26 USC 3305. Applicability of State law
TITLE 26 -- INTERNAL REVENUE CODE
(a) Interstate and foreign commerce
No person required under a State law to make payments to an
unemployment fund shall be relieved from compliance therewith on the
ground that he is engaged in interstate or foreign commerce, or that the
State law does not distinguish between employees engaged in interstate
or foreign commerce and those engaged in intrastate commerce.
(b) Federal instrumentalities in general
The legislature of any State may require any instrumentality of the
United States (other than an instrumentality to which section 3306(c)(6)
applies), and the individuals in its employ, to make contributions to an
unemployment fund under a State unemployment compensation law approved
by the Secretary of Labor under section 3304 and (except as provided in
section 5240 of the Revised Statutes, as amended (12 U.S.C., sec. 484),
and as modified by subsection (c)), to comply otherwise with such law.
The permission granted in this subsection shall apply (A) only to the
extent that no discrimination is made against such instrumentality, so
that if the rate of contribution is uniform upon all other persons
subject to such law on account of having individuals in their employ,
and upon all employees of such persons, respectively, the contributions
required of such instrumentality or the individuals in its employ shall
not be at a greater rate than is required of such other persons and such
employees, and if the rates are determined separately for different
persons or classes of persons having individuals in their employ or for
different classes of employees, the determination shall be based solely
upon unemployment experience and other factors bearing a direct relation
to unemployment risk; (B) only if such State law makes provision for
the refund of any contributions required under such law from an
instrumentality of the United States or its employees for any year in
the event such State is not certified by the Secretary of Labor under
section 3304 with respect to such year; and (C) only if such State law
makes provision for the payment of unemployment compensation to any
employee of any such instrumentality of the United States in the same
amount, on the same terms, and subject to the same conditions as
unemployment compensation is payable to employees of other employers
under the State unemployment compensation law.
(c) National banks
Nothing contained in section 5240 of the Revised Statutes, as amended
(12 U.S.C. 484), shall prevent any State from requiring any national
banking association to render returns and reports relative to the
association's employees, their remuneration and services, to the same
extent that other persons are required to render like returns and
reports under a State law requiring contributions to an unemployment
fund. The Comptroller of the Currency shall, upon receipt of a copy of
any such return or report of a national banking association from, and
upon request of, any duly authorized official, body, or commission of a
State, cause an examination of the correctness of such return or report
to be made at the time of the next succeeding examination of such
association, and shall thereupon transmit to such official, body, or
commission a complete statement of his findings respecting the accuracy
of such returns or reports.
(d) Federal property
No person shall be relieved from compliance with a State unemployment
compensation law on the ground that services were performed on land or
premises owned, held, or possessed by the United States, and any State
shall have full jurisdiction and power to enforce the provisions of such
law to the same extent and with the same effect as though such place
were not owned, held, or possessed by the United States.
((e) Repealed. Sept. 1, 1954, ch. 1212, 4(c), 68 Stat. 1135)
(f) American vessels
The legislature of any State in which a person maintains the
operating office, from which the operations of an American vessel
operating on navigable waters within or within and without the United
States are ordinarily and regularly supervised, managed, directed and
controlled, may require such person and the officers and members of the
crew of such vessel to make contributions to its unemployment fund under
its State unemployment compensation law approved by the Secretary of
Labor under section 3304 and otherwise to comply with its unemployment
compensation law with respect to the service performed by an officer or
member of the crew on or in connection with such vessel to the same
extent and with the same effect as though such service was performed
entirely within such State. Such person and the officers and members of
the crew of such vessel shall not be required to make contributions,
with respect to such service, to the unemployment fund of any other
State. The permission granted by this subsection is subject to the
condition that such service shall be treated, for purposes of wage
credits given employees, like other service subject to such State
unemployment compensation law performed for such person in such State,
and also subject to the same limitation, with respect to contributions
required from such person and from the officers and members of the crew
of such vessel, as is imposed by the second sentence (other than clause
(B) thereof) of subsection (b) with respect to contributions required
from instrumentalities of the United States and from individuals in
their employ.
(g) Vessels operated by general agents of United States
The permission granted by subsection (f) shall apply in the same
manner and under the same conditions (including the obligation to comply
with all requirements of State unemployment compensation laws) to
general agents of the Secretary of Commerce with respect to service
performed by officers and members of the crew on or in connection with
American vessels --
(1) owned by or bareboat chartered to the United States, and
(2) whose business is conducted by such general agents.
As to any such vessel, the State permitted to require contributions
on account of such service shall be the State to which the general agent
would make contributions if the vessel were operated for his own
account. Such general agents are designated, for this purpose,
instrumentalities of the United States neither wholly nor partially
owned by it and shall not be exempt from the tax imposed by section
3301. The permission granted by this subsection is subject to the same
conditions and limitations as are imposed in subsection (f), except that
clause (B) of the second sentence of subsection (b) shall apply.
(h) Requirement by State of contributions
Any State may, as to service performed on account of which
contributions are made pursuant to subsection (g) --
(1) require contributions from persons performing such service under
its unemployment compensation law or temporary disability insurance law
administered in connection therewith, and
(2) require general agents of the Secretary of Commerce to make
contributions under such temporary disability insurance law and to make
such deductions from wages or remuneration as are required by such
unemployment compensation or temporary disability insurance law.
(i) General agent as legal entity
Each general agent of the Secretary of Commerce making contributions
pursuant to subsection (g) or (h) shall, for purposes of such
subsections, be considered a legal entity in his capacity as an
instrumentality of the United States, separate and distinct from his
identity as a person employing individuals on his own account.
(j) Denial of credits in certain cases
Any person required, pursuant to the permission granted by this
section, to make contributions to an unemployment fund under a State
unemployment compensation law approved by the Secretary of Labor under
section 3304 shall not be entitled to the credits permitted, with
respect to the unemployment compensation law of a State, by subsections
(a) and (b) of section 3302 against the tax imposed by section 3301 for
any taxable year if, on October 31 of such taxable year, the Secretary
of Labor certifies to the Secretary of the Treasury his finding, after
reasonable notice and opportunity for hearing to the State agency, that
the unemployment compensation law of such State is inconsistent with any
one or more of the conditions on the basis of which such permission is
granted or that, in the application of the State law with respect to the
12-month period ending on such October 31, there has been a substantial
failure to comply with any one or more of such conditions. For purposes
of section 3310, a finding of the Secretary of Labor under this
subsection shall be treated as a finding under section 3304(c).
(Aug. 16, 1954, ch. 736, 68A Stat. 445; Sept. 1, 1954, ch. 1212,
4(c), 68 Stat. 1135; Sept. 13, 1960, Pub. L. 86-778, title V, 531(a),
(b), 74 Stat. 983; Aug. 10, 1970, Pub. L. 91-373, title I, 123, 84
Stat. 702; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1903(a)(15),
1906(b)(13)(C), 90 Stat. 1809, 1834.)
1976 -- Subsec. (g). Pub. L. 94-455, 1903(a)(15)(A), struck out
''on or after July 1, 1953,'' after ''respect to service performed''.
Subsec. (h). Pub. L. 94-455, 1903(a)(15)(B), struck out ''on or after
July 1, 1953, and'' after ''as to service performed''.
Subsec. (j). Pub. L. 94-455, 1903(a)(15)(C), 1906(b)(13)(C), struck
out ''after December 31, 1971,'' after ''for any taxable year'' and
substituted ''to the Secretary of the Treasury'' for ''to the
Secretary''.
1970 -- Subsec. (j). Pub. L. 91-373 added subsec. (j).
1960 -- Subsec. (b). Pub. L. 86-778, 531(a), substituted ''(other
than an instrumentality to which section 3306(c)(6) applies)'' for
''except such as are (1) wholly owned by the United States, or (2)
exempt from the tax imposed by section 3301 by virtue of any other
provision of law,'' and added cl. (C).
Subsec. (g). Pub. L. 86-778, 531(b), substituted ''neither wholly
nor partially'' for ''not wholly''.
1954 -- Subsec. (e). Act Sept. 1, 1954, repealed subsec. (e) which
related to the Bonneville Power Administrator.
Section 535 of part 3 ( 531-535) of title V of Pub. L. 86-778
provided that: ''The amendments made by this part (enacting section
3308 and amending this section and section 3306 of this title) (other
than the amendments made by subsections (e) and (f) of section 531
(amending sections 1361 and 1367 of Title 42, The Public Health and
Welfare)) shall apply with respect to remuneration paid after 1961 for
services performed after 1961. The amendments made by subsections (e)
and (f) of section 531 shall apply with respect to any week of
unemployment which begins after December 31, 1960.'' (The second
sentence of section 535 was repealed by Pub. L. 89-554, 8(a), Sept. 6,
1966, 80 Stat. 661.)
Section 4(c) of act Sept. 1, 1954, provided that the amendment made
by that section is effective with respect to services performed after
Dec. 31, 1954.
Section 531(g) of Pub. L. 86-778, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that: ''Notwithstanding
section 203(b) of the Farm Credit Act of 1959, sections 3305(b),
3306(c)(6), and 3308 of the Internal Revenue Code of 1986 (formerly
I.R.C. 1954), and sections 1501(a) and 1507(a) of the Social Security
Act (sections 1361(a) and 1367 of Title 42, The Public Health and
Welfare) shall be applicable, according to their terms, to the Federal
land banks, Federal intermediate credit banks, and banks for
cooperatives.''
503.
26 USC 3306. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Employer
For purposes of this chapter --
(1) In general
The term ''employer'' means, with respect to any calendar year, any
person who --
(A) during any calendar quarter in the calendar year or the preceding
calendar year paid wages of $1,500 or more, or
(B) on each of some 20 days during the calendar year or during the
preceding calendar year, each day being in a different calendar week,
employed at least one individual in employment for some portion of the
day.
For purposes of this paragraph, there shall not be taken into account
any wages paid to, or employment of, an employee performing domestic
services referred to in paragraph (3).
(2) Agricultural labor
In the case of agricultural labor, the term ''employer'' means, with
respect to any calendar year, any person who --
(A) during any calendar quarter in the calendar year or the preceding
calendar year paid wages of $20,000 or more for agricultural labor, or
(B) on each of some 20 days during the calendar year or during the
preceding calendar year, each day being in a different calendar week,
employed at least 10 individuals in employment in agricultural labor for
some portion of the day.
(3) Domestic service
In the case of domestic service in a private home, local college
club, or local chapter of a college fraternity or sorority, the term
''employer'' means, with respect to any calendar year, any person who
during any calendar quarter in the calendar year or the preceding
calendar year paid wages in cash of $1,000 or more for such service.
(4) Special rule
A person treated as an employer under paragraph (3) shall not be
treated as an employer with respect to wages paid for any service other
than domestic service referred to in paragraph (3) unless such person is
treated as an employer under paragraph (1) or (2) with respect to such
other service.
(b) Wages
For purposes of this chapter, the term ''wages'' means all
remuneration for employment, including the cash value of all
remuneration (including benefits) paid in any medium other than cash;
except that such term shall not include --
(1) that part of the remuneration which, after remuneration (other
than remuneration referred to in the succeeding paragraphs of this
subsection) equal to $7,000 with respect to employment has been paid to
an individual by an employer during any calendar year, is paid to such
individual by such employer during such calendar year. If an employer
(hereinafter referred to as successor employer) during any calendar year
acquires substantially all the property used in a trade or business of
another employer (hereinafter referred to as a predecessor), or used in
a separate unit of a trade or business of a predecessor, and immediately
after the acquisition employs in his trade or business an individual who
immediately prior to the acquisition was employed in the trade or
business of such predecessor, then, for the purpose of determining
whether the successor employer has paid remuneration (other than
remuneration referred to in the succeeding paragraphs of this
subsection) with respect to employment equal to $7,000 to such
individual during such calendar year, any remuneration (other than
remuneration referred to in the succeeding paragraphs of this
subsection) with respect to employment paid (or considered under this
paragraph as having been paid) to such individual by such predecessor
during such calendar year and prior to such acquisition shall be
considered as having been paid by such successor employer;
(2) the amount of any payment (including any amount paid by an
employer for insurance or annuities, or into a fund, to provide for any
such payment) made to, or on behalf of, an employee or any of his
dependents under a plan or system established by an employer which makes
provision for his employees generally (or for his employees generally
and their dependents) or for a class or classes of his employees (or for
a class or classes of his employees and their dependents), on account of
--
(A) sickness or accident disability (but, in the case of payments
made to an employee or any of his dependents, this subparagraph shall
exclude from the term ''wages'' only payments which are received under a
workmen's compensation law), or
(B) medical or hospitalization expenses in connection with sickness
or accident disability, or
(C) death;
((3) Repealed. Pub. L. 98-21, title III, 324(b)(3)(B), Apr. 20,
1983, 97 Stat. 124)
(4) any payment on account of sickness or accident disability, or
medical or hospitalization expenses in connection with sickness or
accident disability, made by an employer to, or on behalf of, an
employee after the expiration of 6 calendar months following the last
calendar month in which the employee worked for such employer;
(5) any payment made to, or on behalf of, an employee or his
beneficiary --
(A) from or to a trust described in section 401(a) which is exempt
from tax under section 501(a) at the time of such payment unless such
payment is made to an employee of the trust as remuneration for services
rendered as such employee and not as a beneficiary of the trust, or
(B) under or to an annuity plan which, at the time of such payment,
is a plan described in section 403(a),
(C) under a simplified employee pension (as defined in section
408(k)(1)), other than any contributions described in section 408(k)(6),
(D) under or to an annuity contract described in section 403(b),
other than a payment for the purchase of such contract which is made by
reason of a salary reduction agreement (whether evidenced by a written
instrument or otherwise),
(E) under or to an exempt governmental deferred compensation plan (as
defined in section 3121(v)(3)),
(F) to supplement pension benefits under a plan or trust described in
any of the foregoing provisions of this paragraph to take into account
some portion or all of the increase in the cost of living (as determined
by the Secretary of Labor) since retirement but only if such
supplemental payments are under a plan which is treated as a welfare
plan under section 3(2)(B)(ii) of the Employee Retirement Income
Security Act of 1974; /1/ or
(G) under a cafeteria plan (within the meaning of section 125) if
such payment would not be treated as wages without regard to such plan
and it is reasonable to believe that (if section 125 applied for
purposes of this section) section 125 would not treat any wages as
constructively received, /2/
(6) the payment by an employer (without deduction from the
remuneration of the employee) --
(A) of the tax imposed upon an employee under section 3101, or
(B) of any payment required from an employee under a State
unemployment compensation law,
with respect to remuneration paid to an employee for domestic service
in a private home of the employer or for agricultural labor;
(7) remuneration paid in any medium other than cash to an employee
for service not in the course of the employer's trade or business;
((8) Repealed. Pub. L. 98-21, title III, 324(b)(3)(B), Apr. 20,
1983, 97 Stat. 124)
(9) remuneration paid to or on behalf of an employee if (and to the
extent that) at the time of the payment of such remuneration it is
reasonable to believe that a corresponding deduction is allowable under
section 217 (determined without regard to section 274(n));
(10) any payment or series of payments by an employer to an employee
or any of his dependents which is paid --
(A) upon or after the termination of an employee's employment
relationship because of (i) death, or (ii) retirement for disability,
and
(B) under a plan established by the employer which makes provision
for his employees generally or a class or classes of his employees (or
for such employees or class or classes of employees and their
dependents),
other than any such payment or series of payments which would have
been paid if the employee's employment relationship had not been so
terminated;
(11) remuneration for agricultural labor paid in any medium other
than cash;
(12) any contribution, payment, or service, provided by an employer
which may be excluded from the gross income of an employee, his spouse,
or his dependents, under the provisions of section 120 (relating to
amounts received under qualified group legal services plans);
(13) any payment made, or benefit furnished, to or for the benefit of
an employee if at the time of such payment or such furnishing it is
reasonable to believe that the employee will be able to exclude such
payment or benefit from income under section 127 or 129;
(14) the value of any meals or lodging furnished by or on behalf of
the employer if at the time of such furnishing it is reasonable to
believe that the employee will be able to exclude such items from income
under section 119;
(15) any payment made by an employer to a survivor or the estate of a
former employee after the calendar year in which such employee died; or
(16) any benefit provided to or on behalf of an employee if at the
time such benefit is provided it is reasonable to believe that the
employee will be able to exclude such benefit from income under section
74(c), 117, or 132.
Except as otherwise provided in regulations prescribed by the
Secretary, any third party which makes a payment included in wages
solely by reason of the parenthetical matter contained in subparagraph
(A) of paragraph (2) shall be treated for purposes of this chapter and
chapter 22 as the employer with respect to such wages. Nothing in the
regulations prescribed for purposes of chapter 24 (relating to income
tax withholding) which provides an exclusion from ''wages'' as used in
such chapter shall be construed to require a similar exclusion from
''wages'' in the regulations prescribed for purposes of this chapter.
(c) Employment
For purposes of this chapter, the term ''employment'' means any
service performed prior to 1955, which was employment for purposes of
subchapter C of chapter 9 of the Internal Revenue Code of 1939 under the
law applicable to the period in which such service was performed, and
(A) any service, of whatever nature, performed after 1954 by an employee
for the person employing him, irrespective of the citizenship or
residence of either, (i) within the United States, or (ii) on or in
connection with an American vessel or American aircraft under a contract
of service which is entered into within the United States or during the
performance of which and while the employee is employed on the vessel or
aircraft it touches at a port in the United States, if the employee is
employed on and in connection with such vessel or aircraft when outside
the United States, and (B) any service, of whatever nature, performed
after 1971 outside the United States (except in a contiguous country
with which the United States has an agreement relating to unemployment
compensation) by a citizen of the United States as an employee of an
American employer (as defined in subsection (j)(3)), except --
(1) agricultural labor (as defined in subsection (k)) unless --
(A) such labor is performed for a person who --
(i) during any calendar quarter in the calendar year or the preceding
calendar year paid remuneration in cash of $20,000 or more to
individuals employed in agricultural labor (including labor performed by
an alien referred to in subparagraph (B)), or
(ii) on each of some 20 days during the calendar year or the
preceding calendar year, each day being in a different calendar week,
employed in agricultural labor (including labor performed by an alien
referred to in subparagraph (B)) for some portion of the day (whether or
not at the same moment of time) 10 or more individuals; and
(B) such labor is not agricultural labor performed before January 1,
1995, by an individual who is an alien admitted to the United States to
perform agricultural labor pursuant to sections 214(c) and 101(a)(15)(H)
of the Immigration and Nationality Act;
(2) domestic service in a private home, local college club, or local
chapter of a college fraternity or sorority unless performed for a
person who paid cash remuneration of $1,000 or more to individuals
employed in such domestic service in any calendar quarter in the
calendar year or the preceding calendar year;
(3) service not in the course of the employer's trade or business
performed in any calendar quarter by an employee, unless the cash
remuneration paid for such service is $50 or more and such service is
performed by an individual who is regularly employed by such employer to
perform such service. For purposes of this paragraph, an individual
shall be deemed to be regularly employed by an employer during a
calendar quarter only if --
(A) on each of some 24 days during such quarter such individual
performs for such employer for some portion of the day service not in
the course of the employer's trade or business, or
(B) such individual was regularly employed (as determined under
subparagraph (A)) by such employer in the performance of such service
during the preceding calendar quarter;
(4) service performed on or in connection with a vessel or aircraft
not an American vessel or American aircraft, if the employee is employed
on and in connection with such vessel or aircraft when outside the
United States;
(5) service performed by an individual in the employ of his son,
daughter, or spouse, and service performed by a child under the age of
21 in the employ of his father or mother;
(6) service performed in the employ of the United States Government
or of an instrumentality of the United States which is --
(A) wholly or partially owned by the United States, or
(B) exempt from the tax imposed by section 3301 by virtue of any
provision of law which specifically refers to such section (or the
corresponding section of prior law) in granting such exemption;
(7) service performed in the employ of a State, or any political
subdivision thereof, or any instrumentality of any one or more of the
foregoing which is wholly owned by one or more States or political
subdivisions; and any service performed in the employ of any
instrumentality of one or more States or political subdivisions to the
extent that the instrumentality is, with respect to such service, immune
under the Constitution of the United States from the tax imposed by
section 3301;
(8) service performed in the employ of a religious, charitable,
educational, or other organization described in section 501(c)(3) which
is exempt from income tax under section 501(a);
(9) service performed by an individual as an employee or employee
representative as defined in section 1 of the Railroad Unemployment
Insurance Act (45 U.S.C. 351);
(10)(A) service performed in any calendar quarter in the employ of
any organization exempt from income tax under section 501(a) (other than
an organization described in section 401(a)) or under section 521, if
the remuneration for such service is less than $50, or
(B) service performed in the employ of a school, college, or
university, if such service is performed (i) by a student who is
enrolled and is regularly attending classes at such school, college, or
university, or (ii) by the spouse of such a student, if such spouse is
advised, at the time such spouse commences to perform such service, that
(I) the employment of such spouse to perform such service is provided
under a program to provide financial assistance to such student by such
school, college, or university, and (II) such employment will not be
covered by any program of unemployment insurance, or
(C) service performed by an individual who is enrolled at a nonprofit
or public educational institution which normally maintains a regular
faculty and curriculum and normally has a regularly organized body of
students in attendance at the place where its educational activities are
carried on as a student in a full-time program, taken for credit at such
institution, which combines academic instruction with work experience,
if such service is an integral part of such program, and such
institution has so certified to the employer, except that this
subparagraph shall not apply to service performed in a program
established for or on behalf of an employer or group of employers, or
(D) service performed in the employ of a hospital, if such service is
performed by a patient of such hospital;
(11) service performed in the employ of a foreign government
(including service as a consular or other officer or employee or a
nondiplomatic representative);
(12) service performed in the employ of an instrumentality wholly
owned by a foreign government --
(A) if the service is of a character similar to that performed in
foreign countries by employees of the United States Government or of an
instrumentality thereof; and
(B) if the Secretary of State shall certify to the Secretary of the
Treasury that the foreign government, with respect to whose
instrumentality exemption is claimed, grants an equivalent exemption
with respect to similar service performed in the foreign country by
employees of the United States Government and of instrumentalities
thereof;
(13) service performed as a student nurse in the employ of a hospital
or a nurses' training school by an individual who is enrolled and is
regularly attending classes in a nurses' training school chartered or
approved pursuant to State law; and service performed as an intern in
the employ of a hospital by an individual who has completed a 4 years'
course in a medical school chartered or approved pursuant to State law;
(14) service performed by an individual for a person as an insurance
agent or as an insurance solicitor, if all such service performed by
such individual for such person is performed for remuneration solely by
way of commission;
(15)(A) service performed by an individual under the age of 18 in the
delivery or distribution of newspapers or shopping news, not including
delivery or distribution to any point for subsequent delivery or
distribution;
(B) service performed by an individual in, and at the time of, the
sale of newspapers or magazines to ultimate consumers, under an
arrangement under which the newspapers or magazines are to be sold by
him at a fixed price, his compensation being based on the retention of
the excess of such price over the amount at which the newspapers or
magazines are charged to him, whether or not he is guaranteed a minimum
amount of compensation for such service, or is entitled to be credited
with the unsold newspapers or magazines turned back;
(16) service performed in the employ of an international
organization;
(17) service performed by an individual in (or as an officer or
member of the crew of a vessel while it is engaged in) the catching,
taking, harvesting, cultivating, or farming of any kind of fish,
shellfish, crustacea, sponges, seaweeds, or other aquatic forms of
animal and vegetable life (including service performed by any such
individual as an ordinary incident to any such activity), except --
(A) service performed in connection with the catching or taking of
salmon or halibut, for commercial purposes, and
(B) service performed on or in connection with a vessel of more than
10 net tons (determined in the manner provided for determining the
register tonnage of merchant vessels under the laws of the United
States);
(18) service described in section 3121(b)(20);
(19) Service /3/ which is performed by a nonresident alien individual
for the period he is temporarily present in the United States as a
nonimmigrant under subparagraph (F), (J), or (M) of section 101(a)(15)
of the Immigration and Nationality Act, as amended (8 U.S.C.
1101(a)(15)(F), (J), or (M)), and which is performed to carry out the
purpose specified in subparagraph (F), (J), or (M), as the case may be;
or
(20) service performed by a full time student (as defined in
subsection (q)) in the employ of an organized camp --
(A) if such camp --
(i) did not operate for more than 7 months in the calendar year and
did not operate for more than 7 months in the preceding calendar year,
or
(ii) had average gross receipts for any 6 months in the preceding
calendar year which were not more than 33 1/3 percent of its average
gross receipts for the other 6 months in the preceding calendar year;
and
(B) if such full time student performed services in the employ of
such camp for less than 13 calendar weeks in such calendar year.
(d) Included and excluded service
For purposes of this chapter, if the services performed during
one-half or more of any pay period by an employee for the person
employing him constitute employment, all the services of such employee
for such period shall be deemed to be employment; but if the services
performed during more than one-half of any such pay period by an
employee for the person employing him do not constitute employment, then
none of the services of such employee for such period shall be deemed to
be employment. As used in this subsection, the term ''pay period''
means a period (of not more than 31 consecutive days) for which a
payment of remuneration is ordinarily made to the employee by the person
employing him. This subsection shall not be applicable with respect to
services performed in a pay period by an employee for the person
employing him, where any of such service is excepted by subsection
(c)(9).
(e) State agency
For purposes of this chapter, the term ''State agency'' means any
State officer, board, or other authority, designated under a State law
to administer the unemployment fund in such State.
(f) Unemployment fund
For purposes of this chapter, the term ''unemployment fund'' means a
special fund, established under a State law and administered by a State
agency, for the payment of compensation. Any sums standing to the
account of the State agency in the Unemployment Trust Fund established
by section 904 of the Social Security Act, as amended (42 U.S.C. 1104),
shall be deemed to be a part of the unemployment fund of the State, and
no sums paid out of the Unemployment Trust Fund to such State agency
shall cease to be a part of the unemployment fund of the State until
expended by such State agency. An unemployment fund shall be deemed to
be maintained during a taxable year only if throughout such year, or
such portion of the year as the unemployment fund was in existence, no
part of the moneys of such fund was expended for any purpose other than
the payment of compensation (exclusive of expenses of administration)
and for refunds of sums erroneously paid into such fund and refunds paid
in accordance with the provisions of section 3305(b); except that --
(1) an amount equal to the amount of employee payments into the
unemployment fund of a State may be used in the payment of cash benefits
to individuals with respect to their disability, exclusive of expenses
of administration;
(2) the amounts specified by section 903(c)(2) of the Social Security
Act may, subject to the conditions prescribed in such section, be used
for expenses incurred by the State for administration of its
unemployment compensation law and public employment offices, /4/
(3) amounts may be deducted from unemployment benefits and used to
repay overpayments as provided in section 303(g) of the Social Security
Act; and
(4) amounts may be withdrawn for the payment of short-time
compensation under a plan approved by the Secretary of Labor.
(g) Contributions
For purposes of this chapter, the term ''contributions'' means
payments required by a State law to be made into an unemployment fund by
any person on account of having individuals in his employ, to the extent
that such payments are made by him without being deducted or deductible
from the remuneration of individuals in his employ.
(h) Compensation
For purposes of this chapter, the term ''compensation'' means cash
benefits payable to individuals with respect to their unemployment.
(i) Employee
For purposes of this chapter, the term ''employee'' has the meaning
assigned to such term by section 3121(d), except that paragraph (4) and
subparagraphs (B) and (C) of paragraph (3) shall not apply.
(j) State, United States, and American employer
For purposes of this chapter --
(1) State
The term ''State'' includes the District of Columbia, the
Commonwealth of Puerto Rico, and the Virgin Islands.
(2) United States
The term ''United States'' when used in a geographical sense includes
the States, the District of Columbia, the Commonwealth of Puerto Rico,
and the Virgin Islands.
(3) American employer
The term ''American employer'' means a person who is --
(A) an individual who is a resident of the United States,
(B) a partnership, if two-thirds or more of the partners are
residents of the United States,
(C) a trust, if all of the trustees are residents of the United
States, or
(D) a corporation organized under the laws of the United States or of
any State.
An individual who is a citizen of the Commonwealth of Puerto Rico or
the Virgin Islands (but not otherwise a citizen of the United States)
shall be considered, for purposes of this section, as a citizen of the
United States.
(k) Agricultural labor
For purposes of this chapter, the term ''agricultural labor'' has the
meaning assigned to such term by subsection (g) of section 3121, except
that for purposes of this chapter subparagraph (B) of paragraph (4) of
such subsection (g) shall be treated as reading:
''(B) in the employ of a group of operators of farms (or a
cooperative organization of which such operators are members) in the
performance of service described in subparagraph (A), but only if such
operators produced more than one-half of the commodity with respect to
which such service is performed;'' /5/
((l) Repealed. Sept. 1, 1954, ch. 1212, 4(c), 68 Stat. 1135)
(m) American vessel and aircraft
For purposes of this chapter, the term ''American vessel'' means any
vessel documented or numbered under the laws of the United States; and
includes any vessel which is neither documented or numbered under the
laws of the United States nor documented under the laws of any foreign
country, if its crew is employed solely by one or more citizens or
residents of the United States or corporations organized under the laws
of the United States or of any State; and the term ''American
aircraft'' means an aircraft registered under the laws of the United
States.
(n) Vessels operated by general agents of United States
Notwithstanding the provisions of subsection (c)(6), service
performed by officers and members of the crew of a vessel which would
otherwise be included as employment under subsection (c) shall not be
excluded by reason of the fact that it is performed on or in connection
with an American vessel --
(1) owned by or bareboat chartered to the United States and
(2) whose business is conducted by a general agent of the Secretary
of Commerce.
For purposes of this chapter, each such general agent shall be
considered a legal entity in his capacity as such general agent,
separate and distinct from his identity as a person employing
individuals on his own account, and the officers and members of the crew
of such an American vessel whose business is conducted by a general
agent of the Secretary of Commerce shall be deemed to be performing
services for such general agent rather than the United States. Each
such general agent who in his capacity as such is an employer within the
meaning of subsection (a) shall be subject to all the requirements
imposed upon an employer under this chapter with respect to service
which constitutes employment by reason of this subsection.
(o) Special rule in case of certain agricultural workers
(1) Crew leaders who are registered or provide specialized
agricultural labor
For purposes of this chapter, any individual who is a member of a
crew furnished by a crew leader to perform agricultural labor for any
other person shall be treated as an employee of such crew leader --
(A) if --
(i) such crew leader holds a valid certificate of registration under
the Migrant and Seasonal Agricultural Worker Protection Act; or
(ii) substantially all the members of such crew operate or maintain
tractors, mechanized harvesting or crop-dusting equipment, or any other
mechanized equipment, which is provided by such crew leader; and
(B) if such individual is not an employee of such other person within
the meaning of subsection (i).
(2) Other crew leaders
For purposes of this chapter, in the case of any individual who is
furnished by a crew leader to perform agricultural labor for any other
person and who is not treated as an employee of such crew leader under
paragraph (1) --
(A) such other person and not the crew leader shall be treated as the
employer of such individual; and
(B) such other person shall be treated as having paid cash
remuneration to such individual in an amount equal to the amount of cash
remuneration paid to such individual by the crew leader (either on his
behalf or on behalf of such other person) for the agricultural labor
performed for such other person.
(3) Crew leader
For purposes of this subsection, the term ''crew leader'' means an
individual who --
(A) furnishes individuals to perform agricultural labor for any other
person,
(B) pays (either on his behalf or on behalf of such other person) the
individuals so furnished by him for the agricultural labor performed by
them, and
(C) has not entered into a written agreement with such other person
under which such individual is designated as an employee of such other
person.
(p) Concurrent employment by two or more employers
For purposes of sections 3301, 3302, and 3306(b)(1), if two or more
related corporations concurrently employ the same individual and
compensate such individual through a common paymaster which is one of
such corporations, each such corporation shall be considered to have
paid as remuneration to such individual only the amounts actually
disbursed by it to such individual and shall not be considered to have
paid as remuneration to such individual amounts actually disbursed to
such individual by another of such corporations.
(q) Full time student
For purposes of subsection (c)(20), an individual shall be treated as
a full time student for any period --
(1) during which the individual is enrolled as a full time student at
an educational institution, or
(2) which is between academic years or terms if --
(A) the individual was enrolled as a full time student at an
educational institution for the immediately preceding academic year or
term, and
(B) there is a reasonable assurance that the individual will be so
enrolled for the immediately succeeding academic year or term after the
period described in subparagraph (A).
(r) Treatment of certain deferred compensation and salary reduction
arrangements
(1) Certain employer contributions treated as wages
Nothing in any paragraph of subsection (b) (other than paragraph (1))
shall exclude from the term ''wages'' --
(A) any employer contribution under a qualified cash or deferred
arrangement (as defined in section 401(k)) to the extent not included in
gross income by reason of section 402(e)(3), or
(B) any amount treated as an employer contribution under section
414(h)(2) where the pickup referred to in such section is pursuant to a
salary reduction agreement (whether evidenced by a written instrument or
otherwise).
(2) Treatment of certain nonqualified deferred compensation plans
(A) In general
Any amount deferred under a nonqualified deferred compensation plan
shall be taken into account for purposes of this chapter as of the later
of --
(i) when the services are performed, or
(ii) when there is no substantial risk of forfeiture of the rights to
such amount.
(B) Taxed only once
Any amount taken into account as wages by reason of subparagraph (A)
(and the income attributable thereto) shall not thereafter be treated as
wages for purposes of this chapter.
(C) Nonqualified deferred compensation plan
For purposes of this paragraph, the term ''nonqualified deferred
compensation plan'' means any plan or other arrangement for deferral of
compensation other than a plan described in subsection (b)(5).
(s) Tips treated as wages
For purposes of this chapter, the term ''wages'' includes tips which
are --
(1) received while performing services which constitute employment,
and
(2) included in a written statement furnished to the employer
pursuant to section 6053(a).
(Aug. 16, 1954, ch. 736, 68A Stat. 447; Sept. 1, 1954, ch. 1212,
1, 4(c), 68 Stat. 1130, 1135; June 25, 1959, Pub. L. 86-70, 22(a), 73
Stat. 146; July 12, 1960, Pub. L. 86-624, 18(d), 74 Stat. 416; Sept.
13, 1960, Pub. L. 86-778, title V, 531(c), 532-534, 543(a), 74 Stat.
983, 984, 986; Sept. 21, 1961, Pub. L. 87-256, 110(f), 75 Stat. 537;
Oct. 10, 1962, Pub. L. 87-792, 7(k), 76 Stat. 830; Oct. 13, 1964,
Pub. L. 88-650, 4(c), 78 Stat. 1077; Jan. 2, 1968, Pub. L. 90-248,
title V, 504(b), 81 Stat. 935; Aug. 7, 1969, Pub. L. 91-53, 1, 83
Stat. 91; Aug. 10, 1970, Pub. L. 91-373, title I, 101(a), 102(a),
103(a), 105(a), (b), 106(a), title III, 302, 84 Stat. 696, 697, 699,
700, 713; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1903(a)(16),
1906(b)(13)(C), 90 Stat. 1810, 1834; Oct. 20, 1976, Pub. L. 94-566,
title I, 111 (a), (b), 112(a), 113(a), 114(a), 116(b), title II,
211(a), 90 Stat. 2667-2669, 2672, 2676; Dec. 20, 1977, Pub. L. 95-216,
title III, 314(b), 91 Stat. 1536; Oct. 17, 1978, Pub. L. 95-472,
3(a), 92 Stat. 1333; Nov. 6, 1978, Pub. L. 95-600, title I,
164(b)(2), 92 Stat. 2813; Oct. 10, 1979, Pub. L. 96-84, 4(a), (b), 93
Stat. 654; Apr. 1, 1980, Pub. L. 96-222, title I, 101(a)(10)(B)(ii),
94 Stat. 201; Dec. 5, 1980, Pub. L. 96-499, title XI, 1141(b), 94
Stat. 2694; Aug. 13, 1981, Pub. L. 97-34, title I, 124(e)(2)(A), title
VIII, 822(a), 95 Stat. 200, 351; Sept. 3, 1982, Pub. L. 97-248, title
II, 271(a), 276(a)(1), (b)(1), (2), 277, 96 Stat. 554, 558, 559; Apr.
20, 1983, Pub. L. 98-21, title III, 324(b)(1)-(4)(B), 327(c), 328(c),
97 Stat. 123, 124, 127, 128; Oct. 24, 1983, Pub. L. 98-135, title II,
201(a), 202, 97 Stat. 860; July 18, 1984, Pub. L. 98-369, div. A,
title IV, 491(d)(37), title V, 531(d)(3), div. B, title VI,
2661(o)(4), 98 Stat. 851, 884, 1159; Apr. 7, 1986, Pub. L. 99-272,
title XII, 12401(b)(2), title XIII, 13303(a), 100 Stat. 297, 327;
Oct. 21, 1986, Pub. L. 99-509, title IX, 9002(b)(2)(B), 100 Stat. 1971;
Oct. 22, 1986, Pub. L. 99-514, title I, 122(e)(3), title XI,
1108(g)(8), 1151(d)(2)(B), title XVIII, 1884(3), 1899A(44), (45), 100
Stat. 2112, 2435, 2505, 2919, 2961; Oct. 31, 1986, Pub. L. 99-595, 100
Stat. 3348; Nov. 10, 1988, Pub. L. 100-647, title I,
1001(d)(2)(C)(iii), (g)(4)(B)(ii), 1011B(a) (22)(C), (23)(A),
1018(u)(50), title VIII, 8016(a)(3)(B), 102 Stat. 3351, 3352, 3486,
3593, 3792; Nov. 8, 1989, Pub. L. 101-140, title II, 203(a)(2), 103
Stat. 830; July 3, 1992, Pub. L. 102-318, title III, 303(a), title
IV, 401(a)(2), title V, 521(b)(35), 106 Stat. 297, 298, 312.)
Section 3(2)(B)(ii) of the Employee Retirement Income Security Act of
1974, referred to in subsec. (b)(5)(F), is classified to section
1002(2)(B)(ii) of Title 29, Labor.
Subchapter C of chapter 9 of the Internal Revenue Code of 1939,
referred to in subsec. (c), was comprised of sections 1600 to 1611 of
former Title 26, Internal Revenue Code. Subchapter C of chapter 9 was
repealed by section 7851(a)(3) of this title. For table of comparisons
of the 1939 Code to the 1986 Code, see table I preceding section 1 of
this title. See, also, section 7851(e) of this title for provision that
references in the 1986 Code to a provision of the 1939 Code, not then
applicable, shall be deemed a reference to the corresponding provision
of the 1986 Code, which is then applicable.
Sections 214(c) and 101(a)(15)(H) of the Immigration and Nationality
Act, referred to in subsec. (c)(1)(B), are classified to sections
1184(c) and 1101(a)(15)(H), respectively, of Title 8, Aliens and
Nationality.
Sections 303(g) and 903(c)(2) of the Social Security Act, referred to
in subsecs. (f)(2), (g)(3), are classified to sections 503(g) and
1103(c)(2), respectively, of Title 42, The Public Health and Welfare.
The Migrant and Seasonal Agricultural Worker Protection Act, referred
to in subsec. (o)(1)(A)(i), is Pub. L. 97-470, Jan. 14, 1983, 96
Stat. 2584, as amended, which is classified generally to chapter 20 (
1801 et seq.) of Title 29, Labor. For complete classification of this
Act to the Code, see Short Title note set out under section 1801 of
Title 29 and Tables.
1992 -- Subsec. (c)(1)(B). Pub. L. 102-318, 303(a), substituted
''1995'' for ''1993''.
Subsec. (f)(4). Pub. L. 102-318, 401(a)(2), added par. (4).
Subsec. (r)(1)(A). Pub. L. 102-318, 521(b)(35), substituted
''402(e)(3)'' for ''402(a)(8)''.
1989 -- Subsec. (t). Pub. L. 101-140 amended this section to read as
if amendments by Pub. L. 100-647, 1011B(a)(22)(C), had not been
enacted, see 1988 Amendment note below.
1988 -- Subsec. (b)(5)(G). Pub. L. 100-647, 1011B(a)(23)(A),
inserted ''if such payment would not be treated as wages without regard
to such plan and it is reasonable to believe that (if section 125
applied for purposes of this section) section 125 would not treat any
wages as constructively received'' after ''section 125)''.
Subsec. (b)(9). Pub. L. 100-647, 1001(g)(4)(B)(ii), inserted
''(determined without regard to section 274(n))'' after ''section 217''.
Subsec. (c)(1)(B). Pub. L. 100-647, 1018(u)(50), amended Pub. L.
99-272, 13303(a), see 1986 Amendment notes below.
Subsec. (c)(19). Pub. L. 100-647, 1001(d)(2)(C)(iii), substituted
''(F), (J), or (M)'' for ''(F) or (J)'' in three places.
Subsec. (i). Pub. L. 100-647, 8016(a)(3)(B), substituted ''paragraph
(4) and subparagraphs (B) and (C) of paragraph (3)'' for ''paragraph (3)
and subparagraphs (B) and (C) of paragraph (4)''.
Subsec. (t). Pub. L. 100-647, 1011B(a)(22)(C), added subsec. (t)
relating to benefits provided under certain employee benefit plans.
1986 -- Subsec. (b)(2)(A). Pub. L. 99-514, 1899A(44), substituted
''workmen's compensation'' for ''workman's compensation''.
Subsec. (b)(5)(C). Pub. L. 99-514, 1108(g)(8), added subpar. (C)
and struck out former subpar. (C) which read as follows: ''under a
simplified employee pension if, at the time of the payment, it is
reasonable to believe that the employee will be entitled to a deduction
under section 219(b)(2) for such payment,''.
Subsec. (b)(5)(G). Pub. L. 99-514, 1151(d)(2)(B), added subpar.
(G).
Subsec. (b)(13). Pub. L. 99-514, 1899A(45), substituted a semicolon
for a comma.
Subsec. (b)(16). Pub. L. 99-514, 122(e)(3), inserted reference to
section 74(c).
Subsec. (c)(1)(B). Pub. L. 99-595 substituted ''January 1, 1993'' for
''January 1, 1988''.
Pub. L. 99-272, 13303(a), as amended by Pub. L. 100-647,
1018(u)(50), substituted ''January 1, 1988'' for ''January 1, 1986''.
Subsec. (f)(3). Pub. L. 99-272, 12401(b)(2), added par. (3).
Subsec. (i). Pub. L. 99-509 substituted ''paragraph (3) and
subparagraphs (B) and (C) of paragraph (4)'' for ''subparagraphs (B) and
(C) of paragraph (3)''.
Subsec. (o)(1)(A)(i). Pub. L. 99-514, 1884(3), substituted ''Migrant
and Seasonal Agricultural Worker Protection Act'' for ''Farm Labor
Contractor Registration Act of 1963''.
1984 -- Subsec. (b). Pub. L. 98-369, 531(d)(3)(A), in provisions
preceding par. (1), inserted ''(including benefits)''.
Subsec. (b)(5)(C) to (G). Pub. L. 98-369, 491(d)(37), struck out
subpar. (C) which provided: ''under or to a bond purchase plan which,
at the time of such payment, is a qualified bond purchase plan described
in section 405(a),'' and redesignated subpars. (D) to (G) as (C) to
(F), respectively.
Subsec. (b)(16). Pub. L. 98-369, 531(d)(3)(B), added par. (16).
Subsec. (r)(1)(B). Pub. L. 98-369, 2661(o)(4), substituted ''section
414(h)(2) where the pickup referred to in such section is pursuant to a
salary reduction agreement (whether evidenced by a written instrument or
otherwise)'' for ''section 414(h)(2)''.
Subsec. (s). Pub. L. 98-369, 1073(a), added subsec. (s).
1983 -- Subsec. (b). Pub. L. 98-21, 327(c)(4), added sentence at
end providing that nothing in the regulations prescribed for purposes of
chapter 24 (relating to income tax withholding) which provides an
exclusion from ''wages'' as used in such chapter shall be construed to
require a similar exclusion from ''wages'' in regulations prescribed for
purposes of this chapter.
Pub. L. 98-21, 324(b)(4)(B), added sentence at end providing that,
except as otherwise provided in regulations prescribed by the Secretary,
any third party which makes a payment included in wages solely by reason
of parenthetical text contained in subpar. (A) of par. (2) shall be
treated for purposes of this chapter and chapter 22 as the employer with
respect to such wages.
Subsec. (b)(2). Pub. L. 98-21, 324(b)(3)(A), (4)(A), struck out
''(A) retirement or'', redesignated subpars. (B) to (D) as (A) to (C),
respectively, and in subpar. (A), as so redesignated, substituted
''sickness or accident disability (but, in the case of payments made to
an employee or any of his dependents, this subparagraph shall exclude
from the term 'wages' only payments which are received under a workman's
compensation law)'' for ''sickness or accident disability''.
Subsec. (b)(3). Pub. L. 98-21, 324(b)(3)(B), struck out par. (3)
which related to any payment made to an employee (including any amount
paid by an employer for insurance or annuities, or into a fund, to
provide for any such payment) on account of retirement.
Subsec. (b)(5)(D). Pub. L. 98-21, 328(c), substituted ''section
219(b)(2)'' for ''section 219''.
Subsec. (b)(5)(E) to (G). Pub. L. 98-21, 324(b)(2), added subpars.
(E) to (G).
Subsec. (b)(8). Pub. L. 98-21, 324(b)(3)(B), struck out par. (8)
which related to any payment (other than vacation or sick pay) made to
an employee after the month in which he attained the age of 65, if he
did not work for the employer in the period for which such payment was
made.
Subsec. (b)(10)(A). Pub. L. 98-21, 324(b)(3)(C), struck out cl.
(iii) which related to retirement after attaining an age specified in
the plan referred to in subpar. (B) or in a pension plan of the
employer.
Subsec. (b)(14). Pub. L. 98-21, 327(c)(1)-(3), added par. (14).
Subsec. (b)(15). Pub. L. 98-135, 201(a), added par. (15).
Subsec. (c)(1)(B). Pub. L. 98-135, 202, substituted ''1986'' for
''1984''.
Subsec. (r). Pub. L. 98-21, 324(b)(1), added subsec. (r).
1982 -- Subsec. (b)(1). Pub. L. 97-248, 271(a), substituted
''$7,000'' for ''$6,000'' wherever appearing.
Subsec. (c)(1)(B). Pub. L. 97-248, 277, substituted ''1984'' for
''1982''.
Subsec. (c)(10)(C). Pub. L. 97-248, 276(a)(1), struck out ''under
the age of 22'' after ''service performed by an individual''.
Subsec. (c)(20). Pub. L. 97-248, 276(b)(1), added par. (20).
Subsec. (q). Pub. L. 97-248, 276(b)(2), added subsec. (q).
1981 -- Subsec. (b)(13). Pub. L. 97-34, 124(e)(2)(A), substituted
''section 127 or 129'' for ''section 127''.
Subsec. (c)(18), (19). Pub. L. 97-34, 822(a), added par. (18) and
redesignated former par. (18) as (19).
1980 -- Subsec. (b)(5)(D). Pub. L. 96-222 added subpar. (D).
Subsec. (b)(6). Pub. L. 96-499 struck out ''(or the corresponding
section of prior law)'' after ''section 3101'' in subpar. (A) and
inserted ''with respect to remuneration paid to an employee for domestic
service in a private home of the employer or for agricultural labor''
following subpar. (B).
1979 -- Subsec. (c)(1)(A). Pub. L. 96-84, 4(b), substituted
''including labor performed by an alien'' for ''not taking into account
labor performed before January 1, 1980, by an alien'' in parenthetical
text of cls. (i) and (ii).
Subsec. (c)(1)(B). Pub. L. 96-84, 4(a), substituted ''January 1,
1982'' for ''January 1, 1980''.
1978 -- Subsec. (b)(12). Pub. L. 95-472 added par. (12).
Subsec. (b)(13). Pub. L. 95-600 added par. (13).
1977 -- Subsec. (p). Pub. L. 95-216 added subsec. (p).
1976 -- Subsec. (a). Pub. L. 94-566, 114(a), redesignated existing
provisions, consisting of an introductory phrase and pars. (1) and (2),
as par. (1), consisting of an introductory phrase and subpars. (A) and
(B), inserted provisions following subpar. (B) as so redesignated, and
added pars. (2), (3), and (4).
Subsec. (b)(1). Pub. L. 94-566, 211(a), substituted ''$6,000'' for
''$4,200'' wherever appearing.
Subsec. (b)(11). Pub. L. 94-566, 111(a), added par. (11).
Subsec. (c). Pub. L. 94-566, 116(b)(1), struck out ''or in the
Virgin Islands'' after ''agreement relating to unemployment
compensation'' in parenthetical provisions of cl. (B) preceding par.
(1).
Subsec. (c)(1). Pub. L. 94-566, 111(b), inserted ''unless'' after
''subsection (k))'' and added subpars. (A) and (B).
Subsec. (c)(2). Pub. L. 94-566, 113(a), inserted ''unless performed
for a person who paid cash remuneration of $1,000 or more to individuals
employed in such domestic service in any calendar quarter in the
calendar year or the preceding calendar year'' after ''sorority''.
Subsec. (c)(9). Pub. L. 94-455, 1903(a)(16)(A), struck out ''52
Stat. 1094, 1095;'' before ''45 U.S.C. 351''.
Subsec. (c)(12)(B). Pub. L. 94-455, 1906(b)(13)(C), substituted ''to
the Secretary of the Treasury'' for ''to the Secretary''.
Subsec. (c)(18). Pub. L. 94-455, 1903(a)(16)(B), inserted ''(8
U.S.C. 1101(a)(15)(F) or (J))'' after ''Immigration and Nationality Act,
as amended''.
Subsec. (f). Pub. L. 94-455, 1903(a)(16)(C), struck out ''49 Stat.
640; 52 Stat. 1104, 1105;'' before ''42 U.S.C. 1104''.
Subsec. (j). Pub. L. 94-566, 116(b)(2), inserted reference to the
Virgin Islands in pars. (1) and (2) and in provisions following par.
(3).
Subsec. (n). Pub. L. 94-455, 1903(a)(16)(D), struck out ''on or
after July 1, 1953,'' after ''service performed''.
Subsec. (o). Pub. L. 94-566, 112(a), added subsec. (o).
1970 -- Subsec. (a). Pub. L. 91-373, 101(a), expanded definition of
''employer'' by reducing from 4 to 1 the number of individuals which a
person had to employ on each of some 20 days during the calendar year or
the preceding calendar year in order to qualify as an employer and
inserted provisions making a person an employer who paid wages of $1,500
or more during any calendar quarter in the calendar year or the
preceding calendar year.
Subsec. (b)(1). Pub. L. 91-373, 302, substituted ''$4,200'' for
''$3,000''.
Subsec. (c). Pub. L. 91-373, 105(a), inserted reference to service
performed after 1971 outside the United States by a citizen of the
United States as an employee of an American employer.
Subsec. (c)(10). Pub. L. 91-373, 106(a), designated existing
provisions of subpar. (B) as cl. (i) thereof and added cl. (ii) of
subpar. (B) and subpars. (C) and (D).
Subsec. (i). Pub. L. 91-373, 102(a), substituted meaning assigned
''employee'' by section 3121(d) of this title, except that subpars. (B)
and (C) of par. (3) were not applicable, as meaning of ''employee'' for
purposes of this chapter for a definition of ''employee'' as persons
including officers of corporations but not including independent
contractors under common law rules or persons not employees under such
rules.
Subsec. (j)(3). Pub. L. 91-373, 105(b), inserted definition of
''American employer''.
Subsec. (k). Pub. L. 91-373, 103(a), substituted as definition of
''agricultural labor'' a simple reference to that term as defined, with
a minor exception, in section 3121 of this title for a full definition
of the term, the result of which, in view of the substance of section
3121, excluded from the definition of agricultural labor services
performed in connection with the production or harvesting of maple
sirup, maple sugar, or mushrooms, or the hatching of poultry unless
performed on a farm, and provided a new series of tests to determine
whether the handling, planting, drying, packing, packaging, processing,
freezing, grading, storing, or delivering agricultural or horticultural
commodities constitute agricultural labor.
1969 -- Subsec. (a). Pub. L. 90-53 made status of employer depend
also on employment during preceding taxable year.
1968 -- Subsec. (b)(10). Pub. L. 90-248 added par. (10).
1964 -- Subsec. (b)(9). Pub. L. 88-650 added par. (9).
1962 -- Subsec. (b)(5). Pub. L. 87-792 substituted ''is a plan
described in section 403(a)'' for ''meets the requirements of section
401(a)(3), (4), (5), and (6)'' in subpar. (B), and added subpar. (C).
1961 -- Subsec. (c)(18). Pub. L. 87-256 added par. (18).
1960 -- Subsec. (c). Pub. L. 86-778, 532(a), included employment on
or in connection with an American aircraft within cl. (B) of the
opening provisions.
Subsec. (c)(4). Pub. L. 86-778, 532(b), excluded service performed
on or in connection with an aircraft that is not an American aircraft.
Subsec. (c)(6). Pub. L. 86-778, 531(c), substituted ''wholly or
partially owned'' for ''wholly owned'' in cl. (A), and inserted ''which
specifically refers to such section (or the corresponding section of
prior law) in granting such exemption'' in cl. (B).
Subsec. (c)(8). Pub. L. 86-778, 533, substituted ''service performed
in the employ of a religious, charitable, educational, or other
organization described in section 501(c)(3) which is exempt from income
tax under section 501(a)'' for ''service performed in the employ of a
corporation, community chest, fund, or foundation, organized and
operated exclusively for religious, charitable, scientific, testing for
public safety, literary, or educational purposes, or for the prevention
of cruelty to children or animals, no part of the net earnings of which
inures to the benefit of any private shareholder or individual, and no
substantial part of the activities of which is carrying on propaganda,
or otherwise attempting, to influence legislation.''
Subsec. (c)(10). Pub. L. 86-778, 534, struck out provisions which
excepted from definition of ''employment'' service in connection with
the collection of dues or premiums for a fraternal beneficiary society,
order, or association which is preformed away from the home office or is
ritualistic service in connection with any such society, order, or
association, service performed in the employ of an agricultural or
horticultural organization described in section 501(c)(5) of this title,
service performed in the employ of a voluntary employees' beneficiary
association providing for the payment of life, sick, accident, or other
benefits to members or their dependents or designated beneficiaries, and
service performed in the employ of a school, college, or university, not
exempt from income tax under section 501(a) of this title if such
service is performed by a student who is enrolled and regularly
attending classes.
Subsec. (j). Pub. L. 86-778, 543(a), included the Commonwealth of
Puerto Rico and struck out ''Hawaii'' from definition of ''State'',
defined ''United States'', and inserted provisions requiring an
individual who is a citizen of the Commonwealth of Puerto Rico (but not
otherwise a citizen of the United States) to be considered for purposes
of this section, as a citizen of the United States.
Pub. L. 86-624 struck out ''Hawaii, and'' before ''the District of
Columbia''.
Subsec. (m). Pub. L. 86-778, 532(c), included aircraft in heading
and defined ''American aircraft''.
1959 -- Subsec. (j). Pub. L. 86-70 struck out ''Alaska,'' before
''Hawaii''.
1954 -- Subsec. (a). Act Sept. 1, 1954, changed definition of
employer from ''eight or more'' to ''4 or more''.
Subsec. (l). Act Sept. 1, 1954, repealed subsec. (l) which related
to certain employees of Bonneville Power Administrator.
Amendment by section 521(b)(35) of Pub. L. 102-318 applicable to
distributions after Dec. 31, 1992, see section 521(e) of Pub. L.
102-318, set out as a note under section 402 of this title.
Amendment by Pub. L. 101-140 effective as if included in section
1151 of Pub. L. 99-514, see section 203(c) of Pub. L. 101-140, set out
as a note under section 79 of this title.
Amendment by section 1011B(a)(22)(C) of Pub. L. 100-647 not
applicable to any individual who separated from service with the
employer before Jan. 1, 1989, see section 1011B(a)(22)(F) of Pub. L.
100-647, set out as a note under section 3121 of this title.
Section 1018(u)(50) of Pub. L. 100-647 provided that the amendment
made by that section is effective Apr. 7, 1986.
Amendment by sections 1001(d)(2)(C)(iii), (g)(4)(B)(ii), and
1011B(a)(23)(A) of Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Amendment by section 8016(a)(3)(B) of Pub. L. 100-647 effective Nov.
10, 1988, except that any amendment to a provision of a particular
Public Law which is referred to by its number, or to a provision of the
Social Security Act (42 U.S.C. 301 et seq.), or to this title as added
or amended by a provision of a particular Public Law which is so
referred to, effective as though included or reflected in the relevant
provisions of that Public Law at the time of its enactment, see section
8016(b) of Pub. L. 100-647, set out as a note under section 3111 of
this title.
Amendment by section 122(e)(3) of Pub. L. 99-514 applicable to
prizes and awards granted after Dec. 31, 1986, see section 151(c) of
Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 1108(g)(8) of Pub. L. 99-514 applicable to
years beginning after Dec. 31, 1986, see section 1108(h) of Pub. L.
99-514, set out as a note under section 219 of this title.
Amendment by section 1151(d)(2)(B) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1983, see section 1151(k)(5) of
Pub. L. 99-514, set out as a note under section 79 of this title.
Amendment by Pub. L. 99-509 effective, except as otherwise provided,
with respect to payments due with respect to wages paid after Dec. 31,
1986, including wages paid after such date by a State (or political
subdivision thereof) that modified its agreement pursuant to section
418(e)(2) of Title 42, The Public Health and Welfare, see section
9002(d) of Pub. L. 99-509, set out as a note under section 418 of Title
42.
Amendment by Pub. L. 99-272 applicable to recoveries made on or
after Apr. 7, 1986, and applicable with respect to overpayments made
before, on, or after such date, see section 12401(c) of Pub. L.
99-272, set out as a note under section 503 of Title 42.
Amendment by section 491(d)(37) of Pub. L. 98-369 applicable to
obligations issued after Dec. 31, 1983, see section 491(f)(1) of Pub.
L. 98-369, set out as a note under section 62 of this title.
Amendment by section 531(d)(3) of Pub. L. 98-369 effective Jan. 1,
1985, see section 531(h) of Pub. L. 98-369, set out as an Effective
Date note under section 132 of this title.
Section 1073(b) of Pub. L. 98-369 provided that:
''(1) In general. -- Except as provided in paragraph (2), the
amendment made by subsection (a) (amending this section) shall take
effect on January 1, 1986.
''(2) Exception for certain states. -- In the case of any State the
legislature of which --
''(A) did not meet in a regular session which begins during 1984 and
after the date of the enactment of this Act (July 18, 1984), and
''(B) did not meet in a session which began before the date of the
enactment of this Act and remained in session for at least 25 calendar
days after such date of enactment,
the amendment made by subsection (a) shall take effect on January 1,
1987.''
Section 2661(o)(4) of Pub. L. 98-369 provided that the amendment
made by that section is effective Jan. 1, 1985.
Section 201(b) of Pub. L. 98-135 provided that: ''The amendments
made by subsection (a) (amending this section) shall apply to
remuneration paid after the date of the enactment of this Act (Oct. 24,
1983).''
Amendment by section 324(b)(1)-(4)(B) of Pub. L. 98-21 applicable to
remuneration paid after Dec. 31, 1984, except for certain employer
contributions made during 1984 under a qualified cash or deferred
arrangement, and except in the case of an agreement with certain
nonqualified deferred compensation plans in existence on Mar. 24, 1983,
see section 324(d) of Pub. L. 98-21 set out as a note under section
3121 of this title.
Amendment by section 327(c)(1)-(3) of Pub. L. 98-21 applicable to
remuneration paid after Dec. 31, 1984, see section 327(d)(3) of Pub.
L. 98-21, as amended, set out as a note under section 3121 of this
title.
Amendment by section 327(c)(4) of Pub. L. 98-21 applicable to
remuneration (other than amounts excluded under 26 U.S.C. 119) paid
after Mar. 4, 1983, and to any such remuneration paid on or before such
date which the employer treated as wages when paid, see section
327(d)(2) of Pub. L. 98-21, as amended, set out as a note under section
3121 of this title.
Amendment by section 328(c) of Pub. L. 98-21 applicable to
remuneration paid after Dec. 31, 1984, see section 328(d)(2) of Pub.
L. 98-21, set out as a note under section 3121 of this title.
Amendment by section 271(a) of Pub. L. 97-248 applicable to
remuneration paid after Dec. 31, 1982, see section 271(d)(1) of Pub.
L. 97-248, as amended, set out as a note under section 3301 of this
title.
Section 276(a)(2) of Pub. L. 97-248 provided that: ''The amendment
made by paragraph (1) (amending this section) shall apply with respect
to services performed after the date of the enactment of this Act (Sept.
3, 1982).''
Section 276(b)(3) of Pub. L. 97-248 provided that: ''The amendments
made by this subsection (amending this section) shall apply to
remuneration paid after December 31, 1982, and before January 1, 1984.''
Amendment by section 124(e)(2)(A) of Pub. L. 97-34 applicable to
remuneration paid after Dec. 31, 1981, see section 124(f) of Pub. L.
97-34, set out as an Effective Date of 1981 Amendment note under section
21 of this title.
Section 822(b) of Pub. L. 97-34, as amended by Pub. L. 97-362,
title II, 203, Oct. 25, 1982, 96 Stat. 1733; Pub. L. 98-369, div.
A, title X, 1074, July 18, 1984, 98 Stat. 1053; Pub. L. 99-272, title
XIII, 13303(c)(1), Apr. 7, 1986, 100 Stat. 327, provided that: ''The
amendments made by subsection (a) (amending this section) shall apply to
remuneration paid after December 31, 1980.''
For effective date of amendment by Pub. L. 96-499, see section
1141(c) of Pub. L. 96-499, set out as a note under section 3121 of this
title.
Amendment by Pub. L. 96-222 applicable to payments made on or after
Jan. 1, 1979, see section 101(b)(1)(E) of Pub. L. 96-222, set out as a
note under section 3121 of this title.
Section 4(c) of Pub. L. 96-84 provided that: ''The amendments made
by this section (amending this section) shall apply to remuneration paid
after December 31, 1979, for services performed after such date.''
Amendment by Pub. L. 95-600 applicable with respect to taxable years
beginning after Dec. 31, 1978, see section 164(d) of Pub. L. 95-600,
set out as an Effective Date note under section 127 of this title.
Amendment by Pub. L. 95-472 applicable with respect to taxable years
beginning after Dec. 31, 1976, see section 3(d) of Pub. L. 95-472,
set out as a note under section 3121 of this title.
Amendment by Pub. L. 95-216 applicable with respect to wages paid
after Dec. 31, 1978, see section 314(c) of Pub. L. 95-216, set out as
a note under section 3121 of this title.
Section 111(c) of Pub. L. 95-566 provided that: ''The amendments
made by this section (amending this section) shall apply with respect to
remuneration paid after December 31, 1977, for services performed after
such date.''
Section 112(b) of Pub. L. 94-566 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply with respect
to remuneration paid after December 31, 1977, for services performed
after such date.''
Section 113(b) of Pub. L. 94-566 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply with respect
to remuneration paid after December 31, 1977, for services performed
after such date.''
Section 114(c) of Pub. L. 94-566 provided that: ''The amendments
made by this section (amending this section and section 6157 of this
title) shall apply with respect to remuneration paid after December 31,
1977, for services performed after such date.''
Amendment by section 116(b) of Pub. L. 94-566 applicable with
respect to remuneration paid after Dec. 31 of the year in which the
Secretary of Labor approves for the first time an unemployment
compensation law submitted to him by the Virgin Islands for approval,
for services performed after such Dec. 31, see section 116(f)(2) of
Pub. L. 94-566, set out as a note under section 3304 of this title.
Section 211(d)(1) of Pub. L. 94-566 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to
remuneration paid after December 31, 1977.''
Section 101(c)(1) of Pub. L. 91-373 provided that: ''The amendments
made by subsections (a) and (b)(1) (amending this section and section
6157 of this title) shall apply with respect to calendar years beginning
after December 31, 1971.''
Section 102(c) of Pub. L. 91-373 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply with respect
to remuneration paid after December 31, 1971, for services performed
after such date.''
Section 103(b) of Pub. L. 91-373 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply with respect
to remuneration paid after December 31, 1971, for services performed
after such date.''
Section 105(c) of Pub. L. 91-373 provided that: ''The amendments
made by this section (amending this section) shall apply with respect to
service performed after December 31, 1971.''
Section 106(b) of Pub. L. 91-373 provided that: ''Subsection (a)
(amending this section) shall apply with respect to remuneration paid
after December 31, 1969.''
Section 302 of Pub. L. 91-373 provided that the amendment made by
that section is effective with respect to remuneration paid after Dec.
31, 1971.
Amendment by Pub. L. 91-53 applicable with respect to calendar years
beginning after Dec. 31, 1969, see section 4(a) of Pub. L. 91-53, set
out as an Effective Date note under section 6157 of this title.
Amendment by Pub. L. 90-248 applicable with respect to renumeration
paid after Jan. 2, 1968, see section 504(d) of Pub. L. 90-248, set
out as a note under section 3121 of this title.
Amendment by Pub. L. 88-650 applicable with respect to remuneration
paid on or after first day of first calendar month which begins more
than ten days after Oct. 13, 1964, see section 4(d) of Pub. L. 88-650,
set out as a note under section 3121 of this title.
Amendment by Pub. L. 87-792 applicable to taxable years beginning
after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a
note under section 22 of this title.
Amendment by Pub. L. 87-256 applicable with respect to service
performed after Dec. 31, 1961, see section 110(h)(3) of Pub. L.
87-256, set out as a note under section 3121 of this title.
Amendment by sections 531(c) and 532 to 534 of Pub. L. 86-778
applicable with respect to remuneration paid after 1961 for services
performed after 1961, see section 535 of Pub. L. 86-778, set out as a
note under section 3305 of this title.
Section 543(a) of Pub. L. 86-778 provided that the amendment made by
that section is effective with respect to remuneration paid after Dec.
31, 1960, for services performed after such date.
Amendment by Pub. L. 86-624 effective on Aug. 21, 1959, see section
18(k) of Pub. L. 86-624, set out as a note under section 3121 of this
title.
Amendment by Pub. L. 86-70 effective Jan. 3, 1959, see section
22(i) of Pub. L. 86-70, set out as a note under section 3121 of this
title.
Section 1 of act Sept. 1, 1954, provided that the amendment made by
that section is effective with respect to services performed after Dec.
31, 1955.
Section 4(c) of act Sept. 1, 1954, provided that the amendment made
by that section is effective with respect to services performed after
Dec. 31, 1954.
For purposes of this chapter, the term ''wages'' shall not include
the amount of any refund required under section 421 of Pub. L.
100-360, 42 U.S.C. 1395b note, see section 10202 of Pub. L. 101-239,
set out as a note under section 1395b of Title 42, The Public Health and
Welfare.
No monies appropriated by Pub. L. 101-136 to be used to implement or
enforce section 1151 of Pub. L. 99-514 or the amendments made by such
section, see section 528 of Pub. L. 101-136, set out as a note under
section 89 of this title.
For provisions directing that if any amendments made by subtitle B (
521-523) of title V of Pub. L. 102-318 require an amendment to any
plan, such plan amendment shall not be required to be made before the
first plan year beginning on or after Jan. 1, 1994, see section 523 of
Pub. L. 102-318, set out as a note under section 401 of this title.
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
Section 1705 of Pub. L. 99-514 provided that:
''(a) In General. -- For purposes of the Federal Unemployment Tax Act
(this chapter), service performed in the employ of a qualified Indian
tribal government shall not be treated as employment (within the meaning
of section 3306 of such Act) if it is service --
''(1) which is performed --
''(A) before, on, or after the date of the enactment of this Act
(Oct. 22, 1986), but before January 1, 1988, and
''(B) during a period in which the Indian tribal government is not
covered by a State unemployment compensation program, and
''(2) with respect to which the tax imposed under the Federal
Unemployment Tax Act has not been paid.
''(b) Definition. -- For purposes of this section, the term
'qualified Indian tribal government' means an Indian tribal government
the service for which is not covered by a State unemployment
compensation program on June 11, 1986.''
Students Employed by Summer Camps
Section 13303(b) of Pub. L. 99-272 provided that: ''Notwithstanding
paragraph (3) of section 276(b) of the Tax Equity and Fiscal
Responsibility Act of 1982 (see Effective Date of 1982 Amendments note
above), the amendments made by paragraphs (1) and (2) of such section
276(b) (amending this section) shall also apply to remuneration paid
after September 19, 1985.''
Section 324(b)(4)(C) of Pub. L. 98-21 provided that: ''Rules
similar to the rules of subsections (d) and (e) of section 3 of the Act
entitled 'An Act to amend the Omnibus Reconciliation Act of 1981 to
restore minimum benefits under the Social Security Act' (Public Law
97-123), approved December 29, 1981 (set out as notes under section 3121
of this title), shall apply in the administration of section
3306(b)(2)(A) of such Code (as amended by subparagraph (A)).''
Applicability of subsec. (c)(6) of this section to Federal land
banks, Federal intermediate credit banks, and banks for cooperatives,
see section 531(g) of Pub. L. 86-778, set out as a note under section
3305 of this title.
/1/ So in original. The semicolon probably should be a comma.
/2/ So in original. The comma probably should be a semicolon.
/3/ So in original. Probably should not be capitalized.
/4/ So in original. The comma probably should be a semicolon.
/5/ So in original. Probably should be followed by a period.
26 USC 3307. Deductions as constructive payments
TITLE 26 -- INTERNAL REVENUE CODE
Whenever under this chapter or any act of Congress, or under the law
of any State, an employer is required or permitted to deduct any amount
from the remuneration of an employee and to pay the amount deducted to
the United States, a State, or any political subdivision thereof, then
for purposes of this chapter the amount so deducted shall be considered
to have been paid to the employee at the time of such deduction.
(Aug. 16, 1954, ch. 736, 68A Stat. 454.)
26 USC 3308. Instrumentalities of the United States
TITLE 26 -- INTERNAL REVENUE CODE
Notwithstanding any other provision of law (whether enacted before or
after the enactment of this section) which grants to any instrumentality
of the United States an exemption from taxation, such instrumentality
shall not be exempt from the tax imposed by section 3301 unless such
other provision of law grants a specific exemption, by reference to
section 3301 (or the corresponding section of prior law), from the tax
imposed by such section.
(Added Pub. L. 86-778, title V, 531(d)(1), Sept. 13, 1960, 74 Stat.
983.)
Enacted before or after the enactment of this section, referred to in
text, means enacted before or after Sept. 13, 1960, the date of
approval of Pub. L. 86-778.
A prior section 3309 was renumbered section 3311.
Section applicable with respect to remuneration paid after 1961 for
services performed after 1961, see section 535 of Pub. L. 86-778, set
out as an Effective Date of 1960 Amendment note under section 3305 of
this title.
Applicability of this section to Federal land banks, Federal
intermediate credit banks, and banks for cooperatives, see section
531(g) of Pub. L. 86-778, set out as a note under section 3305 of this
title.
26 USC 3309. State law coverage of services performed for nonprofit
organizations or governmental entities
TITLE 26 -- INTERNAL REVENUE CODE
(a) State law requirements
For purposes of section 3304(a)(6) --
(1) except as otherwise provided in subsections (b) and (c), the
services to which this paragraph applies are --
(A) service excluded from the term ''employment'' solely by reason of
paragraph (8) of section 3306(c), and
(B) service excluded from the term ''employment'' solely by reason of
paragraph (7) of section 3306(c); and
(2) the State law shall provide that a governmental entity or any
other organization (or group of governmental entities or other
organizations) which, but for the requirements of this paragraph, would
be liable for contributions with respect to service to which paragraph
(1) applies may elect, for such minimum period and at such time as may
be provided by State law, to pay (in lieu of such contributions) into
the State unemployment fund amounts equal to the amounts of compensation
attributable under the State law to such service. The State law may
provide safeguards to ensure that governmental entities or other
organizations so electing will make the payments required under such
elections.
(b) Section not to apply to certain service
This section shall not apply to service performed --
(1) in the employ of (A) a church or convention or association of
churches, or (B) an organization which is operated primarily for
religious purposes and which is operated, supervised, controlled, or
principally supported by a church or convention or association of
churches;
(2) by a duly ordained, commissioned, or licensed minister of a
church in the exercise of his ministry or by a member of a religious
order in the exercise of duties required by such order;
(3) in the employ of a governmental entity referred to in paragraph
(7) of section 3306(c), if such service is performed by an individual in
the exercise of his duties --
(A) as an elected official;
(B) as a member of a legislative body, or a member of the judiciary,
of a State or political subdivision thereof;
(C) as a member of the State National Guard or Air National Guard;
(D) as an employee serving on a temporary basis in case of fire,
storm, snow, earthquake, flood, or similar emergency; or
(E) in a position which, under or pursuant to the State law, is
designated as (i) a major nontenured policymaking or advisory position,
or (ii) a policymaking or advisory position the performance of the
duties of which ordinarily does not require more than 8 hours per week;
(4) in a facility conducted for the purpose of carrying out a program
of --
(A) rehabilitation for individuals whose earning capacity is impaired
by age or physical or mental deficiency or injury, or
(B) providing remunerative work for individuals who because of their
impaired physical or mental capacity cannot be readily absorbed in the
competitive labor market,
by an individual receiving such rehabilitation or remunerative work;
(5) as part of an unemployment work-relief or work-training program
assisted or financed in whole or in part by any Federal agency or an
agency of a State or political subdivision thereof, by an individual
receiving such work relief or work training; and
(6) by an inmate of a custodial or penal institution.
(c) Nonprofit organizations must employ 4 or more
This section shall not apply to service performed during any calendar
year in the employ of any organization unless on each of some 20 days
during such calendar year or the preceding calendar year, each day being
in a different calendar week, the total number of individuals who were
employed by such organization in employment (determined without regard
to section 3306(c)(8) and by excluding service to which this section
does not apply by reason of subsection (b)) for some portion of the day
(whether or not at the same moment of time) was 4 or more.
(Added Pub. L. 91-373, title I, 104(b)(1), Aug. 10, 1970, 84 Stat.
697; amended Pub. L. 94-566, title I, 115(a), (b), (c)(2), (3), title
V, 506(a), Oct. 20, 1976, 90 Stat. 2670, 2671, 2687; Pub. L. 95-19,
title III, 302(b), Apr. 12, 1977, 91 Stat. 44.)
A prior section 3309 was renumbered section 3311.
1977 -- Subsec. (a)(2). Pub. L. 95-19 substituted ''(or group of
governmental entities or other organizations)'' for ''(or group of
organizations)''.
1976 -- Pub. L. 94-566, 115(c)(3), substituted ''services performed
for nonprofit organizations or governmental entities'' for ''certain
services performed for nonprofit organizations and for State hospitals
and institutions of higher education'' in section catchline.
Subsec. (a)(1)(B). Pub. L. 94-566, 115(a), struck out ''performed in
the employ of the State, or any instrumentality of the State or of the
State and one or more other States, for a hospital or institution of
higher education located in the State, if such service is'' after
''service''.
Subsec. (a)(2). Pub. L. 94-566, 506(a), substituted ''a governmental
entity or any other organization'' for ''an organization'', ''paragraph
(1)'' for ''paragraph (1)(A)'', and ''that governmental entities or
other organizations'' for ''that organizations''.
Subsec. (b)(3). Pub. L. 94-566, 115(b)(1), substituted reference to
services performed in the employ of a governmental entity referred to in
paragraph (7) of section 3306(c), if such services are performed by an
individual in the exercise of his duties as an elected official, as a
member of a legislative body, or a member of the judiciary, of a State
or political subdivision thereof, as a member of the State National
Guard or Air National Guard, as an employee serving on a temporary basis
in case of fire, storm, snow, earthquake, flood, or similar emergency,
or in a position which, under or pursuant to the State law, is
designated as a major nontenured policymaker or advisory position or a
policymaking or advisory position the performance of the duties of which
ordinarily does not require more than 8 hours per week, for reference to
services performed in the employ of a school which is not an institution
of higher education.
Subsec. (b)(6). Pub. L. 94-566, 115(b)(2), substituted ''by an
inmate of a custodial or penal institution'' for ''for a hospital in a
State prison or other State correctional institution by an inmate of the
prison or correctional institution''.
Subsec. (d). Pub. L. 94-566, 115(c)(2), struck out subsec. (d)
which defined ''institution of higher education''. See section 3304(f)
of this title.
Section 302(d)(2) of Pub. L. 95-19 provided that: ''The amendment
made by subsection (b) (amending this section) shall take effect as if
included in the amendments made by section 506 of the Unemployment
Compensation Amendments of 1976 (which amended this section in 1976, see
Effective Date of 1976 Amendment note below).''
For effective date of amendment by section 115(a), (b), (c)(2), (3)
of Pub. L. 94-566, see section 115(d) of Pub. L. 94-566, set out as a
note under section 3304 of this title.
For effective date of amendment by section 506(a) of Pub. L.
94-566, see section 506(c) of Pub. L. 94-566, set out as a note under
section 3304 of this title.
Section applicable with respect to certifications of State laws for
1972 and subsequent years, but only with respect to service performed
after Dec. 31, 1971, see section 104(d)(1) of Pub. L. 91-373, set out
as a note under section 3304 of this title.
26 USC 3310. Judicial review
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
Whenever under section 3303(b) or section 3304(c) the Secretary of
Labor makes a finding pursuant to which he is required to withhold a
certification with respect to a State under such section, such State
may, within 60 days after the Governor of the State has been notified of
such action, file with the United States court of appeals for the
circuit in which such State is located or with the United States Court
of Appeals for the District of Columbia, a petition for review of such
action. A copy of the petition shall be forthwith transmitted by the
clerk of the court to the Secretary of Labor. The Secretary of Labor
thereupon shall file in the court the record of the proceedings on which
he based his action as provided in section 2112 of title 28 of the
United States Code.
(b) Findings of fact
The findings of fact by the Secretary of Labor, if supported by
substantial evidence, shall be conclusive; but the court, for good
cause shown, may remand the case to the Secretary of Labor to take
further evidence, and the Secretary of Labor may thereupon make new or
modified findings of fact and may modify his previous action, and shall
certify to the court the record of the further proceedings. Such new or
modified findings of fact shall likewise be conclusive if supported by
substantial evidence.
(c) Jurisdiction of court; review
The court shall have jurisdiction to affirm the action of the
Secretary of Labor or to set it aside, in whole or in part. The
judgment of the court shall be subject to review by the Supreme Court of
the United States upon certiorari or certification as provided in
section 1254 of title 28 of the United States Code.
(d) Stay of Secretary of Labor's action
(1) The Secretary of Labor shall not withhold any certification under
section 3303(b) or section 3304(c) until the expiration of 60 days after
the Governor of the State has been notified of the action referred to in
subsection (a) or until the State has filed a petition for review of
such action, whichever is earlier.
(2) The commencement of judicial proceedings under this section shall
stay the Secretary of Labor's action for a period of 30 days, and the
court may thereafter grant interim relief if warranted, including a
further stay of the Secretary of Labor's action and including such other
relief as may be necessary to preserve status or rights.
(Added Pub. L. 91-373, title I, 131(b)(1), Aug. 10, 1970, 84 Stat.
703; amended Pub. L. 94-455, title XIX, 1906(b)(13)(F), (H), Oct. 4,
1976, 90 Stat. 1835; Pub. L. 98-620, title IV, 402(28)(A), Nov. 8,
1984, 98 Stat. 3359.)
1984 -- Subsec. (e). Pub. L. 98-620 struck out subsec. (e) which
had provided that any judicial proceedings under this section were
entitled to, and upon request of the Secretary of Labor or of the State
would receive, a preference and would be heard and determined as
expeditiously as possible.
1976 -- Subsec. (d)(2). Pub. L. 94-455, 1906(b)(13)(F), substituted
''the Secretary of Labor's action'' for ''the Secretary's action'' in
two places.
Subsec. (e). Pub. L. 94-455, 1906(b)(13)(H), substituted ''of the
Secretary of Labor'' for ''of the Secretary''.
Amendment by Pub. L. 98-620 not applicable to cases pending on Nov.
8, 1984, see section 403 of Pub. L. 98-620, set out as an Effective
Date note under section 1657 of Title 28, Judiciary and Judicial
Procedure.
26 USC 3311. Short title
TITLE 26 -- INTERNAL REVENUE CODE
This chapter may be cited as the ''Federal Unemployment Tax Act.''
(Aug. 16, 1954, ch. 736, 68A Stat. 454, 3308; renumbered 3309,
Sept. 13, 1960, Pub. L. 86-778, title V, 531(d)(1), 74 Stat. 983;
renumbered 3311, Aug. 10, 1970, Pub. L. 91-373, title I, 104(b)(1), 84
Stat. 697.)
Pub. L. 94-566, 1, Oct. 20, 1976, 90 Stat. 2667, provided that:
''This Act (enacting section 603a of Title 42, The Public Health and
Welfare, amending section 3304 of this title and provisions set out as
notes under sections 3301, 3303, 3304, 3306, 3309, and 6157 of this
title, sections 8501, 8503, 8504, 8505, 8506, 8521, and 8522 of Title 5,
Government Organization and Employees, sections 49b and 49d of Title 29,
Labor, and sections 607, 1101, 1105, 1301, 1321, 1382, 1382a, 1382d, and
1382e of Title 42, and enacting provisions set out as notes under
sections 3301, 3303, 3304, and 3306 of this title, sections 8501 and
8506 of Title 5, and sections 607, 1101, 1321, 1382, 1382d, 1382e, and
1396a of Title 42) may be cited as the 'Unemployment Compensation
Amendments of 1976'.''
Pub. L. 94-45, 1, June 30, 1975, 89 Stat. 236, provided that:
''This Act (amending sections 44 and 3302 of this title and amending
provisions set out as notes under sections 44 and 3304 of this title and
enacting provisions set out as notes under sections 3302 and 3304 of
this title) may be cited as the 'Emergency Compensation and Special
Unemployment Assistance Extension Act of 1975'.''
Section 1 of Pub. L. 91-373 provided: ''That this Act (enacting
sections 3309 and 3310 of this title and sections 504, 1106, 1107, and
1108 of Title 42, The Public Health and Welfare, repealing section 8524
of Title 5, Government Organization and Employees, and amending sections
1563, 3301 to 3306, and 6157 of this title, sections 77c and 78c of
Title 15, Commerce and Trade, and sections 1101, 1102, 1103, 1105, and
1323 of Title 42, and enacting provisions set out as notes under
sections 3301 to 3304, 3306, and 6157 of this title, section 77c of
Title 15, and section 1101 of Title 42) may be cited as the 'Employment
Security Amendments of 1970'.''
26 USC CHAPTER 23A -- RAILROAD UNEMPLOYMENT REPAYMENT TAX
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
3321. Imposition of tax.
3322. Definitions.
1990 -- Pub. L. 101-508, title XI, 11704(a)(18), Nov. 5, 1990, 104
Stat. 1388-519, substituted ''23A -- '' for ''23A.'' in chapter
heading.
1988 -- Pub. L. 100-647, title VII, 7106(a), Nov. 10, 1988, 102
Stat. 3772, reenacted chapter heading and item 3321 without change,
substituted ''Definitions'' for ''Taxable period'' in item 3322, and
omitted item 3323 ''Other definitions''.
26 USC 3321. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
There is hereby imposed on every rail employer for each calendar
month an excise tax, with respect to having individuals in his employ,
equal to 4 percent of the total rail wages paid by him during such
month.
(b) Tax on employee representatives
(1) In general
There is hereby imposed on the income of each employee representative
a tax equal to 4 percent of the rail wages paid to him during the
calendar month.
(2) Determination of wages
The rail wages of an employee representative for purposes of
paragraph (1) shall be determined in the same manner and with the same
effect as if the employee organization by which such employee
representative is employed were a rail employer.
(c) Termination if loans to railroad unemployment fund repaid
The tax imposed by this section shall not apply to rail wages paid on
or after the 1st day of any calendar month if, as of such 1st day, there
is --
(1) no balance of transfers made before October 1, 1985, to the
railroad unemployment insurance account under section 10(d) of the
Railroad Unemployment Insurance Act, and
(2) no unpaid interest on such transfers.
(Added Pub. L. 98-76, title II, 231(a), Aug. 12, 1983, 97 Stat.
426; amended Pub. L. 99-272, title XIII, 13301(a), Apr. 7, 1986, 100
Stat. 325; Pub. L. 100-647, title I, 1018(u)(17), title VIII,
7106(a), Nov. 10, 1988, 102 Stat. 3590, 3772.)
Section 10(d) of the Railroad Unemployment Insurance Act, referred to
in subsec. (c)(1), is classified to section 360(d) of Title 45,
Railroads.
1988 -- Pub. L. 100-647, 7106(a), amended section generally,
revising and restating provisions of subsecs. (a) and (b) and
specifying imposition of 4 percent tax on rail wages rather than a tax
based on the ''applicable percentage'' of rail wages, and in subsec.
(c) substituting provisions relating to termination if loans to railroad
unemployment fund repaid for provisions relating to rates of tax.
Pub. L. 100-647, 1018(u)(17), added a period at end of par. (4).
1986 -- Subsec. (c). Pub. L. 99-272 amended subsec. (c) generally.
Prior to amendment subsec. (c) read as follows:
''(c) Rate of Tax. -- For purposes of this section --
''(1) For taxable period july 1 through december 31, 1986. -- The
applicable percentage for the taxable period beginning on July 1, 1986,
and ending on December 31, 1986, shall be 2 percent.
''(2) Subsequent taxable periods. -- The applicable percentage for
any taxable period beginning after 1986 shall be the sum of --
''(A) 2 percent, plus
''(B) 0.3 percent for each preceding taxable period.
In no event shall the applicable percentage exceed 5 percent.''
Amendment by section 1018(u)(17) of Pub. L. 100-647 effective,
except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates,
see section 1019(a) of Pub. L. 100-647, set out as a note under section
1 of this title.
Section 7106(d) of Pub. L. 100-647 provided that: ''The amendments
made by this section (amending this section and sections 3322, 6157,
6201, 6317, 6513, and 6601 of this title, omitting section 3323 of this
title, and amending provisions set out as a note under section 231n of
Title 45, Railroads), and the provisions of subsection (b) (set out
below), shall apply to remuneration paid after December 31, 1988.''
Section 231(d) of Pub. L. 98-76 provided that: ''The amendments
made by this section (enacting this chapter and amending sections 6157,
6201, 6317, 6513, and 6601 of this title) shall apply to remuneration
paid after June 30, 1986.''
Section 7106(b) of Pub. L. 100-647 provided that:
''(1) In general. -- In the case of any calendar month beginning
before January 1, 1991 --
''(A) there shall be substituted for '4 percent' in subsections (a)
and (b) of section 3321 of the 1986 Code the percentage equal to the sum
of --
''(i) 4 percent, plus
''(ii) the surtax rate (if any) for such calendar month, and
''(B) subsection (c) of such section shall not apply to so much of
the tax imposed by such section as is attributable to the surtax rate.
''(2) Surtax rate. -- For purposes of paragraph (1), the surtax rate
shall be --
''(A) 3.5 percent for each month during a calendar year if, as of
September 30, of the preceding calendar year, there was a balance of
transfers (or unpaid interest thereon) made after September 30, 1985, to
the railroad unemployment insurance account under section 10(d) of the
Railroad Unemployment Insurance Act (45 U.S.C. 360(d)), and
''(B) zero for any other calendar month.''
26 USC 3322. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Rail employer
For purposes of this chapter, the term ''rail employer'' means any
person who is an employer as defined in section 1 of the Railroad
Unemployment Insurance Act.
(b) Rail wages
For purposes of this chapter, the term ''rail wages'' means, with
respect to any calendar month, so much of the remuneration paid during
such month which is subject to contributions under section 8(a) of the
Railroad Unemployment Insurance Act.
(c) Employee representative
For purposes of this chapter, the term ''employee representative''
has the meaning given such term by section 1 of the Railroad
Unemployment Insurance Act.
(d) Certain rules made applicable
For purposes of this chapter, rules similar to the rules of section
3307 and 3308 shall apply.
(Added Pub. L. 98-76, title II, 231(a), Aug. 12, 1983, 97 Stat.
427; amended Pub. L. 99-272, title XIII, 13301(d), Apr. 7, 1986, 100
Stat. 327; Pub. L. 100-647, title VII, 7106(a), Nov. 10, 1988, 102
Stat. 3773.)
Section 1 of the Railroad Unemployment Insurance Act, referred to in
subsecs. (a) and (c), is classified to section 351 of Title 45,
Railroads.
Section 8(a) of the Railroad Unemployment Insurance Act, referred to
in subsec. (b), is classified to section 358(a) of Title 45.
1988 -- Pub. L. 100-647 amended section generally, substituting
present provisions for former provisions relating to taxable period,
which had provided, in subsec. (a), for a general rule and, in subsec.
(b), for earlier termination if loans to rail unemployment fund repaid.
1986 -- Subsec. (a)(2), (3). Pub. L. 99-272, 13301(d)(1), struck
out ''and before 1990, and'' after ''1986'' in par. (2) and struck out
par. (3) relating to the period beginning on Jan. 1, 1990, and ending
on Sept. 30, 1990.
Subsec. (b). Pub. L. 99-272, 13301(d)(2), substituted ''The basic
rate under section 3321(c)(1)(A) of the tax imposed by section 3321
shall not apply'' for ''The tax imposed by this chapter shall not
apply'' in introductory provision, and inserted ''made before October 1,
1985,'' in par. (1).
Amendment by Pub. L. 100-647 applicable to remuneration paid after
Dec. 31, 1988, see section 7106(d) of Pub. L. 100-647, set out as a
note under section 3321 of this title.
For purposes of this chapter, the term ''rail wages'' shall not
include the amount of any refund required under section 421 of Pub. L.
100-360, 42 U.S.C. 1395b note, see section 10202 of Pub. L. 101-239,
set out as a note under section 1395b of Title 42, The Public Health and
Welfare.
26 USC ( 3323. Omitted)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added Pub. L. 98-76, title II, 231(a), Aug. 12, 1983, 97
Stat. 427; amended Pub. L. 99-272, title XIII, 13301(b), Apr. 7,
1986, 100 Stat. 326, contained definitions, prior to the general
amendment of this chapter by Pub. L. 100-647, 7106(a). See section
3322 of this title.
26 USC CHAPTER 24 -- COLLECTION OF INCOME TAX AT SOURCE ON WAGES
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
3401. Definitions.
3402. Income tax collected at source.
3403. Liability for tax.
3404. Return and payment by governmental employer.
3405. Special rules for pensions, annuities, and certain other
deferred income. /1/
3406. Backup withholding.
1983 -- Pub. L. 98-67, title I, 102(a), 104(d)(4), Aug. 5, 1983,
97 Stat. 369, 380, added item 3406 and repealed amendments made by Pub.
L. 97-248. See 1982 Amendment note below.
1982 -- Pub. L. 97-248, title III, 307(b)(4), 308(a), Sept. 3,
1982, 96 Stat. 590, 591, provided that, applicable to payments of
interest, dividends, and patronage dividends paid or credited after June
30, 1983, the caption of chapter 24 is amended by striking out ''ON
WAGES'', items for subchapters A and B are added in analysis, and
heading ''Subchapter A -- Withholding From Wages'' is added. Section
102(a), (b) of Pub. L. 98-67, title I, Aug. 5, 1983, 97 Stat. 369,
repealed subtitle A ( 301-308) of title III of Pub. L. 97-248 as of
the close of June 30, 1983, and provided that the Internal Revenue Code
of 1954 (now 1986) (this title) shall be applied and administered
(subject to certain exceptions) as if such subtitle A (and the
amendments made by such subtitle A) had not been enacted.
title 48 section 1421i.
/1/ Editorially supplied. Section 3405 added by Pub. L. 97-248
without corresponding amendment of analysis.
26 USC 3401. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Wages
For purposes of this chapter, the term ''wages'' means all
remuneration (other than fees paid to a public official) for services
performed by an employee for his employer, including the cash value of
all remuneration (including benefits) paid in any medium other than
cash; except that such term shall not include remuneration paid --
(1) for active service performed in a month for which such employee
is entitled to the benefits of section 112 (relating to certain combat
pay of members of the Armed Forces of the United States); or
(2) for agricultural labor (as defined in section 3121(g)) unless the
remuneration paid for such labor is wages (as defined in section
3121(a)); or
(3) for domestic service in a private home, local college club, or
local chapter of a college fraternity or sorority; or
(4) for service not in the course of the employer's trade or business
performed in any calendar quarter by an employee, unless the cash
remuneration paid for such service is $50 or more and such service is
performed by an individual who is regularly employed by such employer to
perform such service. For purposes of this paragraph, an individual
shall be deemed to be regularly employed by an employer during a
calendar quarter only if --
(A) on each of some 24 days during such quarter such individual
performs for such employer for some portion of the day service not in
the course of the employer's trade or business; or
(B) such individual was regularly employed (as determined under
subparagraph (A)) by such employer in the performance of such service
during the preceding calendar quarter; or
(5) for services by a citizen or resident of the United States for a
foreign government or an international organization; or
(6) for such services, performed by a nonresident alien individual,
as may be designated by regulations prescribed by the Secretary; or
((7) Repealed. Pub. L. 89-809, title I, 103(k), Nov. 13, 1966, 80
Stat. 1554)
(8)(A) for services for an employer (other than the United States or
any agency thereof) --
(i) performed by a citizen of the United States if, at the time of
the payment of such remuneration, it is reasonable to believe that such
remuneration will be excluded from gross income under section 911; or
(ii) performed in a foreign country or in a possession of the United
States by such a citizen if, at the time of the payment of such
remuneration, the employer is required by the law of any foreign country
or possession of the United States to withhold income tax upon such
remuneration; or
(B) for services for an employer (other than the United States or any
agency thereof) performed by a citizen of the United States within a
possession of the United States (other than Puerto Rico), if it is
reasonable to believe that at least 80 percent of the remuneration to be
paid to the employee by such employer during the calendar year will be
for such services; or
(C) for services for an employer (other than the United States or any
agency thereof) performed by a citizen of the United States within
Puerto Rico, if it is reasonable to believe that during the entire
calendar year the employee will be a bona fide resident of Puerto Rico;
or
(D) for services for the United States (or any agency thereof)
performed by a citizen of the United States within a possession of the
United States to the extent the United States (or such agency) withholds
taxes on such remuneration pursuant to an agreement with such
possession; or
(9) for services performed by a duly ordained, commissioned, or
licensed minister of a church in the exercise of his ministry or by a
member of a religious order in the exercise of duties required by such
order; or
(10)(A) for services performed by an individual under the age of 18
in the delivery or distribution of newspapers or shopping news, not
including delivery or distribution to any point for subsequent delivery
or distribution; or
(B) for services performed by an individual in, and at the time of,
the sale of newspapers or magazines to ultimate consumers, under an
arrangement under which the newspapers or magazines are to be sold by
him at a fixed price, his compensation being based on the retention of
the excess of such price over the amount at which the newspapers or
magazines are charged to him, whether or not he is guaranteed a minimum
amount of compensation for such services, or is entitled to be credited
with the unsold newspapers or magazines turned back; or
(11) for services not in the course of the employer's trade or
business, to the extent paid in any medium other than cash; or
(12) to, or on behalf of, an employee or his beneficiary --
(A) from or to a trust described in section 401(a) which is exempt
from tax under section 501(a) at the time of such payment unless such
payment is made to an employee of the trust as remuneration for services
rendered as such employee and not as a beneficiary of the trust; or
(B) under or to an annuity plan which, at the time of such payment,
is a plan described in section 403(a); or
(C) for a payment described in section 402(h)(1) and (2) if, at the
time of such payment, it is reasonable to believe that the employee will
be entitled to an exclusion under such section for payment; or
(13) pursuant to any provision of law other than section 5(c) or 6(1)
of the Peace Corps Act, for service performed as a volunteer or
volunteer leader within the meaning of such Act; or
(14) in the form of group-term life insurance on the life of an
employee; or
(15) to or on behalf of an employee if (and to the extent that) at
the time of the payment of such remuneration it is reasonable to believe
that a corresponding deduction is allowable under section 217
(determined without regard to section 274(n)); or
(16)(A) as tips in any medium other than cash;
(B) as cash tips to an employee in any calendar month in the course
of his employment by an employer unless the amount of such cash tips is
$20 or more;
(17) for service described in section 3121(b)(20);
(18) for any payment made, or benefit furnished, to or for the
benefit of an employee if at the time of such payment or such furnishing
it is reasonable to believe that the employee will be able to exclude
such payment or benefit from income under section 127 or 129;
(19) any benefit provided to or on behalf of an employee if at the
time such benefit is provided it is reasonable to believe that the
employee will be able to exclude such benefit from income under section
74(c), 117, or 132; or
(20) for any medical care reimbursement made to or for the benefit of
an employee under a self-insured medical reimbursement plan (within the
meaning of section 105(h)(6)).
(b) Payroll period
For purposes of this chapter, the term ''payroll period'' means a
period for which a payment of wages is ordinarily made to the employee
by his employer, and the term ''miscellaneous payroll period'' means a
payroll period other than a daily, weekly, biweekly, semimonthly,
monthly, quarterly, semiannual or annual payroll period.
(c) Employee
For purposes of this chapter, the term ''employee'' includes an
officer, employee, or elected official of the United States, a State, or
any political subdivision thereof, or the District of Columbia, or any
agency or instrumentality of any one or more of the foregoing. The term
''employee'' also includes an officer of a corporation.
(d) Employer
For purposes of this chapter, the term ''employer'' means the person
for whom an individual performs or performed any service, of whatever
nature, as the employee of such person, except that --
(1) if the person for whom the individual performs or performed the
services does not have control of the payment of the wages for such
services, the term ''employer'' (except for purposes of subsection (a))
means the person having control of the payment of such wages, and
(2) in the case of a person paying wages on behalf of a nonresident
alien individual, foreign partnership, or foreign corporation, not
engaged in trade or business within the United States, the term
''employer'' (except for purposes of subsection (a)) means such person.
(e) Number of withholding exemptions claimed
For purposes of this chapter, the term ''number of withholding
exemptions claimed'' means the number of withholding exemptions claimed
in a withholding exemption certificate in effect under section 3402(f),
or in effect under the corresponding section of prior law, except that
if no such certificate is in effect, the number of withholding
exemptions claimed shall be considered to be zero.
(f) Tips
For purposes of subsection (a), the term ''wages'' includes tips
received by an employee in the course of his employment. Such wages
shall be deemed to be paid at the time a written statement including
such tips is furnished to the employer pursuant to section 6053(a) or
(if no statement including such tips is so furnished) at the time
received.
((g) Repealed. Pub. L. 101-140, title II, 203(a)(2), Nov. 8, 1989,
103 Stat. 830)
(h) Crew leader rules to apply
Rules similar to the rules of section 3121(o) shall apply for
purposes of this chapter.
(Aug. 16, 1954, ch. 736, 68A Stat. 455; Aug. 9, 1955, ch. 681, 69
Stat. 616; Sept. 21, 1961, Pub. L. 87-256, 110(g)(1), 75 Stat. 537;
Sept. 22, 1961, Pub. L. 87-293, title II, 201(c), 75 Stat. 625; Oct.
10, 1962, Pub. L. 87-792, 7(l), 76 Stat. 830; Feb. 26, 1964, Pub. L.
88-272, title II, 204(b), 213(c), 78 Stat. 36, 52; July 30, 1965,
Pub. L. 89-97, title III, 313(d)(1), (2), 79 Stat. 383, 384; Nov. 13,
1966, Pub. L. 89-809, title I, 103(k), 80 Stat. 1554; Apr. 26, 1972,
Pub. L. 92-279, 2, 86 Stat. 125; Sept. 2, 1974, Pub. L. 93-406, title
II, 2002(g)(7), 88 Stat. 970; Oct. 4, 1976, Pub. L. 94-455, title
XII, 1207(e)(1)(C), title XV, 1501(b)(7), title XIX, 1903(c),
1906(b)(13)(A), 90 Stat. 1707, 1736, 1810, 1834; Nov. 6, 1978, Pub. L.
95-600, title I, 164(b)(1), 92 Stat. 2813; Nov. 8, 1978, Pub. L.
95-615, 207(a), 92 Stat. 3108; Apr. 1, 1980, Pub. L. 96-222, title I,
103(a)(13)(A), 94 Stat. 213; Aug. 13, 1981, Pub. L. 97-34, title I,
112(b)(5), 124(e)(2)(A), title III, 311(h)(6), 95 Stat. 195, 200, 282;
Jan. 12, 1983, Pub. L. 97-448, title I, 103(c)(12)(B), 96 Stat. 2377;
July 18, 1984, Pub. L. 98-369, div. A, title IV, 491(d)(38), title V,
531(d)(4), 98 Stat. 851, 885; Oct. 22, 1986, Pub. L. 99-514, title I,
122(e)(4), title XII, 1272(c), 100 Stat. 2112, 2594; Nov. 10, 1988,
Pub. L. 100-647, title I, 1001(g)(4)(B)(iii), 1011(f)(9),
1011B(a)(22)(D), (33), 102 Stat. 3352, 3463, 3486, 3488; Nov. 8, 1989,
Pub. L. 101-140, title II, 203(a)(2), 103 Stat. 830; Dec. 19, 1989,
Pub. L. 101-239, title VII, 7631(a), (b), 103 Stat. 2378; Nov. 5,
1990, Pub. L. 101-508, title XI, 11703(f)(1), 104 Stat. 1388-517.)
Sections 5(c) and 6(1) of the Peace Corps Act, referred to in subsec.
(a)(13), are classified to sections 2504(c) and 2505(1), respectively,
of Title 22, Foreign Relations and Intercourse.
1990 -- Subsec. (a)(20). Pub. L. 101-508 added par. (20).
1989 -- Subsec. (a)(2). Pub. L. 101-239, 7631(a), amended par. (2)
generally. Prior to amendment, par. (2) read as follows: ''for
agricultural labor (as defined in section 3121(g)); or''.
Subsec. (g). Pub. L. 101-140 amended this section to read as if
amendments by Pub. L. 100-647, 1011B(a)(22)(D), had not been enacted,
see 1988 Amendment note below.
Subsec. (h). Pub. L. 101-239, 7631(b), added subsec. (h).
1988 -- Subsec. (a)(12)(C). Pub. L. 100-647, 1011(f)(9),
substituted ''section 402(h)(1) and (2)'' for ''section 219'' and ''an
exclusion'' for ''a deduction''.
Subsec. (a)(15). Pub. L. 100-647, 1001(g)(4)(B)(iii), inserted
''(determined without regard to section 274(n))'' after ''section 217''.
Subsec. (a)(19), (20). Pub. L. 100-647, 1011B(a)(33), redesignated
par. (20) as (19) and struck out former par. (19) which excluded
medical care reimbursement made to or for benefit of employee under
self-insured medical reimbursement plan.
Subsec. (g). Pub. L. 100-647, 1011B(a)(22)(D), added subsec. (g)
relating to benefits provided under certain employee benefit plans.
1986 -- Subsec. (a)(8)(D). Pub. L. 99-514, 1272(c), added subpar.
(D).
Subsec. (a)(20). Pub. L. 99-514, 122(e)(4), inserted reference to
section 74(c).
1984 -- Subsec. (a). Pub. L. 98-369, 531(d)(4)(A), inserted
''(including benefits)'' in introductory provisions.
Subsec. (a)(12). Pub. L. 98-369, 491(d)(38), struck out subpar. (C)
which provided: ''under or to a bond purchase plan which, at the time
of such payment, is a qualified bond purchase plan described in section
405(a);'' and redesignated subpar. (D) as (C).
Subsec. (a)(20). Pub. L. 98-369, 531(d)(4)(B), added par. (20).
1983 -- Subsec. (a)(12)(D). Pub. L. 97-448 substituted ''section
219'' for ''section 219(a)''.
1981 -- Subsec. (a)(12)(D). Pub. L. 97-34, 311(h)(6), substituted
''section 219(a)'' for ''section 219(a) or 220(a)''.
Subsec. (a)(18). Pub. L. 97-34, 124(e)(2)(A), substituted ''section
127 or 129'' for ''section 127''.
Pub. L. 97-34, 112(b)(5), redesignated par. (19) as (18). Former
par. (18), relating to remuneration paid to or on behalf of an employee
if (and to the extent that) at the time of the payment of such
remuneration it was reasonable to believe that a corresponding deduction
was allowable under section 913 (relating to deduction for certain
expenses of living abroad), was struck out.
Subsec. (a)(19), (20). Pub. L. 97-34, 112(b)(5), redesignated par.
(20) as (19). Former par. (19) redesignated (18).
1980 -- Subsec. (a)(18) to (20). Pub. L. 96-222 redesignated par.
(18), added by Pub. L. 95-600, as (19), in par. (19) as so
redesignated, substituted ''section 127; or'' for ''section 124.'', and
added par. (20).
1978 -- Subsec. (a)(18). Pub. L. 95-615 added par. (18) relating to
payments or benefits excludable from income under section 124.
Pub. L. 95-600 added par. (18) relating to remuneration for which a
corresponding deduction is allowable under section 913.
1976 -- Subsec. (a)(6). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (a)(12)(D). Pub. L. 94-455, 1501(b)(7), inserted ''or
220(a)'' after ''section 219(a)''.
Subsec. (a)(17). Pub. L. 94-455, 1207(e)(1)(C), added par. (17).
Subsec. (c). Pub. L. 94-455, 1903(c), struck out ''Territory'' after
''a State''.
1974 -- Subsec. (a)(12)(D). Pub. L. 93-406 added subpar. (D).
1972 -- Subsec. (a)(1). Pub. L. 92-279 struck out ''as a member of
the Armed Forces of the United States'' after ''active service'',
substituted ''employee'' for ''member'', and parenthetical text
''(relating to certain combat pay of members of the Armed Forces of the
United States)''.
1966 -- Subsec. (a)(6), (7). Pub. L. 89-809, 103(k), struck out
par. (6) dealing with services performed by nonresident alien
individuals other than residents of contiguous countries who enter and
leave the United States at frequent intervals, residents of Puerto Rico
if such services are performed as an employee of the United States or
any agency thereof, or individuals temporarily present in the United
States as nonimmigrants under certain conditions, redesignated par. (7)
as (6), and in par (6) as so redesignated, struck out ''who is a
resident of a contiguous country and who enters and leaves the United
States at frequent intervals'' after ''nonresident alien individual''.
1965 -- Subsec. (a)(16). Pub. L. 89-97, 313(d)(2), added par.
(16).
Subsec. (f). Pub. L. 89-97, 313(d)(1), added subsec. (f).
1964 -- Subsec. (a)(14). Pub. L. 88-272, 204(b), added par. (14).
Subsec. (a)(15). Pub. L. 88-272, 213(c), added par. (15).
1962 -- Subsec. (a)(12)(B), (C). Pub. L. 87-792 substituted ''is a
plan described in section 403(a)'' for ''meets the requirements of
section 401(a)(3), (4), (5), and (6)'', in subpar. (B), and added
subpar. (C).
1961 -- Subsec. (a)(6)(C). Pub. L. 87-256 added subpar. (C).
Subsec. (a)(13). Pub. L. 87-293 added par. (13).
1955 -- Subsec. (a). Act Aug. 9, 1955, excluded from definition of
wages, remuneration paid for services performed in a possession of the
United States by a United States citizen if the employer is required by
the law of the possession to withhold income tax on the remuneration.
Section 11703(f)(2) of Pub. L. 101-508 provided that: ''The
amendment made by paragraph (1) (amending this section) shall apply as
if included in the amendments made by section 1151 of the Tax Reform Act
of 1986 (Pub. L. 99-514, see Effective Date of 1986 Amendment note set
out under section 79 of this title) but shall not apply to any amount
paid before the date of the enactment of this Act (Nov. 5, 1990) which
the employer treated as wages for purposes of chapter 24 of the Internal
Revenue Code of 1986 when paid.''
Section 7631(c) of Pub. L. 101-239 provided that: ''The amendments
made by this section (amending this section) shall apply to remuneration
paid after December 31, 1989.''
Amendment by Pub. L. 101-140 effective as if included in section
1151 of Pub. L. 99-514, see section 203(c) of Pub. L. 101-140, set out
as a note under section 79 of this title.
Amendment by sections 1001(g)(4)(B)(iii), 1011(f)(9), and
1011B(a)(33) of Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Amendment by section 1011B(a)(22)(D) of Pub. L. 100-647 not
applicable to any individual who separated from service with the
employer before Jan. 1, 1989, see section 1011B(a)(22)(F) of Pub. L.
100-647, set out as a note under section 3121 of this title.
Amendment by section 122(e)(4) of Pub. L. 99-514 applicable to
prizes and awards granted after Dec. 31, 1986, see section 151(c) of
Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 1272(c) of Pub. L. 99-514 applicable to taxable
years beginning after Dec. 31, 1986, with certain exceptions and
qualifications, see section 1277 of Pub. L. 99-514, set out as a note
under section 931 of this title.
Amendment by section 491(d)(38) of Pub. L. 98-369 applicable to
obligations issued after Dec. 31, 1983, see section 491(f)(1) of Pub.
L. 98-369, set out as a note under section 62 of this title.
Amendment by section 531(d)(4) of Pub. L. 98-369 effective Jan. 1,
1985, see section 531(h) of Pub. L. 98-369, set out as an Effective
Date note under section 132 of this title.
Amendment by Pub. L. 97-448 effective, except as otherwise provided,
as if it had been included in the provision of the Economic Recovery Tax
Act of 1981, Pub. L. 97-34, to which such amendment relates, see
section 109 of Pub. L. 97-448, set out as a note under section 1 of
this title.
Amendment by section 112(b)(5) of Pub. L. 97-34 applicable with
respect to taxable years beginning after Dec. 31, 1981, see section 115
of Pub. L. 97-34, set out as a note under section 911 of this title.
Amendment by section 124(e)(2)(A) of Pub. L. 97-34 applicable to
remuneration paid after Dec. 31, 1981, see section 124(f)(2) of Pub.
L. 97-34, set out as a note under section 21 of this title.
Amendment by section 311(h)(6) of Pub. L. 97-34 applicable to
taxable years beginning after Dec. 31, 1981, see section 311(i)(1) of
Pub. L. 97-34, set out as a note under section 219 of this title.
Amendment by Pub. L. 96-222 effective, except as otherwise provided,
as if it had been included in the provisions of the Revenue Act of 1978,
Pub. L. 95-600, to which such amendment relates, see section 201 of
Pub. L. 96-222, set out as a note under section 32 of this title.
Amendment by Pub. L. 95-615 applicable to remuneration paid after
Nov. 8, 1978, but with taxpayers allowed to elect not to have the
amendment apply with respect to any taxable year beginning after Dec.
31, 1977, and before Jan. 1, 1979, see section 209(b), (c) of Pub. L.
95-615, set out as a note under section 911 of this title.
Amendment by Pub. L. 95-600 applicable with respect to taxable years
beginning after Dec. 31, 1978, see section 164(d) of Pub. L. 95-600,
set out as a note under section 127 of this title.
Amendment by section 1501(b)(7) of Pub. L. 94-455 effective for
taxable years beginning after Dec. 31, 1976, see section 1501(d) of
Pub. L. 94-455, set out as a note under section 62 of this title.
Amendment by Pub. L. 93-406 effective on Jan. 1, 1975, see section
2002(i)(2) of Pub. L. 93-406, set out as an Effective Date note under
section 4973 of this title.
Section 3(b) of Pub. L. 92-279 provided that: ''The amendments made
by section 2 (amending this section) shall apply to wages paid on or
after the first day of the first calendar month which begins more than
30 days after the date of the enactment of this Act (Apr. 26, 1972).''
Amendment by Pub. L. 89-809 applicable with respect to remuneration
paid after Dec. 31, 1966, see section 103(n)(4) of Pub. L. 89-809, set
out as a note under section 871 of this title.
Amendment by section 313(d)(1), (2) of Pub. L. 89-97 applicable only
with respect to tips received by employees after 1965, see section
313(f) of Pub. L. 89-97, set out as a note under section 6053 of this
title.
Amendment by section 204(b) of Pub. L. 88-272 applicable to
remuneration paid after Dec. 31, 1963, in the form of group-term life
insurance provided after such date, see section 204(d) of Pub. L.
88-272, set out as an Effective Date note under section 79 of this
title.
Amendment by section 213(c) of Pub. L. 88-272 applicable to
remuneration paid after the seventh day following Feb. 26, 1964, see
section 213(d) of Pub. L. 88-272, set out as a note under section 62 of
this title.
Amendment by Pub. L. 87-792 applicable to taxable years beginning
after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a
note under section 22 of this title.
Amendment by Pub. L. 87-293 applicable with respect to remuneration
paid after Sept. 22, 1961, see section 201(d) of Pub. L. 87-293, set
out as a note under section 912 of this title.
Section 110(h)(4) of Pub. L. 87-256 provided that: ''The amendments
made by subsection (g) of this section (amending sections 3401 and 3402
of this title) shall apply with respect to wages paid after December 31,
1961.''
Pub. L. 89-368, 1, Mar. 15, 1966, 80 Stat. 38, provided that:
''This Act (enacting sections 276 and 6682 of this title and section 428
of Title 42, The Public Health and Welfare, amending sections 1402,
1403, 3402, 4061, 4251, 4253, 6015, 6154, 6211, 6412, 6654, 7205, and
7701 of this title and section 1202 of Title 19, Customs Duties, and
enacting provisions set out as notes under sections 276, 3402, 4061,
4251, 6154, and 6654 of this title and section 428 of Title 42) may be
cited as the 'Tax Adjustment Act of 1966'.''
Unaffected
Section 201(c) of Pub. L. 87-293, cited as a credit to this section,
was repealed by Pub. L. 89-572, 5(a), Sept. 13, 1966, 80 Stat. 765.
Such repeal not deemed to affect amendments to this section contained in
such provisions, and continuation in full force and effect until
modified by appropriate authority of all determinations, authorization,
regulations, orders, contracts, agreements, and other actions issued,
undertaken, or entered into under authority of the repealed provisions,
see section 5(b) of Pub. L. 89-572, set out as a note under former
section 2515 of Title 22, Foreign Relations and Intercourse.
Section 530 of Pub. L. 95-600, as amended by Pub. L. 96-167, 9(d),
Dec. 29, 1979, 93 Stat. 1278; Pub. L. 96-541, 1, Dec. 17, 1980, 94
Stat. 3204; Pub. L. 97-248, title II, 269(c)(1), (2), 96 Stat. 552;
Pub. L. 99-514, 2, title XVII, 1706(a), Oct. 22, 1986, 100 Stat.
2095, 2781, provided that:
''(a) Termination of Certain Employment Tax Liability. --
''(1) In general. -- If --
''(A) for purposes of employment taxes, the taxpayer did not treat an
individual as an employee for any period, and
''(B) in the case of periods after December 31, 1978, all Federal tax
returns (including information returns) required to be filed by the
taxpayer with respect to such individual for such period are filed on a
basis consistent with the taxpayer's treatment of such individual as not
being an employee,
then, for purposes of applying such taxes for such period with
respect to the taxpayer, the individual shall be deemed not to be an
employee unless the taxpayer had no reasonable basis for not treating
such individual as an employee.
''(2) Statutory standards providing one method of satisfying the
requirements of paragraph (1). -- For purposes of paragraph (1), a
taxpayer shall in any case be treated as having a reasonable basis for
not treating an individual as an employee for a period if the taxpayer's
treatment of such individual for such period was in reasonable reliance
on any of the following:
''(A) judicial precedent, published rulings, technical advice with
respect to the taxpayer, or a letter ruling to the taxpayer;
''(B) a past Internal Revenue Service audit of the taxpayer in which
there was no assessment attributable to the treatment (for employment
tax purposes) of the individuals holding positions substantially similar
to the position held by this individual; or
''(C) long-standing recognized practice of a significant segment of
the industry in which such individual was engaged.
''(3) Consistency required in the case of prior tax treatment. --
Paragraph (1) shall not apply with respect to the treatment of any
individual for employment tax purposes for any period ending after
December 31, 1978, if the taxpayer (or a predecessor) has treated any
individual holding a substantially similar position as an employee for
purposes of the employment taxes for any period beginning after December
31, 1977.
''(4) Refund or credit of overpayment. -- If refund or credit of any
overpayment of an employment tax resulting from the application of
paragraph (1) is not barred on the date of the enactment of this Act
(Nov. 6, 1978) by any law or rule of law, the period for filing a claim
for refund or credit of such overpayment (to the extent attributable to
the application of paragraph (1)) shall not expire before the date 1
year after the date of the enactment of this Act.
''(b) Prohibition Against Regulations and Rulings on Employment
Status. -- No regulation or Revenue Ruling shall be published on or
after the date of the enactment of this Act (Nov. 6, 1978) and before
the effective date of any law hereafter enacted clarifying the
employment status of individuals for purposes of the employment taxes by
the Department of the Treasury (including the Internal Revenue Service)
with respect to the employment status of any individual for purposes of
the employment taxes.
''(c) Definitions. -- For purposes of this section --
''(1) Employment tax. -- The term 'employment tax' means any tax
imposed by subtitle C of the Internal Revenue Code of 1986 (formerly
I.R.C. 1954, section 3101 et seq. of this title).
''(2) Employment status. -- The term 'employment status' means the
status of an individual, under the usual common law rules applicable in
determining the employer-employee relationship, as an employee or as an
independent contractor (or other individual who is not an employee).
''(d) Exception. -- This section shall not apply in the case of an
individual who, pursuant to an arrangement between the taxpayer and
another person, provides services for such other person as an engineer,
designer, drafter, computer programmer, systems analyst, or other
similarly skilled worker engaged in a similar line of work.''
(Section 1706(b) of Pub. L. 99-514 provided that: ''The amendment
made by this section (amending note above) shall apply to remuneration
paid and services rendered after December 31, 1986.'')
Effective date of this subtitle, see section 7851 of this title.
26 USC 3402. Income tax collected at source
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirement of withholding
(1) In general
Except as otherwise provided in this section, every employer making
payment of wages shall deduct and withhold upon such wages a tax
determined in accordance with tables or computational procedures
prescribed by the Secretary. Any tables or procedures prescribed under
this paragraph shall --
(A) apply with respect to the amount of wages paid during such
periods as the Secretary may prescribe, and
(B) be in such form, and provide for such amounts to be deducted and
withheld, as the Secretary determines to be most appropriate to carry
out the purposes of this chapter and to reflect the provisions of
chapter 1 applicable to such periods.
(2) Amount of wages
For purposes of applying tables or procedures prescribed under
paragraph (1), the term ''the amount of wages'' means the amount by
which the wages exceed the number of withholding exemptions claimed
multiplied by the amount of one such exemption. The amount of each
withholding exemption shall be equal to the amount of one personal
exemption provided in section 151(b), prorated to the payroll period.
The maximum number of withholding exemptions permitted shall be
calculated in accordance with regulations prescribed by the Secretary
under this section, taking into account any reduction in withholding to
which an employee is entitled under this section.
(b) Percentage method of withholding
(1) If wages are paid with respect to a period which is not a payroll
period, the withholding exemption allowable with respect to each payment
of such wages shall be the exemption allowed for a miscellaneous payroll
period containing a number of days (including Sundays and holidays)
equal to the number of days in the period with respect to which such
wages are paid.
(2) In any case in which wages are paid by an employer without regard
to any payroll period or other period, the withholding exemption
allowable with respect to each payment of such wages shall be the
exemption allowed for a miscellaneous payroll period containing a number
of days equal to the number of days (including Sundays and holidays)
which have elapsed since the date of the last payment of such wages by
such employer during the calendar year, or the date of commencement of
employment with such employer during such year, or January 1 of such
year, whichever is the later.
(3) In any case in which the period, or the time described in
paragraph (2), in respect of any wages is less than one week, the
Secretary, under regulations prescribed by him, may authorize an
employer to compute the tax to be deducted and withheld as if the
aggregate of the wages paid to the employee during the calendar week
were paid for a weekly payroll period.
(4) In determining the amount to be deducted and withheld under this
subsection, the wages may, at the election of the employer, be computed
to the nearest dollar.
(c) Wage bracket withholding
(1) At the election of the employer with respect to any employee, the
employer shall deduct and withhold upon the wages paid to such employee
a tax (in lieu of the tax required to be deducted and withheld under
subsection (a)) determined in accordance with tables prescribed by the
Secretary in accordance with paragraph (6).
(2) If wages are paid with respect to a period which is not a payroll
period, the amount to be deducted and withheld shall be that applicable
in the case of a miscellaneous payroll period containing a number of
days (including Sundays and holidays) equal to the number of days in the
period with respect to which such wages are paid.
(3) In any case in which wages are paid by an employer without regard
to any payroll period or other period, the amount to be deducted and
withheld shall be that applicable in the case of a miscellaneous payroll
period containing a number of days equal to the number of days
(including Sundays and holidays) which have elapsed since the date of
the last payment of such wages by such employer during the calendar
year, or the date of commencement of employment with such employer
during such year, or January 1 of such year, whichever is the later.
(4) In any case in which the period, or the time described in
paragraph (3), in respect of any wages is less than one week, the
Secretary, under regulations prescribed by him, may authorize an
employer to determine the amount to be deducted and withheld under the
tables applicable in the case of a weekly payroll period, in which case
the aggregate of the wages paid to the employee during the calendar week
shall be considered the weekly wages.
(5) If the wages exceed the highest wage bracket, in determining the
amount to be deducted and withheld under this subsection, the wages may,
at the election of the employer, be computed to the nearest dollar.
(6) In the case of wages paid after December 31, 1969, the amount
deducted and withheld under paragraph (1) shall be determined in
accordance with tables prescribed by the Secretary. In the tables so
prescribed, the amounts set forth as amounts of wages and amounts of
income tax to be deducted and withheld shall be computed on the basis of
the table for an annual payroll period prescribed pursuant to subsection
(a).
(d) Tax paid by recipient
If the employer, in violation of the provisions of this chapter,
fails to deduct and withhold the tax under this chapter, and thereafter
the tax against which such tax may be credited is paid, the tax so
required to be deducted and withheld shall not be collected from the
employer; but this subsection shall in no case relieve the employer
from liability for any penalties or additions to the tax otherwise
applicable in respect of such failure to deduct and withhold.
(e) Included and excluded wages
If the remuneration paid by an employer to an employee for services
performed during one-half or more of any payroll period of not more than
31 consecutive days constitutes wages, all the remuneration paid by such
employer to such employee for such period shall be deemed to be wages;
but if the remuneration paid by an employer to an employee for services
performed during more than one-half of any such payroll period does not
constitute wages, then none of the remuneration paid by such employer to
such employee for such period shall be deemed to be wages.
(f) Withholding exemptions
(1) In general
An employee receiving wages shall on any day be entitled to the
following withholding exemptions:
(A) an exemption for himself unless he is an individual described in
section 151(d)(2);
(B) if the employee is married, any exemption to which his spouse is
entitled, or would be entitled if such spouse were an employee receiving
wages, under subparagraph (A) or (D), but only if such spouse does not
have in effect a withholding exemption certificate claiming such
exemption;
(C) an exemption for each individual with respect to whom, on the
basis of facts existing at the beginning of such day, there may
reasonably be expected to be allowable an exemption under section 151(c)
for the taxable year under subtitle A in respect of which amounts
deducted and withheld under this chapter in the calendar year in which
such day falls are allowed as a credit;
(D) any allowance to which he is entitled under subsection (m), but
only if his spouse does not have in effect a withholding exemption
certificate claiming such allowance; and
(E) a standard deduction allowance which shall be an amount equal to
one exemption (or more than one exemption if so prescribed by the
Secretary) unless (i) he is married (as determined under section 7703)
and his spouse is an employee receiving wages subject to withholding or
(ii) he has withholding exemption certificates in effect with respect to
more than one employer.
For purposes of this title, any standard deduction allowance under
subparagraph (E) shall be treated as if it were denominated a
withholding exemption.
(2) Exemption certificates
(A) On commencement of employment
On or before the date of the commencement of employment with an
employer, the employee shall furnish the employer with a signed
withholding exemption certificate relating to the number of withholding
exemptions which he claims, which shall in no event exceed the number to
which he is entitled.
(B) Change of status
If, on any day during the calendar year, the number of withholding
exemptions to which the employee is entitled is less than the number of
withholding exemptions claimed by the employee on the withholding
exemption certificate then in effect with respect to him, the employee
shall within 10 days thereafter furnish the employer with a new
withholding exemption certificate relating to the number of withholding
exemptions which the employee then claims, which shall in no event
exceed the number to which he is entitled on such day. If, on any day
during the calendar year, the number of withholding exemptions to which
the employee is entitled is greater than the number of withholding
exemptions claimed, the employee may furnish the employer with a new
withholding exemption certificate relating to the number of withholding
exemptions which the employee then claims, which shall in no event
exceed the number to which he is entitled on such day.
(C) Change of status which affects next calendar year
If on any day during the calendar year the number of withholding
exemptions to which the employee will be, or may reasonably be expected
to be, entitled at the beginning of his next taxable year under subtitle
A is different from the number to which the employee is entitled on such
day, the employee shall, in such cases and at such times as the
Secretary may by regulations prescribe, furnish the employer with a
withholding exemption certificate relating to the number of withholding
exemptions which he claims with respect to such next taxable year, which
shall in no event exceed the number to which he will be, or may
reasonably be expected to be, so entitled.
(3) When certificate takes effect
(A) First certificate furnished
A withholding exemption certificate furnished the employer in cases
in which no previous such certificate is in effect shall take effect as
of the beginning of the first payroll period ending, or the first
payment of wages made without regard to a payroll period, on or after
the date on which such certificate is so furnished.
(B) Furnished to take place of existing certificate
(i) In general
Except as provided in clauses (ii) and (iii), a withholding exemption
certificate furnished to the employer in cases in which a previous such
certificate is in effect shall take effect as of the beginning of the
1st payroll period ending (or the 1st payment of wages made without
regard to a payroll period) on or after the 30th day after the day on
which such certificate is so furnished.
(ii) Employer may elect earlier effective date
At the election of the employer, a certificate described in clause
(i) may be made effective beginning with any payment of wages made on or
after the day on which the certificate is so furnished and before the
30th day referred to in clause (i).
(iii) Change of status which affects next year
Any certificate furnished pursuant to paragraph (2)(C) shall not take
effect, and may not be made effective, with respect to any payment of
wages made in the calendar year in which the certificate is furnished.
(4) Period during which certificate remains in effect
A withholding exemption certificate which takes effect under this
subsection, or which on December 31, 1954, was in effect under the
corresponding subsection of prior law, shall continue in effect with
respect to the employer until another such certificate takes effect
under this subsection.
(5) Form and contents of certificate
Withholding exemption certificates shall be in such form and contain
such information as the Secretary may by regulations prescribe.
(6) Exemption of certain nonresident aliens
Notwithstanding the provisions of paragraph (1), a nonresident alien
individual (other than an individual described in section 3401(a)(6)(A)
or (B)) shall be entitled to only one withholding exemption.
(7) Exemption where certificate with another employer is in effect
If a withholding exemption certificate is in effect with respect to
one employer, an employee shall not be entitled under a certificate in
effect with any other employer to any withholding exemption which he has
claimed under such first certificate.
(g) Overlapping pay periods, and payment by agent or fiduciary
If a payment of wages is made to an employee by an employer --
(1) with respect to a payroll period or other period, any part of
which is included in a payroll period or other period with respect to
which wages are also paid to such employee by such employer, or
(2) without regard to any payroll period or other period, but on or
prior to the expiration of a payroll period or other period with respect
to which wages are also paid to such employee by such employer, or
(3) with respect to a period beginning in one and ending in another
calendar year, or
(4) through an agent, fiduciary, or other person who also has the
control, receipt, custody, or disposal of, or pays, the wages payable by
another employer to such employee,
the manner of withholding and the amount to be deducted and withheld
under this chapter shall be determined in accordance with regulations
prescribed by the Secretary under which the withholding exemption
allowed to the employee in any calendar year shall approximate the
withholding exemption allowable with respect to an annual payroll
period.
(h) Alternative methods of computing amount to be withheld
The Secretary may, under regulations prescribed by him, authorize --
(1) Withholding on basis of average wages
An employer --
(A) to estimate the wages which will be paid to any employee in any
quarter of the calendar year,
(B) to determine the amount to be deducted and withheld upon each
payment of wages to such employee during such quarter as if the
appropriate average of the wages so estimated constituted the actual
wages paid, and
(C) to deduct and withhold upon any payment of wages to such employee
during such quarter (and, in the case of tips referred to in subsection
(k), within 30 days thereafter) such amount as may be necessary to
adjust the amount actually deducted and withheld upon the wages of such
employee during such quarter to the amount required to be deducted and
withheld during such quarter without regard to this subsection.
(2) Withholding on basis of annualized wages
An employer to determine the amount of tax to be deducted and
withheld upon a payment of wages to an employee for a payroll period by
--
(A) multiplying the amount of an employee's wages for a payroll
period by the number of such payroll periods in the calendar year,
(B) determining the amount of tax which would be required to be
deducted and withheld upon the amount determined under subparagraph (A)
if such amount constituted the actual wages for the calendar year and
the payroll period of the employee were an annual payroll period, and
(C) dividing the amount of tax determined under subparagraph (B) by
the number of payroll periods (described in subparagraph (A)) in the
calendar year.
(3) Withholding on basis of cumulative wages
An employer, in the case of any employee who requests to have the
amount of tax to be withheld from his wages computed on the basis of his
cumulative wages, to --
(A) add the amount of the wages to be paid to the employee for the
payroll period to the total amount of wages paid by the employer to the
employee during the calendar year,
(B) divide the aggregate amount of wages computed under subparagraph
(A) by the number of payroll periods to which such aggregate amount of
wages relates,
(C) compute the total amount of tax that would have been required to
be deducted and withheld under subsection (a) if the average amount of
wages (as computed under subparagraph (B)) had been paid to the employee
for the number of payroll periods to which the aggregate amount of wages
(computed under subparagraph (A)) relates,
(D) determine the excess, if any, of the amount of tax computed under
subparagraph (C) over the total amount of tax deducted and withheld by
the employer from wages paid to the employee during the calendar year,
and
(E) deduct and withhold upon the payment of wages (referred to in
subparagraph (A)) to the employee an amount equal to the excess (if any)
computed under subparagraph (D).
(4) Other methods
An employer to determine the amount of tax to be deducted and
withheld upon the wages paid to an employee by any other method which
will require the employer to deduct and withhold upon such wages
substantially the same amount as would be required to be deducted and
withheld by applying subsection (a) or (c), either with respect to a
payroll period or with respect to the entire taxable year.
(i) Changes in withholding
(1) In general
The Secretary may by regulations provide for increases in the amount
of withholding otherwise required under this section in cases where the
employee requests such changes.
(2) Treatment as tax
Any increased withholding under paragraph (1) shall for all purposes
be considered tax required to be deducted and withheld under this
chapter.
(j) Noncash remuneration to retail commission salesman
In the case of remuneration paid in any medium other than cash for
services performed by an individual as a retail salesman for a person,
where the service performed by such individual for such person is
ordinarily performed for remuneration solely by way of cash commission
an employer shall not be required to deduct or withhold any tax under
this subchapter with respect to such remuneration, provided that such
employer files with the Secretary such information with respect to such
remuneration as the Secretary may by regulation prescribe.
(k) Tips
In the case of tips which constitute wages, subsection (a) shall be
applicable only to such tips as are included in a written statement
furnished to the employer pursuant to section 6053(a), and only to the
extent that the tax can be deducted and withheld by the employer, at or
after the time such statement is so furnished and before the close of
the calendar year in which such statement is furnished, from such wages
of the employee (excluding tips, but including funds turned over by the
employee to the employer for the purpose of such deduction and
withholding) as are under the control of the employer; and an employer
who is furnished by an employee a written statement of tips (received in
a calendar month) pursuant to section 6053(a) to which paragraph (16)(B)
of section 3401(a) is applicable may deduct and withhold the tax with
respect to such tips from any wages of the employee (excluding tips)
under his control, even though at the time such statement is furnished
the total amount of the tips included in statements furnished to the
employer as having been received by the employee in such calendar month
in the course of his employment by such employer is less than $20. Such
tax shall not at any time be deducted and withheld in an amount which
exceeds the aggregate of such wages and funds (including funds turned
over under section 3102(c)(2) or section 3202(c)(2)) minus any tax
required by section 3102(a) or section 3202(a) to be collected from such
wages and funds.
(l) Determination and disclosure of marital status
(1) Determination of status by employer
For purposes of applying the tables in subsections (a) and (c) to a
payment of wages, the employer shall treat the employee as a single
person unless there is in effect with respect to such payment of wages a
withholding exemption certificate furnished to the employer by the
employee after the date of the enactment of this subsection indicating
that the employee is married.
(2) Disclosure of status by employee
An employee shall be entitled to furnish the employer with a
withholding exemption certificate indicating he is married only if, on
the day of such furnishing, he is married (determined with the
application of the rules in paragraph (3)). An employee whose marital
status changes from married to single shall, at such time as the
Secretary may by regulations prescribe, furnish the employer with a new
withholding exemption certificate.
(3) Determination of marital status
For purposes of paragraph (2), an employee shall on any day be
considered --
(A) as not married, if (i) he is legally separated from his spouse
under a decree of divorce or separate maintenance, or (ii) either he or
his spouse is, or on any preceding day within the calendar year was, a
nonresident alien; or
(B) as married, if (i) his spouse (other than a spouse referred to in
subparagraph (A)) died within the portion of his taxable year which
precedes such day, or (ii) his spouse died during one of the two taxable
years immediately preceding the current taxable year and, on the basis
of facts existing at the beginning of such day, the employee reasonably
expects, at the close of his taxable year, to be a surviving spouse (as
defined in section 2(a)).
(m) Withholding allowances
Under regulations prescribed by the Secretary, an employee shall be
entitled to additional withholding allowances or additional reductions
in withholding under this subsection. In determining the number of
additional withholding allowances or the amount of additional reductions
in withholding under this subsection, the employee may take into account
(to the extent and in the manner provided by such regulations) --
(1) estimated itemized deductions allowable under chapter 1 (other
than the deductions referred to in section 151 and other than the
deductions required to be taken into account in determining adjusted
gross income under section 62(a) (other than paragraph (10) thereof)),
(2) estimated tax credits allowable under chapter 1, and
(3) such additional deductions (including the additional standard
deduction under section 63(c)(3) for the aged and blind) and other items
as may be specified by the Secretary in regulations.
(n) Employees incurring no income tax liability
Notwithstanding any other provision of this section, an employer
shall not be required to deduct and withhold any tax under this chapter
upon a payment of wages to an employee if there is in effect with
respect to such payment a withholding exemption certificate (in such
form and containing such other information as the Secretary may
prescribe) furnished to the employer by the employee certifying that the
employee --
(1) incurred no liability for income tax imposed under subtitle A for
his preceding taxable year, and
(2) anticipates that he will incur no liability for income tax
imposed under subtitle A for his current taxable year.
The Secretary shall by regulations provide for the coordination of
the provisions of this subsection with the provisions of subsection (f).
(o) Extension of withholding to certain payments other than wages
(1) General rule
For purposes of this chapter (and so much of subtitle F as relates to
this chapter) --
(A) any supplemental unemployment compensation benefit paid to an
individual,
(B) any payment of an annuity to an individual, if at the time the
payment is made a request that such annuity be subject to withholding
under this chapter is in effect, and
(C) any payment to an individual of sick pay which does not
constitute wages (determined without regard to this subsection), if at
the time the payment is made a request that such sick pay be subject to
withholding under this chapter is in effect,
shall be treated as if it were a payment of wages by an employer to
an employee for a payroll period.
(2) Definitions
(A) Supplemental unemployment compensation benefits
For purposes of paragraph (1), the term ''supplemental unemployment
compensation benefits'' means amounts which are paid to an employee,
pursuant to a plan to which the employer is a party, because of an
employee's involuntary separation from employment (whether or not such
separation is temporary), resulting directly from a reduction in force,
the discontinuance of a plant or operation, or other similar conditions,
but only to the extent such benefits are includible in the employee's
gross income.
(B) Annuity
For purposes of this subsection, the term ''annuity'' means any
amount paid to an individual as a pension or annuity.
(C) Sick pay
For purposes of this subsection, the term ''sick pay'' means any
amount which --
(i) is paid to an employee pursuant to a plan to which the employer
is a party, and
(ii) constitutes remuneration or a payment in lieu of remuneration
for any period during which the employee is temporarily absent from work
on account of sickness or personal injuries.
(3) Amount withheld from annuity payments or sick pay
If a payee makes a request that an annuity or any sick pay be subject
to withholding under this chapter, the amount to be deducted and
withheld under this chapter from any payment to which such request
applies shall be an amount (not less than a minimum amount determined
under regulations prescribed by the Secretary) specified by the payee in
such request. The amount deducted and withheld with respect to a
payment which is greater or less than a full payment shall bear the same
relation to the specified amount as such payment bears to a full
payment.
(4) Request for withholding
A request that an annuity or any sick pay be subject to withholding
under this chapter --
(A) shall be made by the payee in writing to the person making the
payments and shall contain the social security number of the payee,
(B) shall specify the amount to be deducted and withheld from each
full payment, and
(C) shall take effect --
(i) in the case of sick pay, with respect to payments made more than
7 days after the date on which such request is furnished to the payor,
or
(ii) in the case of an annuity, at such time (after the date on which
such request is furnished to the payor) as the Secretary shall by
regulations prescribe.
Such a request may be changed or terminated by furnishing to the
person making the payments a written statement of change or termination
which shall take effect in the same manner as provided in subparagraph
(C). At the election of the payor, any such request (or statement of
change or revocation) may take effect earlier than as provided in
subparagraph (C).
(5) Special rule for sick pay paid pursuant to certain
collective-bargaining agreements
In the case of any sick pay paid pursuant to a collective-bargaining
agreement between employee representatives and one or more employers
which contains a provision specifying that this paragraph is to apply to
sick pay paid pursuant to such agreement and contains a provision for
determining the amount to be deducted and withheld from each payment of
such sick pay --
(A) the requirement of paragraph (1)(C) that a request for
withholding be in effect shall not apply, and
(B) except as provided in subsection (n), the amounts to be deducted
and withheld under this chapter shall be determined in accordance with
such agreement.
The preceding sentence shall not apply with respect to sick pay paid
pursuant to any agreement to any individual unless the social security
number of such individual is furnished to the payor and the payor is
furnished with such information as is necessary to determine whether the
payment is pursuant to the agreement and to determine the amount to be
deducted and withheld.
(6) Coordination with withholding on designated distributions under
section 3405
This subsection shall not apply to any amount which is a designated
distribution (within the meaning of section 3405(e)(1)).
(p) Voluntary withholding agreements
The Secretary is authorized by regulations to provide for withholding
--
(1) from remuneration for services performed by an employee for his
employer which (without regard to this subsection) does not constitute
wages, and
(2) from any other type of payment with respect to which the
Secretary finds that withholding would be appropriate under the
provisions of this chapter,
if the employer and the employee, or in the case of any other type of
payment the person making and the person receiving the payment, agree to
such withholding. Such agreement shall be made in such form and manner
as the Secretary may by regulations provide. For purposes of this
chapter (and so much of subtitle F as relates to this chapter)
remuneration or other payments with respect to which such agreement is
made shall be treated as if they were wages paid by an employer to an
employee to the extent that such remuneration is paid or other payments
are made during the period for which the agreement is in effect.
(q) Extension of withholding to certain gambling winnings
(1) General rule
Every person, including the Government of the United States, a State,
or a political subdivision thereof, or any instrumentalities of the
foregoing, making any payment of winnings which are subject to
withholding shall deduct and withhold from such payment a tax in an
amount equal to 28 percent of such payment.
(2) Exemption where tax otherwise withheld
In the case of any payment of winnings which are subject to
withholding made to a nonresident alien individual or a foreign
corporation, the tax imposed under paragraph (1) shall not apply to any
such payment subject to tax under section 1441(a) (relating to
withholding on nonresident aliens) or tax under section 1442(a)
(relating to withholding on foreign corporations).
(3) Winnings which are subject to withholding
For purposes of this subsection, the term ''winnings which are
subject to withholding'' means proceeds from a wager determined in
accordance with the following:
(A) In general
Except as provided in subparagraphs (B) and (C), proceeds of more
than $5,000 from a wagering transaction, if the amount of such proceeds
is at least 300 times as large as the amount wagered.
(B) State-conducted lotteries
Proceeds of more than $5,000 from a wager placed in a lottery
conducted by an agency of a State acting under authority of State law,
but only if such wager is placed with the State agency conducting such
lottery, or with its authorized employees or agents.
(C) Sweepstakes, wagering pools, certain parimutuel pools, jai alai,
and lotteries
Proceeds of more than $5,000 from --
(i) a wager placed in a sweepstakes, wagering pool, or lottery (other
than a wager described in subparagraph (B)), or
(ii) a wagering transaction in a parimutuel pool with respect to
horse races, dog races, or jai alai if the amount of such proceeds is at
least 300 times as large as the amount wagered.
(4) Rules for determining proceeds from a wager
For purposes of this subsection --
(A) proceeds from a wager shall be determined by reducing the amount
received by the amount of the wager, and
(B) proceeds which are not money shall be taken into account at their
fair market value.
(5) Exception for bingo, keno, and slot machines
The tax imposed under paragraph (1) shall not apply to winnings from
a slot machine, keno, and bingo.
(6) Statement by recipient
Every person who is to receive a payment of winnings which are
subject to withholding shall furnish the person making such payment a
statement, made under the penalties of perjury, containing the name,
address, and taxpayer identification number of the person receiving the
payment and of each person entitled to any portion of such payment.
(7) Coordination with other sections
For purposes of sections 3403 and 3404 and for purposes of so much of
subtitle F (except section 7205) as relates to this chapter, payments to
any person of winnings which are subject to withholding shall be treated
as if they were wages paid by an employer to an employee.
((r) Repealed. Pub. L. 99-514, title XVIII, 1303(b)(4), Oct. 22,
1986, 100 Stat. 2658)
(s) Exemption from withholding for any vehicle fringe benefit
(1) Employer election not to withhold
The employer may elect not to deduct and withhold any tax under this
chapter with respect to any vehicle fringe benefit provided to any
employee if such employee is notified by the employer of such election
(at such time and in such manner as the Secretary shall by regulations
prescribe). The preceding sentence shall not apply to any vehicle
fringe benefit unless the amount of such benefit is included by the
employer on a statement timely furnished under section 6051.
(2) Employer must furnish W-2
Any vehicle fringe benefit shall be treated as wages from which
amounts are required to be deducted and withheld under this chapter for
purposes of section 6051.
(3) Vehicle fringe benefit
For purposes of this subsection, the term ''vehicle fringe benefit''
means any fringe benefit --
(A) which constitutes wages (as defined in section 3401), and
(B) which consists of providing a highway motor vehicle for the use
of the employee.
(Aug. 16, 1954, ch. 736, 68A Stat. 457; Aug. 9, 1955, ch. 666, 2,
69 Stat. 605; Sept. 21, 1961, Pub. L. 87-256, 110(g)(2), 75 Stat. 537;
Feb. 26, 1964, Pub. L. 88-272, title III, 302(a), (b), 78 Stat. 140;
July 30, 1965, Pub. L. 89-97, title III, 313(d)(3)-(5), 79 Stat. 384;
Sept. 29, 1965, Pub. L. 89-212, 2(c), 79 Stat. 859; Mar. 15, 1966,
Pub. L. 89-368, title I, 101(a)-(e)(3), 80 Stat. 38-61; June 28,
1968, Pub. L. 90-364, title I, 102(c), 82 Stat. 256; June 30, 1969,
Pub. L. 91-36, 2(a), 83 Stat. 42; Aug. 7, 1969, Pub. L. 91-53, 6(a),
83 Stat. 96; Dec. 30, 1969, Pub. L. 91-172, title VIII, 805(a)-(e),
(f)(1), (g), 83 Stat. 686, 704-708; Dec. 10, 1971, Pub. L. 92-178,
title II, 208(a), (b)(1), (c)-(h)(1), 85 Stat. 512-517; Mar. 29,
1975, Pub. L. 94-12, title II, 202(b), 205, 89 Stat. 29, 32; Dec. 23,
1975, Pub. L. 94-164, 2(b)(2), 5(a)(1), 89 Stat. 971, 975; June 30,
1976, Pub. L. 94-331, 3(a)(1), 90 Stat. 782; Sept. 3, 1976, Pub. L.
94-396, 2(a)(1), 90 Stat. 1201; Sept. 17, 1976, Pub. L. 94-414,
3(a)(1), 90 Stat. 1273; Oct. 4, 1976, Pub. L. 94-455, title IV,
401(d), title V, 502(b), 504(c)(3), title XII, 1207(d), title XIX,
1903(a)(17), 1906(b)(13)(A), 90 Stat. 1557, 1559, 1566, 1705, 1810,
1834; May 23, 1977, Pub. L. 95-30, title I, 105, title IV, 405(a), 91
Stat. 140, 156; Nov. 6, 1978, Pub. L. 95-600, title I, 101(e),
102(c), title VI, 601(b)(2), 92 Stat. 2770, 2771, 2896; Dec. 24,
1980, Pub. L. 96-601, 4(a)-(d), 94 Stat. 3496, 3497; Aug. 13, 1981,
Pub. L. 97-34, title I, 101(e), 95 Stat. 184; Sept. 3, 1982, Pub. L.
97-248, title III, 317(a), 334(d), 96 Stat. 607, 627; Aug. 5, 1983,
Pub. L. 98-67, title I, 104(d)(3), 97 Stat. 380; May 24, 1985, Pub. L.
99-44, 3, 99 Stat. 77; Oct. 22, 1986, Pub. L. 99-514, title I,
104(b)(15), title XIII, 1301(j)(8), 1303(b)(4), title XV, 1581(b),
100 Stat. 2106, 2658, 2766; Dec. 22, 1987, Pub. L. 100-203, title X,
10302(a), 101 Stat. 1330-429; Nov. 10, 1988, Pub. L. 100-647, title I,
1003(a)(2), 102 Stat. 3382; Nov. 5, 1990, Pub. L. 101-508, title XI,
11801(a)(41), 104 Stat. 1388-521; July 3, 1992, Pub. L. 102-318, title
V, 522(b)(2)(D), 106 Stat. 314; Oct. 24, 1992, Pub. L. 102-486, title
XIX, 1934(a), 1942(a), 106 Stat. 3031, 3036.)
The date of the enactment of this subsection, referred to in subsec.
(l)(1), is the date of enactment of Pub. L. 89-368, which was approved
Mar. 15, 1966.
1992 -- Subsec. (o)(6). Pub. L. 102-318 substituted ''3405(e)(1)''
for ''3405(d)(1)''.
Subsec. (q)(1). Pub. L. 102-486, 1934(a), substituted ''28 percent''
for ''20 percent''.
Subsec. (q)(3)(A), (C). Pub. L. 102-486, 1942(a), substituted
''$5,000'' for ''$1,000''.
1990 -- Subsec. (a)(3). Pub. L. 101-508 struck out par. (3) which
read as follows: ''Notwithstanding the provisions of this subsection,
the Secretary shall modify the tables and procedures under paragraph (1)
to reflect --
''(A) the amendments made by section 101(b) of the Economic Recovery
Tax Act of 1981, and such modification shall take effect on October 1,
1981, as if such amendments made a 5-percent reduction effective on such
date, and
''(B) the amendments made by section 101(a) of such Act, and such
modifications shall take effect --
''(i) on July 1, 1982, as if the reductions in the rate of tax under
section 1 (as amended by such section) were attributable to a 10-percent
reduction effective on such date, and
''(ii) on July 1, 1983, as if such reductions were attributable to a
10-percent reduction effective on such date.''
1988 -- Subsec. (m)(1). Pub. L. 100-647 substituted ''section 62(a)
(other than paragraph (10) thereof))'' for ''section 62) (other than
paragraph (13) thereof)''.
1987 -- Subsec. (f)(3)(B). Pub. L. 100-203 amended subpar. (B)
generally. Prior to amendment, subpar. (B) read as follows: ''A
withholding exemption certificate furnished the employer in cases in
which a previous such certificate is in effect shall take effect with
respect to the first payment of wages made on or after the first status
determination date which occurs at least 30 days from the date on which
such certificate is so furnished, except that at the election of the
employer such certificate may be made effective with respect to any
payment of wages made on or after the date on which such certificate is
so furnished; but a certificate furnished pursuant to paragraph (2)(C)
shall not take effect, and may not be made effective, with respect to
any payment of wages made in the calendar year in which the certificate
is furnished. For purposes of this subparagraph the term 'status
determination date' means January 1, May 1, July 1, and October 1 of
each year.''
1986 -- Subsec. (f)(1). Pub. L. 99-514, 104(b)(15)(F), substituted
''standard deduction'' for ''zero bracket'' and ''subparagraph (E)'' for
''subparagraph (G)'' in last sentence.
Subsec. (f)(1)(A). Pub. L. 99-514, 104(b)(15)(B), inserted ''unless
he is an individual described in section 151(d)(2)'' after ''himself''.
Subsec. (f)(1)(B). Pub. L. 99-514, 104(b)(15)(A), redesignated
subpar. (D) as (B) and struck out former subpar. (B) which read as
follows: ''one additional exemption for himself if, on the basis of
facts existing at the beginning of such day, there may reasonably be
expected to be allowable an exemption under section 151(c)(1) (relating
to old age) for the taxable year under subtitle A in respect of which
amounts deducted and withheld under this chapter in the calendar year in
which such day falls are allowed as a credit;''.
Pub. L. 99-514, 104(b)(15)(C), which directed that ''subparagraph
(A) or (D)'' be substituted for ''subparagraph (A), (B), (C), or (F)''
was executed by making the substitution for ''subparagraph (A), (B), or
(C)'', as the probable intent of Congress.
Subsec. (f)(1)(C). Pub. L. 99-514, 104(b)(15)(A), (D), redesignated
subpar. (E) as (C), substituted ''section 151(c)'' for ''section
151(e)'', and struck out former subpar. (C) which read as follows:
''one additional exemption for himself if, on the basis of facts
existing at the beginning of such day, there may reasonably be expected
to be allowable an exemption under section 151(d)(1) (relating to the
blind) for the taxable year under subtitle A in respect of which amounts
deducted and withheld under this chapter in the calendar year in which
such day falls are allowed as a credit;''.
Subsec. (f)(1)(D). Pub. L. 99-514, 104(b)(15)(A), redesignated
subpar. (F) as (D). Former subpar. (D) redesignated (B).
Subsec. (f)(1)(E). Pub. L. 99-514, 104(b)(15)(A), (E), redesignated
subpar. (G) as (E) and substituted ''standard deduction'' for ''zero
bracket''. Former subpar. (E) redesignated (C).
Pub. L. 99-514, 1301(j)(8), substituted ''section 7703'' for
''section 143''.
Subsec. (f)(1)(F), (G). Pub. L. 99-514, 104(b)(15)(A), redesignated
subpars. (F) and (G) as (D) and (E), respectively.
Subsec. (i)(1). Pub. L. 99-514, 1581(b), struck out ''or decreases''
after ''increases''.
Subsec. (m)(3). Pub. L. 99-514, 104(b)(15)(G), inserted ''(including
the additional standard deduction under section 63(c)(3) for the aged
and blind)''.
Subsec. (r). Pub. L. 99-514, 1303(b)(4), struck out subsec. (r)
which provided for extension of withholding to GSOC distributions.
1985 -- Subsec. (s). Pub. L. 99-44 added subsec. (s).
1983 -- Subsec. (s). Pub. L. 98-67 struck out subsec. (s) which
related to extension of withholding to certain payments where
identifying number was not furnished or was inaccurate. See section
3406 of this title.
1982 -- Subsec. (o)(6). Pub. L. 97-248, 334(d), added par. (6).
Subsec. (s). Pub. L. 97-248, 317(a), added subsec. (s).
1981 -- Subsec. (a). Pub. L. 97-34, 101(e)(1), revised subsec. (a)
generally to provide for a 5-percent reduction in income tax withholding
rates on Oct. 1, 1981, a further 10-percent reduction on July 1, 1982,
and a final 10-percent reduction on July 1, 1983.
Subsec. (b)(1). Pub. L. 97-34, 101(e)(2)(A), redesignated par. (2)
as (1). Former par. (1), which set out a table for determining amount
of one withholding exemption for each of the various payroll periods,
was struck out.
Subsec. (b)(2). Pub. L. 97-34, 101(e)(2)(A), redesignated par. (3)
as (2). Former par. (2) redesignated (1).
Subsec. (b)(3). Pub. L. 97-34, 101(e)(2)(A), (B), redesignated par.
(4) as (3) and substituted provisions relating to an employer's
computation of the tax to be deducted and withheld as if the aggregate
of the wages paid to the employee during the calendar week were paid for
a weekly payroll period, for provisions relating to an employer's
computation of the tax to be deducted and withheld using the excess of
the aggregate of the wages paid to the employee during the calendar week
over the withholding exemption allowed by this subsection for a weekly
payroll period. Former par. (3) redesignated (2).
Subsec. (b)(4), (5). Pub. L. 97-34, 101(e)(2)(A), redesignated par.
(5) as (4). Former par. (4) redesignated (3).
Subsec. (f)(1)(G). Pub. L. 97-34, 101(e)(3), inserted ''(or more
than one exemption if so prescribed by the Secretary)'' after ''an
amount equal to one exemption''.
Subsec. (i). Pub. L. 97-34, 101(e)(4), substituted provisions
authorizing the Secretary by regulations to provide for increases or
decreases in the amount of withholding otherwise required under this
section in cases where the employee requests the changes, for provisions
under which the Secretary was authorized to provide withholding in
addition to that otherwise required under this section in cases in which
the employer and the employee agreed to such additional withholding.
Subsec. (m). Pub. L. 97-34, 101(e)(5), revised provisions respecting
additional withholding allowances for anticipated excess itemized
deductions and tax credits claimed in accordance with Treasury
regulations and Treasury statutory authority to provide additional
withholding allowances for any additional items specified in Treasury
regulations.
1980 -- Subsec. (o)(1)(C). Pub. L. 96-601, 4(a), added subpar.
(C).
Subsec. (o)(2)(B). Pub. L. 96-601, 4(d), struck out '', but only to
the extent that the amount is includible in the gross income of such
individual'' after ''pension or annuity''.
Subsec. (o)(2)(C). Pub. L. 96-601, 4(c), added subpar. (C).
Subsec. (o)(3). Pub. L. 96-601, 4(b), substituted provision
authorizing amount to be withheld from annuity payments or sick pay for
provision relating to request for withholding. See subsec. (o)(4) of
this section.
Subsec. (o)(4), (5). Pub. L. 96-601, 4(b), added pars. (4) and
(5).
1978 -- Subsec. (a). Pub. L. 95-600, 101(e)(1), substituted ''With
respect to wages paid after December 31, 1978, the tables so prescribed
shall be the same as the tables prescribed under this subsection which
were in effect on January 1, 1975, except that such tables shall be
modified to the extent necessary to reflect the amendments made by
sections 101 and 102 of the Tax Reduction and Simplification Act of 1977
and the amendments made by section 101 of the Revenue Act of 1978.'' for
''With respect to wages paid after May 31, 1977, and before January 1,
1979, the tables so prescribed shall be the same as the tables
prescribed under this subsection which were in effect on January 1,
1976; except that such tables shall be modified to the extent necessary
so that, had they been in effect for all of 1977, they would reflect the
full year effect of the amendments made by sections 101 and 102 of the
Tax Reduction and Simplification Act of 1977. With respect to wages
paid after December 31, 1978, the tables so prescribed shall be the same
as the tables prescribed under this subsection which were in effect on
January 1, 1975, except that such tables shall be modified to the extent
necessary to reflect the amendments made by sections 101 and 102 of the
Tax Reduction and Simplification Act of 1977.''.
Subsec. (b)(1). Pub. L. 95-600, 102(c)(1), increased the amounts set
out in the table for one withholding exemption for each of the payroll
period categories from $14.40, $28.80, $31.30, $62.50, $187.50, $375.00,
$750.00 and $2.10 to $19.23, $38.46, $41.66, $83.33, $250.00, $500.00,
$1,000.00 and $2.74, respectively.
Subsec. (m)(1). Pub. L. 95-600, 101(e)(2), 102(c)(2), substituted
''$1,000'' for ''$750'', ''$3,400'' for ''$3,200'' and ''$2,300'' for
''$2,200''.
Subsec. (r). Pub. L. 95-600, 601(b)(2), added subsec. (r).
1977 -- Subsec. (a). Pub. L. 95-30, 105(a), substituted ''With
respect to wages paid after May 31, 1977, and before January 1, 1979,
the tables so prescribed shall be the same as the tables prescribed
under this subsection which were in effect on January 1, 1976; except
that such tables shall be modified to the extent necessary so that, had
they been in effect for all of 1977, they would reflect the full year
effect of the amendments made by sections 101 and 102 of the Tax
Reduction and Simplification Act of 1977. With respect to wages paid
after December 31, 1978, the tables so prescribed shall be the same as
the tables prescribed under this subsection which were in effect on
January 1, 1975, except that such tables shall be modified to the extent
necessary to reflect the amendments made by sections 101 and 102 of the
Tax Reduction and Simplification Act of 1977'' for ''With respect to
wages paid prior to January 1, 1978, the tables so prescribed shall be
the same as the tables prescribed under this section which were in
effect on January 1, 1976. With respect to wages paid after December
31, 1977, the Secretary shall prescribe new tables which shall be the
same as the tables prescribed under this subsection which were in effect
on January 1, 1975, except that such tables shall be modified to the
extent necessary to reflect the amendments made to subsections (b) and
(c) of section 141 by the Tax Reform Act of 1976''.
Subsec. (f)(1). Pub. L. 95-30, 105(b)(1), substituted ''zero
bracket'' for ''standard deduction'' in subpar. (G) and in provisions
following subpar. (G).
Subsec. (m)(1)(B). Pub. L. 95-30, 105(b)(2), substituted ''an amount
equal to $3,200 ($2,200'' for ''an amount equal to the lesser of (i) 16
percent of his estimated wages, or (ii) $2,800 ($2,400''.
Subsec. (m)(2)(A). Pub. L. 95-30, 105(b)(3)(A), (B), substituted
''section 151'' for ''sections 141 and 151'' and ''(or the zero bracket
amount (within the meaning of section 63(d)))'' for ''(or the amount of
the standard deduction)''.
Subsec. (m)(2)(C). Pub. L. 95-30, 105(b)(3)(C), substituted ''(or
the zero bracket amount)'' for ''(or the standard deduction)''.
Subsec. (q)(3)(C). Pub. L. 95-30, 405(a), inserted reference to
certain parimutuel pools and jai alai in heading and, in text,
designated existing provisions as cl. (i) and added cl. (ii).
1976 -- Subsec. (a). Pub. L. 94-455, 401(d)(1), 1906 (b)(13)(A),
struck out ''or his delegate'' after ''Secretary'', inserted ''With
respect to wages paid prior to January 1, 1978'' after ''by the
Secretary'', as amended, and substituted ''prescribed under this section
which were'' for ''contained in this subsection as'' after ''same as the
tables'', ''1976'' for ''1975'' after ''January 1'', and ''With respect
to wages paid after December 31, 1977, the Secretary shall prescribe new
tables which shall be the same as the tables prescribed under this
subsection which were in effect on January 1, 1975, except that such
tables shall be modified to the extent necessary to reflect the
amendments made to subsections (b) and (c) of section 141 by the Tax
Reform Act of 1976'' for ''except that the amounts set forth as amounts
of income tax to be withheld with respect to wages paid after April 30,
1975, and before January 1, 1976, shall reflect the full calendar year
effect for 1975 of the amendments made by sections 201, 202, 203, and
204 of the Tax Reduction Act of 1975'' after ''effect on January 1,
1976'', as amended.
Pub. L. 94-414 substituted ''October 1, 1976'' for ''September 15,
1976''.
Pub. L. 94-396 substituted ''September 15, 1976'' for ''September 1,
1976''.
Pub. L. 94-331 substituted ''September 1, 1976'' for ''July 1,
1976''.
Subsec. (c)(4). Pub. L. 94-455, 1906(b)(13)(A), struck out ''or his
delegate'' after ''Secretary''.
Subsec. (c)(6). Pub. L. 94-455, 401(d)(2), 1906(b)(13)(A),
substituted ''the table for an annual payroll period prescribed pursuant
to subsection (a)'' for ''table 7 contained in subsection (a)'' after
''basis of the'', as subsec. (c)(6) was in effect on the day before the
date of enactment of the Tax Reduction Act of 1975, Pub. L. 94-12,
which was approved on Mar. 29, 1975, and struck out ''or his delegate''
after ''Secretary''.
Subsecs. (f), (h), (i), (j). Pub. L. 94-455, 1906(b)(13)(A), struck
out ''or his delegate'' after ''Secretary''.
Subsec. (l). Pub. L. 94-455, 1903(a)(17), substituted ''section
2(a)'' for ''section 2(b)'' after ''as defined in''.
Subsec. (m)(1)(B). Pub. L. 94-455, 401(d)(3), reenacted subpar. (B)
without change.
Subsec. (m)(2)(A). Pub. L. 94-455, 502(b), inserted ''(other than
paragraph (13) thereof)'' after ''under section 62''.
Subsec. (m)(2)(D), (3)(B). Pub. L. 94-455, 1906(b)(13)(A), struck
out ''or his delegate'' after ''Secretary''.
Subsec. (m)(4). Pub. L. 94-455, 504(c)(3), added subpar. (C).
1906(b)(13)(A) struck out ''or his delegate'' after ''Secretary''.
Subsecs. (n), (p). Pub. L. 94-455, 1906(b)(13)(A), struck out ''or
his delegate'' after ''Secretary'' wherever appearing.
Subsec. (q). Pub. L. 94-455, 1207(d), added subsec. (q).
1975 -- Subsec. (a). Pub. L. 94-164, 5(a)(1), inserted provision
that the tables prescribed with respect to wages paid after Dec. 31,
1975, and before July 1, 1976, shall be the same as the tables
prescribed under this subsection which were in effect on Dec. 10, 1975.
Pub. L. 94-12, 205(a), substituted provisions directing the
Secretary to prescribe new withholding tables setting changed
withholding rates for wages paid during the period May 1, 1975, to Dec.
31, 1975, so as to reflect the full calendar year effect for 1975 of the
amendments to the minimum standard deduction, the percentage standard
deduction, the earned income credit, and the additional tax credit by
sections 201, 202, 203, and 204 of the Tax Reduction Act of 1975, Pub.
L. 94-12, for provisions setting out 8 tables to be followed by
employers in withholding taxes on wages paid.
Subsec. (c)(6). Pub. L. 94-12, 205(b), substituted ''the table for
an annual payroll period prescribed pursuant to subsection (a)'' for
''table 7 contained in subsection (a)''. See 1976 Amendment note set
out above.
Subsec. (m)(1)(B). Pub. L. 94-164, 2(b)(2), substituted ''$2,800''
and ''$2,400'' for ''$2,600'' and ''$2,300'' respectively in cl. (ii).
Pub. L. 94-12, 202(b), substituted ''the lesser of (i) 16 percent of
his estimated wages, or (ii) $2,600 ($2,300 in the case of an individual
who is not married (within the meaning of section 143) and who is not a
surviving spouse (as defined in section 2(a)))'' for ''the lesser of (i)
$2,000 or (ii) 15 percent of his estimated wages''.
1971 -- Subsec. (a). Pub. L. 92-178, 208(a), substituted new sets
of tables 1 to 8 applicable (under 208(i)(1)) with respect to wages
paid after Jan. 15, 1972, for the tables applicable in the case of
wages paid as provided in former: par. (1) after Dec. 31, 1969, and
before July 1, 1970; par. (2) after June 30, 1970, and before Jan. 1,
1971; par. (3) after Dec. 31, 1970, and before Jan. 1, 1972; par.
(4) after Dec. 31, 1971, and before Jan. 1, 1973; and par. (5) after
Dec. 31, 1972. Pub. L. 92-178, 208(h)(1), made provisions of par.
(3) applicable (under section 208(i)(2)) with respect to wages paid
after Dec. 31, 1971, and before Jan. 16, 1972.
Subsec. (b)(1). Pub. L. 92-178, 208(b)(1), revised withholding rates
upwards, substituting 14.40; 28.80; 31.30; 62.50; 187.50; 375.00;
750.00; and 2.10 for 12.50; 25.00 27.10; 54.20; 162.50; 325.00;
650.00; and 1.80, respectively, to be effective with respect to wages
paid after Jan. 15, 1972. Pub. L. 92-178, 208(h)(2), in amending Pub.
L. 91-172, 805(b)(1), extended application of such former withholding
rates to wages paid after June 30, 1970, and before Jan. 16, 1972,
previously applicable to wages paid before Jan. 1, 1972.
Subsec. (c)(6). Pub. L. 92-178, 208(g), substituted ''table 7
contained in subsection (a)'' for ''table 7 contained in paragraph (1),
(2), (3), (4), or (5) (whichever is applicable) of subsection (a)''.
Subsec. (f)(1)(G). Pub. L. 92-178, 208(c), added subpar. (G).
Subsec. (f)(7). Pub. L. 92-178, 208(d), added par. (7).
Subsec. (m)(1)(B). Pub. L. 92-178, 208(e), substituted ''an amount
equal to the lesser of (i) $2,000 or (ii) 15 percent of his estimated
wages'' for ''an amount equal to 15 percent of his estimated wages''.
Subsec. (m)(2)(A). Pub. L. 92-178, 208(f)(1), inserted ''or (if such
a return has not been filed for such preceding taxable year at the time
the withholding exemption certificate is furnished the employer) the
second taxable year preceding the estimation year'' after ''for the
taxable year preceding the estimation year''.
Subsec. (m)(2)(D). Pub. L. 92-178, 208(f)(2), substituted as
definition of ''estimation year'' the calendar year in which the wages
are paid for prior provision defining term as meaning ''(i) with respect
to payments of wages after April 30 and on or before December 31 of any
calendar year, such calendar year, and (ii) with respect to payments of
wages on or after January 1 and before May 1 of any calendar year, the
preceding calendar year (except that with respect to an exemption
certificate furnished by an employee after he has filed his return for
the preceding calendar year, such term means the current calendar
year).''
Subsec. (m)(3)(B) to (E). Pub. L. 92-178, 208(f)(3), struck out
subpars. (B) and (C) providing that only one certificate be in effect
and for termination of effectiveness of certificate and redesignated
subpars. (D) and (E) as (B) and (C), respectively.
1969 -- Subsec. (a)(1). Pub. L. 91-172, 805(a), (b)(2), substituted
new sets of tables 1 to 8 for application to wages paid after Dec. 31,
1969, and before July 1, 1970, and after June 30, 1970, and before
January 1, 1972, for the tables applicable to wages paid before July 13,
1968, and after Dec. 31, 1969.
Pub. L. 91-53, 6(a)(1), substituted ''December 31, 1969'' for ''July
31, 1969''.
Pub. L. 91-36, 2(a)(1), substituted ''July 31, 1969'' for ''June 30,
1969''.
Subsec. (a)(2). Pub. L. 91-172, 805(a), substituted a set of tables
1 to 8 for application to wages paid after June 30, 1970, and before
Jan. 1, 1971, for the tables applicable to wages paid after June 30,
1970, and before Jan. 1, 1970.
Pub. L. 91-53, 6(a)(2), substituted ''January 1, 1970'' for ''August
1, 1969''.
Pub. L. 91-36, 2(a)(2), substituted ''August 1, 1969'' for ''July 1,
1969''.
Subsec. (a)(3) to (5). Pub. L. 91-172, 805(a), added sets of tables
applicable, respectively, to wages paid after Dec. 31, 1970, and before
Jan. 1, 1972, after Dec. 31, 1971, and before Jan. 1, 1973, and after
Dec. 31, 1972.
Subsec. (b)(1). Pub. L. 91-172, 805(b)(1)-(4), revised withholding
rates effective with respect to wages paid after Dec. 31, 1969, and
before July 1, 1970, for the period after June 30, 1970, and before Jan.
1, 1972, during 1972, and after 1972.
Subsec. (c)(1). Pub. L. 91-172, 805(c)(1), substituted provisions
authorizing employer to deduct and withhold tax determinable according
to tables prescribed by the Secretary or his delegate for provisions
under which the employer was authorized to deduct and withhold tax only
according to tables set out.
Subsec. (c)(6). Pub. L. 91-172, 805(c)(2), substituted provisions
for determination of amount deductible according to tables prescribed by
the Secretary or his delegate and for computation of wages and amounts
of income tax after Dec. 31, 1969, for provisions for determination of
such wages and amounts of income tax after July 13, 1968, and before
Jan. 1, 1970.
Pub. L. 91-53, 6(a)(3), substituted ''January 1, 1970'' for ''August
1, 1969''.
Pub. L. 91-36, 2(a)(3), substituted ''August 1, 1969'' for ''July 1,
1969''.
Subsec. (h). Pub. L. 91-172, 805(d), redesignated existing pars.
(1) to (3) as subpars. (A) to (C) of par. (1), and added pars. (2) to
(4).
Subsec. (m)(1). Pub. L. 91-172, 805(e)(2), substituted $750 for $700
in the material preceding subpar. (A) and in subpar. (B) substituted
15 per cent for 10 per cent of the first $7,500 and 17 per cent of
remainder of the estimated wages.
Subsec. (m)(2)(A). Pub. L. 91-172, 805(e)(2), inserted amount of
standard deduction as an alternative limit in cl. (i), and substituted
the determinable additional deductions for provisions referring to an
employee who did not show such deductions on his return.
Subsec. (m)(2)(B). Pub. L. 91-172, 805(e)(2), struck out limit on
aggregate amount.
Subsec. (m)(2)(C), (D). Pub. L. 91-172, 805(e)(1), (2), added
subpar. (C). Former subpar. (C) redesignated (D)
Subsec. (n). Pub. L. 91-172, 805(f)(1), added subsec. (n).
Subsecs. (o), (p). Pub. L. 91-172, 805(g), added subsecs. (o) and
(p).
1968 -- Subsec. (a). Pub. L. 90-364, 102(c)(1), designated existing
Tables 1 to 8 as constituting par. (1), inserted provisions preceding
existing Table 1-8 so as to limit their application to the case of wages
paid on or before the 15th day after the date of the enactment of the
Revenue and Expenditure Control Act of 1968 or after June 30, 1969, and
added par. (2).
Subsec. (c)(6). Pub. L. 90-364, 102(c)(2), added par. (6).
1966 -- Subsec. (a). Pub. L. 89-368, 101(a), struck out reference
to subsections (j) and (k) and substituted provisions establishing
separate tables for single persons and for married persons in each of
eight payroll period categories each containing six graduated
withholding rates ranging from 14 to 30 percent for provisions placing
the rate at a fixed 14 percent.
Subsec. (b)(1). Pub. L. 89-368, 101(b), increased amounts set out
for one withholding exemption for each of the payroll period categories
from ''$13.00'', $26.00'', ''$28.00'', ''$56.00'', ''$167.00'',
''$333.00'', ''$667.00'', and ''$1.80'' to ''$13.50'', ''$26.90'',
''$29.20'', ''$58.30'', ''$175.00'', ''$350.00'', ''$700.00'', and
''$1.90'' respectively.
Subsec. (c)(1). Pub. L. 89-368, 101(c), replaced existing tables
with separate tables for employees who are married and for employees who
are not married covering weekly, biweekly, semimonthly, monthly, and
daily or miscellaneous pay periods and reflecting increased and
graduated withholding rates.
Subsec. (f)(1)(F), (3)(B). Pub. L. 89-368, 101(e)(1), (3), added
par. (1)(F) and, in par. (3)(B), changed definition of ''status
determination date'' from January 1 and July 1 of each year to January
1, May 1, July 1, and October 1 of each year.
Subsec. (l). Pub. L. 89-368, 101(d), added subsec. (l).
Subsec. (m). Pub. L. 89-368, 101(e)(2), added subsec. (m).
1965 -- Subsec. (a). Pub. L. 89-97, 313(d)(3), substituted
''subsections (j) and (k)'' for ''subsection (j)''.
Subsec. (h)(3). Pub. L. 89-97, 313(d)(4), inserted ''(and, in the
case of tips referred to in subsection (k), within 30 days thereafter)''
after ''quarter'' first place it appears.
Subsec. (k). Pub. L. 89-212 inserted ''or section 3202 (c)(2)'' and
''or section 3202(a)''.
Pub. L. 89-97, 313(d)(5), added subsec. (k).
1964 -- Subsec. (a). Pub. L. 88-272, 302(a), reduced tax from 18%
to 14%.
Subsec. (c)(1). Pub. L. 88-272, 302(b), substituted new tables
reflecting lowered withholding rates.
1961 -- Subsec. (f)(6). Pub. L. 87-256 added par. (6).
1955 -- Subsec. (a). Act Aug. 9, 1955, 2(a), inserted ''(except as
provided in subsection (j))'' after ''upon such wages''.
Subsec. (j). Act Aug. 9, 1955, 2(b), added subsec. (j).
Section 1934(b) of Pub. L. 102-486 provided that: ''The amendment
made by this section (amending this section) applies to payments
received after December 31, 1992.''
Section 1942(b) of Pub. L. 102-486 provided that: ''The amendments
made by subsection (a) (amending this section) shall apply to payments
of winnings after December 31, 1992.''
Amendment by Pub. L. 102-318 applicable, except as otherwise
provided, to distributions after Dec. 31, 1992, see section 522(d) of
Pub. L. 102-318, set out as a note under section 401 of this title.
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Section 10302(b) of Pub. L. 100-203 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to
certificates furnished after the day 30 days after the date of the
enactment of this Act (Dec. 22, 1987).''
Amendment by section 104(b)(15) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 151(a) of Pub.
L. 99-514, set out as a note under section 1 of this title.
Amendment by section 1301(j)(8) of Pub. L. 99-514 applicable to
bonds issued after Aug. 15, 1986, except as otherwise provided, see
sections 1311 to 1318 of Pub. L. 99-514, set out as an Effective Date;
Transitional Rules note under section 141 of this title.
Amendment by section 1303(b)(4) of Pub. L. 99-514 effective Oct.
22, 1986, see section 1311(f) of Pub. L. 99-514, as amended, set out as
an Effective Date; Transitional Rules note under section 141 of this
title.
Section 6(d) of Pub. L. 99-44 provided that: ''The amendment made
by section 3 (amending this section) shall take effect on January 1,
1985.''
Amendment by Pub. L. 98-67 applicable with respect to payments made
after Dec. 31, 1983, see section 110(a) of Pub. L. 98-67, set out as a
note under section 31 of this title.
Section 317(b) of Pub. L. 97-248 provided: ''The amendments made by
subsection (a) (amending this section) shall apply to payments made
after December 31, 1983.''
Amendment by section 334(d) of Pub. L. 97-248 applicable to payments
or other distributions made after Dec. 31, 1982, see section 334(e) of
Pub. L. 97-248, set out as an Effective Date note under section 3405 of
this title.
Section 101(f)(2) of Pub. L. 97-34 provided that: ''The amendments
made by subsection (e) (amending this section) shall apply to
remuneration paid after September 30, 1981; except that the amendment
made by subsection (e)(5) (amending this section) shall apply to
remuneration paid after December 31, 1981.''
Section 4(f) of Pub. L. 96-601 provided that: ''The amendments made
by this section (amending this section and section 6051 of this title)
shall apply to payments made on or after the first day of the first
calendar month beginning more than 120 days after the date of the
enactment of this Act (Dec. 24, 1980).''
Section 101(f)(2) of Pub. L. 95-600 provided that: ''The amendments
made by subsection (e) (amending this section) shall apply to
remuneration paid after December 31, 1978.''
Section 102(d)(2) of Pub. L. 95-600 provided that: ''The amendments
made by subsection (c) (amending this section) shall apply with respect
to remuneration paid after December 31, 1978.''
Amendment by section 601(b)(2) of Pub. L. 95-600 applicable with
respect to corporations chartered after Dec. 31, 1978, and before Jan.
1, 1984, see section 601(d) of Pub. L. 95-600, set out as a note under
section 172 of this title.
Section 106(b) of Pub. L. 95-30 provided that: ''The amendments
made by section 105 (amending this section) shall apply to wages paid
after April 30, 1977.''
Section 405(b) of Pub. L. 95-30 provided that: ''The amendments
made by this section (amending this section) apply to payments made
after April 30, 1977.''
Amendment by section 401(d) of Pub. L. 94-455 applicable to wages
paid after Sept. 14, 1976, see section 401(e) of Pub. L. 94-455, set
out as a note under section 32 of this title.
Section 1207(f)(3) of Pub. L. 94-455 provided that: ''The
amendments made by subsection (d) (amending this section) shall apply to
payments of winnings made after the 90th day after the date of the
enactment of this Act (Oct. 4, 1976).''
Amendment by section 2(b)(2) of Pub. L. 94-164 applicable to taxable
years ending after Dec. 31, 1975 and before Jan. 1, 1977, see section
2(g) of Pub. L. 94-164, set out as an Effective Date of 1975 Amendment
note under section 32 of this title.
Section 209(c) of Pub. L. 94-12, as amended by Pub. L. 94-164,
5(a)(2); Pub. L. 94-331, 3(a)(2); Pub. L. 94-396, 2(b); Pub. L.
94-414, 3(a)(2), provided that: ''The amendments made by sections
202(b) and 205 (amending this section) shall apply to wages paid after
April 30, 1975, and before October 1, 1976.''
Section 208(i) of Pub. L. 92-178 provided that:
''(1) The amendments made by this section (amending this section)
(other than subsection (h)) shall apply with respect to wages paid after
January 15, 1972.
''(2) The amendments made by subsection (h) (amending this section)
shall apply with respect to wages paid after December 31, 1971, and
before January 16, 1972.''
Section 805(h) of Pub. L. 91-172, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) The amendments made by subsections (a), (b), (c), (d), and (e)
(amending this section) shall apply with respect to remuneration paid
after December 31, 1969.
''(2) The amendment made by subsection (f) (amending this section and
section 6051 of this title) applies to wages paid after April 30, 1970.
''(3) Subsection (o) of section 3402 of the Internal Revenue Code of
1986 (formerly I.R.C. 1954), added by subsection (g) of this subsection,
shall apply to payments made after December 31, 1970. Subsection (p) of
such section 3402, added by subsection (g) of this section, shall apply
to payments made after June 30, 1970.''
Section 6(b) of Pub. L. 91-53 provided that: ''The amendments made
by this section (amending this section) shall apply with respect to
wages paid after July 31, 1969, and before January 1, 1970.''
Section 2(b) of Pub. L. 91-36 provided that: ''The amendments made
by subsection (a) (amending this section) shall apply with respect to
wages paid after June 30, 1969.''
Section 101(e)(6) of Pub. L. 89-368 provided that: ''The amendments
made by paragraphs (1) and (2) of this subsection (amending this
section) shall apply only with respect to remuneration paid after
December 31, 1966, but only with respect to withholding exemptions based
on estimation years beginning after such date.''
Section 101(g) of Pub. L. 89-368 provided that: ''The amendments
made by this section (other than subsection (e) (amending this section))
shall apply only with respect to remuneration paid after April 30,
1966.''
Amendment by Pub. L. 89-212 effective only with respect to tips
received after 1965, see section 6 of Pub. L. 89-212, set out as a note
under section 3201 of this title.
Amendment by Pub. L. 89-97 applicable only with respect to tips
received by employees after 1965, see section 313(f) of Pub. L. 89-97,
set out as an Effective Date note under section 6053 of this title.
Section 302(d) of Pub. L. 88-272 provided that: ''The amendments
made by subsections (a) and (b) of this section (amending this section)
shall apply with respect to remuneration paid after the seventh day
following the date of the enactment of this Act (Feb. 26, 1964). The
amendment made by subsection (c) of this section (amending section 1441
of this title) shall apply with respect to payments made after the
seventh day following the date of the enactment of this Act.''
Amendment by Pub. L. 87-256 applicable with respect to wages paid
after Dec. 31, 1961, see section 110(h)(4) of Pub. L. 87-256, set out
as a note under section 3401 of this title.
Section 3 of act Aug. 9, 1955, provided that: ''The amendment made
by section 2 (amending this section) shall be applicable only with
respect to remuneration paid after the date of enactment of this Act
(Aug. 9, 1955).''
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit taken
into account prior to Nov. 5, 1990, for purposes of determining
liability for tax for periods ending after Nov. 5, 1990, see section
11821(b) of Pub. L. 101-508, set out as a note under section 29 of this
title.
For provisions directing that if any amendments made by subtitle B (
521-523) of title V of Pub. L. 102-318 require an amendment to any
plan, such plan amendment shall not be required to be made before the
first plan year beginning on or after Jan. 1, 1994, see section 523 of
Pub. L. 102-318, set out as a note under section 401 of this title.
Section 1581(a) of Pub. L. 99-514 provided that: ''The Secretary of
the Treasury or his delegate shall modify the withholding schedules and
withholding exemption certificates under section 3402 of the Internal
Revenue Code of 1954 (now 1986) to better approximate actual tax
liability under the amendments made by this Act (see Tables for
classification).''
Section 1581(c) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, 1015(p), Nov. 10, 1988, 102 Stat. 3572, provided that: ''If
an employee has not filed a revised withholding allowance certificate
before October 1, 1987, the employer shall withhold income taxes from
the employee's wages --
''(1) as if the employee claimed 1 withholding allowance, if the
employee checked the 'single' box on the employee's previous withholding
allowance certificate, or
''(2) as if the employee claimed 2 withholding allowances, if the
employee checked the 'married' box on the employee's previous
withholding allowance certificate.
The preceding sentence shall not apply if its application would
result in an increase in the number of withholding allowances for the
employee.''
Section 304 of Pub. L. 95-30, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that: ''No person shall be
liable in respect of any failure to deduct and withhold under section
3402 of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)
(relating to income tax collected at source) on remuneration paid before
January 1, 1977, to the extent that the duty to deduct and withhold was
created or increased by any provision of the Tax Reform Act of 1976
(Pub. L. 94-455).''
Section 805(b)(3), (4) of Pub. L. 91-172, title VIII, Dec. 30,
1969, 83 Stat. 704, which provided for section 3402(b)(1) withholding
rates of 13.50; 26.90; 29.20; 58.30; 175.00; 350.00; 700.00; and
1.90, effective with respect to wages during 1972, and withholding rates
of 14.40; 28.80; 31.30; 62.50; 187.50; 375.00; 750.00; and 2.10,
effective with respect to wages paid after 1972, was repealed by section
208(b)(2) of Pub. L. 92-178.
Section 101(f) of Pub. L. 89-368, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that: ''Notwithstanding
section 3402(f)(3)(B) of the Internal Revenue Code of 1986 (formerly
I.R.C. 1954), a withholding exemption certificate furnished the employer
after the date of the enactment of this Act (Mar. 15, 1966) and before
May 1, 1966, shall take effect with respect to the first payment of
wages made on or after May 1, 1966, or the 10th day after the date on
which such certificate is furnished to the employer, whichever is later,
and at the election of the employer such certificate may be made
effective with respect to any payment of wages made on or after the date
on which such certificate is furnished.''
Section 1 of act Aug. 9, 1955, provided that: ''The terms used in
this Act (amending subsecs. (a) and (j) of this section) shall have the
same meaning as when used in the Internal Revenue Code.''
Adjustment of tax under this section, see section 6205 of this title.
Amount and method of adjustment inapplicable to taxes under this
chapter, see section 1314 of this title.
Amount withheld as special trust fund for United States, see section
7501 of this title.
Assessment for underpayment of tax imposed by this section, see
section 6205 of this title.
Nondeductibility of tax deducted and withheld under this chapter as
deduction from gross income, see section 3502 of this title.
Penalty for fraudulently withholding exemption certificate or failure
to supply information, see section 7204 of this title.
Personal exemptions allowable as deductions from gross income, see
section 151 et seq. of this title.
Receipts for employees for taxes withheld by employers, see section
6051 of this title.
Tax withheld on wages as credit against income tax, see section 31 of
this title.
Time tax withheld deemed paid, see section 6513 of this title.
2719; title 42 section 662.
26 USC 3403. Liability for tax
TITLE 26 -- INTERNAL REVENUE CODE
The employer shall be liable for the payment of the tax required to
be deducted and withheld under this chapter, and shall not be liable to
any person for the amount of any such payment.
(Aug. 16, 1954, ch. 736, 68A Stat. 469; Sept. 3, 1982, Pub. L.
97-248, title III, 307(a)(2), 308(a), 96 Stat. 589, 591; Aug. 5,
1983, Pub. L. 98-67, title I, 102(a), 97 Stat. 369.)
1983 -- Pub. L. 98-67 repealed amendments made by Pub. L. 97-248.
See 1982 Amendment note below.
1982 -- Pub. L. 97-248 provided that, applicable to payments of
interest, dividends, and patronage dividends paid or credited after June
30, 1983, this section is amended by striking out ''this chapter'' and
inserting in lieu thereof ''this subchapter''. Section 102(a), (b) of
Pub. L. 98-67, title I, Aug. 5, 1983, 97 Stat. 369, repealed subtitle
A ( 301-308) of title III of Pub. L. 97-248 as of the close of June
30, 1983, and provided that the Internal Revenue Code of 1954 (now 1986)
(this title) shall be applied and administered (subject to certain
exceptions) as if such subtitle A (and the amendments made by such
subtitle A) had not been enacted.
Refund or credit to employer for overpayment of tax imposed by this
chapter, see section 6414 of this title.
Willful failure to collect or pay one's tax, punishment for, see
section 7202 of this title.
26 USC 3404. Return and payment by governmental employer
TITLE 26 -- INTERNAL REVENUE CODE
If the employer is the United States, or a State, or political
subdivision thereof, or the District of Columbia, or any agency or
instrumentality of any one or more of the foregoing, the return of the
amount deducted and withheld upon any wages may be made by any officer
or employee of the United States, or of such State, or political
subdivision, or of the District of Columbia, or of such agency or
instrumentality, as the case may be, having control of the payment of
such wages, or appropriately designated for that purpose.
(Aug. 16, 1954, ch. 736, 68A Stat. 469; Oct. 4, 1976, Pub. L.
94-455, title XIX, 1903(c), 90 Stat. 1810.)
1976 -- Pub. L. 94-455 struck out ''Territory'' after ''or a State''
and ''of such State''.
26 USC 3405. Special rules for pensions, annuities, and certain other
deferred income
TITLE 26 -- INTERNAL REVENUE CODE
(a) Periodic payments
(1) Withholding as if payment were wages
The payor of any periodic payment (as defined in subsection (e)(2))
shall withhold from such payment the amount which would be required to
be withheld from such payment if such payment were a payment of wages by
an employer to an employee for the appropriate payroll period.
(2) Election of no withholding
An individual may elect to have paragraph (1) not apply with respect
to periodic payments made to such individual. Such an election shall
remain in effect until revoked by such individual.
(3) When election takes effect
Any election under this subsection (and any revocation of such an
election) shall take effect as provided by subsection (f)(3) of section
3402 for withholding exemption certificates.
(4) Amount withheld where no withholding exemption certificate in
effect
In the case of any payment with respect to which a withholding
exemption certificate is not in effect, the amount withheld under
paragraph (1) shall be determined by treating the payee as a married
individual claiming 3 withholding exemptions.
(b) Nonperiodic distribution
(1) Withholding
The payor of any nonperiodic distribution (as defined in subsection
(e)(3)) shall withhold from such distribution an amount equal to 10
percent of such distribution.
(2) Election of no withholding
(A) In general
An individual may elect not to have paragraph (1) apply with respect
to any nonperiodic distribution.
(B) Scope of election
An election under subparagraph (A) --
(i) except as provided in clause (ii), shall be on a
distribution-by-distribution basis, or
(ii) to the extent provided in regulations, may apply to subsequent
nonperiodic distributions made by the payor to the payee under the same
arrangement.
(c) Eligible rollover distributions
(1) In general
In the case of any designated distribution which is an eligible
rollover distribution --
(A) subsections (a) and (b) shall not apply, and
(B) the payor of such distribution shall withhold from such
distribution an amount equal to 20 percent of such distribution.
(2) Exception
Paragraph (1)(B) shall not apply to any distribution if the
distributee elects under section 401(a)(31)(A) to have such distribution
paid directly to an eligible retirement plan.
(3) Eligible rollover distribution
For purposes of this subsection, the term ''eligible rollover
distribution'' has the meaning given such term by section 402(f)(2)(A)
(or in the case of an annuity contract under section 403(b), a
distribution from such contract described in section 402(f)(2)(A)).
(d) Liability for withholding
(1) In general
Except as provided in paragraph (2), the payor of a designated
distribution (as defined in subsection (e)(1)) shall withhold, and be
liable for, payment of the tax required to be withheld under this
section.
(2) Plan administrator liable in certain cases
(A) In general
In the case of any plan to which this paragraph applies, paragraph
(1) shall not apply and the plan administrator shall withhold, and be
liable for, payment of the tax unless the plan administrator --
(i) directs the payor to withhold such tax, and
(ii) provides the payor with such information as the Secretary may
require by regulations.
(B) Plans to which paragraph applies
This paragraph applies to any plan described in, or which at any time
has been determined to be described in --
(i) section 401(a),
(ii) section 403(a), or
(iii) section 301(d) of the Tax Reduction Act of 1975.
(e) Definitions and special rules
For purposes of this section --
(1) Designated distribution
(A) In general
Except as provided in subparagraph (B), the term ''designated
distribution'' means any distribution or payment from or under --
(i) an employer deferred compensation plan,
(ii) an individual retirement plan (as defined in section
7701(a)(37)), or
(iii) a commercial annuity.
(B) Exceptions
The term ''designated distribution'' shall not include --
(i) any amount which is wages without regard to this section,
(ii) the portion of a distribution or payment which it is reasonable
to believe is not includible in gross income, and
(iii) any amount which is subject to withholding under subchapter A
of chapter 3 (relating to withholding of tax on nonresident aliens and
foreign corporations) by the person paying such amount or which would be
so subject but for a tax treaty, or
(iv) any distribution described in section 404(k)(2).
For purposes of clause (ii), any distribution or payment from or
under an individual retirement plan shall be treated as includible in
gross income.
(2) Periodic payment
The term ''periodic payment'' means a designated distribution which
is an annuity or similar periodic payment.
(3) Nonperiodic distribution
The term ''nonperiodic distribution'' means any designated
distribution which is not a periodic payment.
((4) Repealed. Pub. L. 102-318, title V, 521(b)(38), July 3, 1992,
106 Stat. 312)
(5) Employer deferred compensation plan
The term ''employer deferred compensation plan'' means any pension,
annuity, profit-sharing, or stock bonus plan or other plan deferring the
receipt of compensation.
(6) Commercial annuity
The term ''commercial annuity'' means an annuity, endowment, or life
insurance contract issued by an insurance company licensed to do
business under the laws of any State.
(7) Plan administrator
The term ''plan administrator'' has the meaning given such term by
section 414(g).
(8) Maximum amount withheld
The maximum amount to be withheld under this section on any
designated distribution shall not exceed the sum of the amount of money
and the fair market value of other property (other than securities of
the employer corporation) received in the distribution. No amount shall
be required to be withheld under this section in the case of any
designated distribution which consists only of securities of the
employer corporation and cash (not in excess of $200) in lieu of
financial shares. For purposes of this paragraph, the term ''securities
of the employer corporation'' has the meaning given such term by section
402(e)(4)(E).
(9) Separate arrangements to be treated separately
If the payor has more than 1 arrangement under which designated
distributions may be made to any individual, each such arrangement shall
be treated separately.
(10) Time and manner of election
(A) In general
Any election and any revocation under this section shall be made at
such time and in such manner as the Secretary shall prescribe.
(B) Payor required to notify payee of rights to elect
(i) Periodic payments
The payor of any periodic payment --
(I) shall transmit to the payee notice of the right to make an
election under subsection (a) not earlier than 6 months before the first
of such payments and not later than when making the first of such
payments,
(II) if such a notice is not transmitted under subclause (I) when
making such first payment, shall transmit such a notice when making such
first payment, and
(III) shall transmit to payees, not less frequently than once each
calendar year, notice of their rights to make elections under subsection
(a) and to revoke such elections.
(ii) Nonperiodic distributions
The payor of any nonperiodic distribution shall transmit to the payee
notice of the right to make any election provided in subsection (b) at
the time of the distribution (or at such earlier time as may be provided
in regulations).
(iii) Notice
Any notice transmitted pursuant to this subparagraph shall be in such
form and contain such information as the Secretary shall prescribe.
(11) Withholding includes deduction
The terms ''withholding'', ''withhold'', and ''withheld'' include
''deducting'', ''deduct'', and ''deducted''.
(12) Failure to provide correct TIN
If --
(A) a payee fails to furnish his TIN to the payor in the manner
required by the Secretary, or
(B) the Secretary notifies the payor before any payment or
distribution that the TIN furnished by the payee is incorrect,
no election under subsection (a)(2) or (b)(3) /1/ shall be treated as
in effect and subsection (a)(4) shall not apply to such payee.
(13) Election may not be made with respect to certain payments
outside the United States or its possessions
(A) In general
Except as provided in subparagraph (B), in the case of any periodic
payment or nonperiodic distribution which is to be delivered outside of
the United States and any possession of the United States, no election
may be made under subsection (a)(2) or (b)(2) with respect to such
payment.
(B) Exception
Subparagraph (A) shall not apply if the recipient certifies to the
payor, in such manner as the Secretary may prescribe, that such person
is not --
(i) a United States citizen or a resident alien of the United States,
or
(ii) an individual to whom section 877 applies.
(f) Withholding to be treated as wage withholding under section 3402
for other purposes
For purposes of this chapter (and so much of subtitle F as relates to
this chapter) --
(1) any designated distribution (whether or not an election under
this section applies to such distribution) shall be treated as if it
were wages paid by an employer to an employee with respect to which
there has been withholding under section 3402, and
(2) in the case of any designated distribution not subject to
withholding under this section by reason of an election under this
section, the amount withheld shall be treated as zero.
(Added Pub. L. 97-248, title III, 334(a), Sept. 3, 1982, 96 Stat.
623; amended Pub. L. 98-369, div. A, title V, 542(c), title VII,
714(j)(1), (4), (5), 722(h)(4)(A), July 18, 1984, 98 Stat. 891, 962,
963, 976; Pub. L. 99-514, title XI, 1102(e)(1), title XII,
1234(b)(1), title XVIII, 1875(c)(10), Oct. 22, 1986, 100 Stat. 2416,
2566, 2895; Pub. L. 100-647, title I, 1012(bb)(2)(A)-(C), Nov. 10,
1988, 102 Stat. 3534; Pub. L. 102-318, title V, 521(b)(36)-(40),
522(b)(1)-(2)(C), July 3, 1992, 106 Stat. 312-314.)
Section 301(d) of the Tax Reduction Act of 1975, referred to in
subsec. (d)(2)(B)(iii), is section 301(d) of Pub. L. 94-12, Mar. 29,
1975, 89 Stat. 26, relating to plan requirements for taxpayers electing
additional credits, which was set out as a note under section 46 of this
title and was repealed by Pub. L. 95-600, title I, 141(f)(1), Nov. 6,
1978, 92 Stat. 2795.
Subsection (b)(3), referred to in subsec. (e)(12), was redesignated
subsec. (b)(2) by Pub. L. 102-318, title V, 521(b)(37)(B), July 3,
1992, 106 Stat. 312.
1992 -- Subsec. (a). Pub. L. 102-318, 521(b)(36), substituted
''Periodic payments'' for ''Pensions, annuities, etc.'' in heading.
Subsec. (a)(1). Pub. L. 102-318, 522(b)(2)(A), substituted
''subsection (e)(2)'' for ''subsection (d)(2)''.
Subsec. (b)(1). Pub. L. 102-318, 521(b)(37)(A), 522(b)(2)(B),
substituted ''subsection (e)(3)'' for ''subsection (d)(3)'' and ''an
amount equal to 10 percent of such distribution'' for ''the amount
determined under paragraph (2)''.
Subsec. (b)(2), (3). Pub. L. 102-318, 521(b)(37)(B), redesignated
par. (3) as (2) and struck out former par. (2) which related to amount
of withholding.
Subsec. (c). Pub. L. 102-318, 522(b)(1), added subsec. (c). Former
subsec. (c) redesignated (d).
Subsec. (d). Pub. L. 102-318, 522(b)(1), (2)(C), redesignated
subsec. (c) as (d) and substituted ''subsection (e)(1)'' for
''subsection (d)(1)'' in par. (1). Former subsec. (d) redesignated
(e).
Pub. L. 102-318, 521(b)(40), substituted ''(b)(2)'' for ''(b)(3)''
in par. (13)(A).
Pub. L. 102-318, 521(b)(39), amended par. (8) generally. Prior to
amendment, par. (8) read as follows: ''The maximum amount to be
withheld under this section on any designated distribution shall not
exceed the sum of the amount of money and the fair market value of other
property (other than employer securities of the employer corporation
(within the meaning of section 402(a)(3))) received in the distribution.
No amount shall be required to be withheld under this section in the
case of any designated distribution which consists only of employer
securities of the employer corporation (within the meaning of section
402(a)(3)) and cash (not in excess of $200) in lieu of fractional
shares.''
Pub. L. 102-318, 521(b)(38), struck out par. (4) which defined
''qualified total distribution'' and provided special rule for
accumulated deductible employee contributions in determining qualified
total distribution.
Subsecs. (e), (f). Pub. L. 102-318, 522(b)(1), redesignated
subsecs. (d) and (e) as (e) and (f), respectively.
1988 -- Subsec. (d)(13). Pub. L. 100-647, 1012(bb)(2)(C),
substituted ''United States or its possessions'' for ''United States''
in heading.
Subsec. (d)(13)(A). Pub. L. 100-647, 1012(bb)(2)(A), substituted
''the United States and any possession of the United States'' for ''the
United States''.
Subsec. (d)(13)(B)(i). Pub. L. 100-647, 1012(bb)(2)(B), amended cl.
(i) generally, substituting ''or a resident alien of the United States''
for ''who is a bona fide resident of a foreign country''.
1986 -- Subsec. (d)(1)(B). Pub. L. 99-514, 1102(e)(1), inserted
last sentence for ''For purposes of clause (ii), any distribution or
payment from or under an individual retirement plan shall be treated as
includible in gross income.''
Subsec. (d)(1)(B)(iii), (iv). Pub. L. 99-514, 1875(c)(10),
reenacted cl. (iii) relating to amounts subject to withholding under
subchapter A of chapter 3 as cl. (iii) and reenacted cl. (iii)
relating to distribution described in section 404(k)(2) as cl. (iv).
Subsec. (d)(13). Pub. L. 99-514, 1234(b)(1), added par. (13).
1984 -- Subsec. (b)(2)(C). Pub. L. 98-369, 714(j)(1), substituted
''nonperiodic distribution'' for ''distribution described in
subparagraph (B)'' and ''subparagraph (A) or (B) (as the case may be)
shall be applied by taking into account'' for ''the Secretary, in
prescribing tables or procedures under paragraph (1), shall take into
account'', designated phrase ''which is made by reason of a
participant's death'' as cl. (i) and added cl. (ii).
Subsec. (d)(1)(B)(iii). Pub. L. 98-369, 714(j)(4), added cl. (iii)
relating to amounts subject to withholding under subchapter A of chapter
3.
Pub. L. 98-369, 542(c), added cl. (iii) relating to distributions
described in section 404(k)(2). Directory language that section
(d)(1)(B) be amended by striking out ''and'' at end of cl. (i) and
substituting '', or'' for the period at end of cl. (ii) could not be
executed in view of prior amendment by section 714(j)(4) of Pub. L.
98-369, which struck out ''and'' at end of cl. (i) and substituted '',
and'' for the period at end of cl. (ii).
Subsec. (d)(8). Pub. L. 98-369, 714(j)(5), freed from withholding
requirement any designated distribution which consists only of employer
securities of the employer corporation (within the meaning of section
402(a)(3)) and cash (not in excess of $200) in lieu of fractional
shares.
Subsec. (d)(12). Pub. L. 98-369, 722(h)(4), added par. (12).
Amendment by section 521(b)(36)-(40) of Pub. L. 102-318 applicable
to distributions after Dec. 31, 1992, see section 521(e) of Pub. L.
102-318, set out as a note under section 402 of this title.
Amendment by section 522(b)(1)-(2)(C) of Pub. L. 102-318 applicable,
except as otherwise provided, to distributions after Dec. 31, 1992, see
section 522(d) of Pub. L. 102-318, set out as a note under section 401
of this title.
Section 1012(bb)(2)(D) of Pub. L. 100-647 provided that: ''The
amendments made by this paragraph (amending this section) shall apply to
distributions made after the date of the enactment of this Act (Nov. 10,
1988).''
Amendment by section 1102(e)(1) of Pub. L. 99-514 applicable to
contributions and distributions for taxable years beginning after Dec.
31, 1986, see section 1102(g) of Pub. L. 99-514, set out as a note
under section 219 of this title.
Section 1234(b)(2) of Pub. L. 99-514 provided that: ''The amendment
made by this subsection (amending this section) shall apply to payments
after December 31, 1986.''
Amendment by section 1875(c)(10) of Pub. L. 99-514 effective, except
as otherwise provided, as if included in the provisions of the Tax
Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment
relates, see section 1881 of Pub. L. 99-514, set out as a note under
section 48 of this title.
Amendment by section 542(c) of Pub. L. 98-369 applicable to taxable
years beginning after July 18, 1984, see section 542(d) of Pub. L.
98-369, set out as a note under section 404 of this title.
Amendment by section 714(j)(1), (4), (5) of Pub. L. 98-369 effective
as if included in the provision of the Tax Equity and Fiscal
Responsibility Act of 1982, Pub. L. 97-248, to which such amendment
relates, see section 715 of Pub. L. 98-369, set out as a note under
section 31 of this title.
Amendment by section 722(h)(4)(A) of Pub. L. 98-369 applicable to
payments or distributions after Dec. 31, 1984, unless the payor elects
to have such amendment apply to payments or distributions before Jan.
1, 1985, see section 722(h)(5)(B) of Pub. L. 98-369, set out as a note
under section 643 of this title.
Section 334(e) of Pub. L. 97-248, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) Amendment made by subsections (a) and (d). -- Except as
provided in paragraph (4), the amendment made by subsections (a)
(enacting this section) and (d) (amending section 3402 of this title)
shall apply to payments or other distributions made after December 31,
1982.
''(2) Amendments made by subsection (b). -- Except as provided in
paragraph (4), the amendments made by subsection (b) (amending section
6047 of this title) shall take effect on January 1, 1983.
''(3) Amendments made by subsection (c). -- The amendments made by
subsection (c) (enacting section 6704 of this title) shall take effect
on January 1, 1985.
''(4) Periodic payments beginning before january 1, 1983. -- For
purposes of section 3405(a) of the Internal Revenue Code of 1986
(formerly I.R.C. 1954), in the case of periodic payments beginning
before January 1, 1983, the first periodic payment after December 31,
1982, shall be treated as the first such periodic payment.
''(5) Delay in application. -- The Secretary of the Treasury shall
prescribe such regulations which delay (but not beyond June 30, 1983)
the application of some or all of the amendments made by this section
with respect to any payor until such time as such payor is able to
comply without undue hardship with the requirements of such provisions.
''(6) Waiver of penalty. -- No penalty shall be assessed under
section 6672 with respect to any failure to withhold as required by the
amendments made by this section if such failure was before July 1, 1983,
and if the person made a good faith effort to comply with such
withholding requirements.''
For provisions directing that if any amendments made by subtitle B (
521-523) of title V of Pub. L. 102-318 require an amendment to any
plan, such plan amendment shall not be required to be made before the
first plan year beginning on or after Jan. 1, 1994, see section 523 of
Pub. L. 102-318, set out as a note under section 401 of this title.
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
/1/ See References in Text note below.
26 USC 3406. Backup withholding
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirement to deduct and withhold
(1) In general
In the case of any reportable payment, if --
(A) the payee fails to furnish his TIN to the payor in the manner
required,
(B) the Secretary notifies the payor that the TIN furnished by the
payee is incorrect,
(C) there has been a notified payee underreporting described in
subsection (c), or
(D) there has been a payee certification failure described in
subsection (d),
then the payor shall deduct and withhold from such payment a tax
equal to 31 percent of such payment.
(2) Subparagraphs (C) and (D) of paragraph (1) apply only to interest
and dividend payments
Subparagraphs (C) and (D) of paragraph (1) shall apply only to
reportable interest or dividend payments.
(b) Reportable payment, etc.
For purposes of this section --
(1) Reportable payment
The term ''reportable payment'' means --
(A) any reportable interest or dividend payment, and
(B) any other reportable payment.
(2) Reportable interest or dividend payment
(A) In general
The term ''reportable interest or dividend payment'' means any
payment of a kind, and to a payee, required to be shown on a return
required under --
(i) section 6049(a) (relating to payments of interest),
(ii) section 6042(a) (relating to payments of dividends), or
(iii) section 6044 (relating to payments of patronage dividends) but
only to the extent such payment is in money.
(B) Special rule for patronage dividends
For purposes of subparagraphs (C) and (D) of subsection (a)(1), the
term ''reportable interest or dividend payment'' shall not include any
payment to which section 6044 (relating to patronage dividends) applies
unless 50 percent or more of such payment is in money.
(3) Other reportable payment
The term ''other reportable payment'' means any payment of a kind,
and to a payee, required to be shown on a return required under --
(A) section 6041 (relating to certain information at source),
(B) section 6041A(a) (relating to payments of remuneration for
services),
(C) section 6045 (relating to returns of brokers),
(D) section 6050A (relating to reporting requirements of certain
fishing boat operators), but only to the extent such payment is in money
and represents a share of the proceeds of the catch, or
(E) section 6050N (relating to payments of royalties).
(4) Whether payment is of reportable kind determined without regard
to minimum amount
The determination of whether any payment is of a kind required to be
shown on a return described in paragraph (2) or (3) shall be made
without regard to any minimum amount which must be paid before a return
is required.
(5) Exception for certain small payments
To the extent provided in regulations, the term ''reportable
payment'' shall not include any payment which --
(A) does not exceed $10, and
(B) if determined for a 1-year period, would not exceed $10.
(6) Other reportable payments include payments described in section
6041(a) or 6041A(a) only where aggregate for calendar year is $600 or
more
Any payment of a kind required to be shown on a return required under
section 6041(a) or 6041A(a) which is made during any calendar year shall
be treated as a reportable payment only if --
(A) the aggregate amount of such payment and all previous payments
described in such sections by the payor to the payee during such
calendar year equals or exceeds $600,
(B) the payor was required under section 6041(a) or 6041A(a) to file
a return for the preceding calendar year with respect to payments to the
payee, or
(C) during the preceding calendar year, the payor made reportable
payments to the payee with respect to which amounts were required to be
deducted and withheld under subsection (a).
(7) Exception for certain window payments of interest, etc.
For purposes of subparagraphs (C) and (D) of subsection (a)(1), the
term ''reportable interest or dividend payment'' shall not include any
payment --
(A) in redemption of a coupon on a bearer instrument or in redemption
of a United States savings bond, or
(B) to the extent provided in regulations, of interest on instruments
similar to those described in subparagraph (A).
The preceding sentence shall not apply for purposes of determining
whether there is payee underreporting described in subsection (c).
(c) Notified payee underreporting with respect to interest and
dividends
(1) Notified payee underreporting
If --
(A) the Secretary determines with respect to any payee that there has
been payee underreporting,
(B) at least 4 notices have been mailed by the Secretary to the payee
(over a period of at least 120 days) with respect to the underreporting,
and
(C) in the case of any payee who has filed a return for the taxable
year, any deficiency of tax attributable to such failure has been
assessed,
the Secretary may notify payors of reportable interest or dividend
payments with respect to such payee of the requirement to deduct and
withhold under subsection (a)(1)(C) (but not the reasons for the
withholding under subsection (a)(1)(C)).
(2) Payee underreporting defined
For purposes of this section, there has been payee underreporting if
for any taxable year the Secretary determines that --
(A) the payee failed to include in his return of tax under chapter 1
for such year any portion of a reportable interest or dividend payment
required to be shown on such return, or
(B) the payee may be required to file a return for such year and to
include a reportable interest or dividend payment in such return, but
failed to file such return.
(3) Determination by secretary to stop (or not to start) withholding
(A) In general
If the Secretary determines that --
(i) there was no payee underreporting,
(ii) any payee underreporting has been corrected (and any tax,
penalty, or interest with respect to the payee underreporting has been
paid),
(iii) withholding under subsection (a)(1)(C) has caused (or would
cause) undue hardship to the payee and it is unlikely that any payee
underreporting by such payee will occur again, or
(iv) there is a bona fide dispute as to whether there has been any
payee underreporting,
then the Secretary shall take the action described in subparagraph
(B).
(B) Secretary to take action to stop (or not to start) withholding
For purposes of subparagraph (A), if at the time of the Secretary's
determination under subparagraph (A) --
(i) no notice has been given under paragraph (1) to any payor with
respect to the underreporting, the Secretary shall not give any such
notice, or
(ii) if such notice has been given, the Secretary shall --
(I) provide the payee with a written certification that withholding
under subsection (a)(1)(C) is to stop, and
(II) notify the applicable payors (and brokers) that such withholding
is to stop.
(C) Time for taking action where notice to payor has been given
In any case where notice has been given under paragraph (1) to any
payor with respect to any underreporting, if the Secretary makes a
determination under subparagraph (A) during the 12-month period ending
on October 15 of any calendar year --
(i) except as provided in clause (ii), the Secretary shall take the
action described in subparagraph (B)(ii) to bring about the stopping of
withholding no later than December 1 of such calendar year, or
(ii) in the case of --
(I) a no payee underreporting determination under clause (i) of
subparagraph (A), or
(II) a hardship determination under clause (iii) of subparagraph (A),
such action shall be taken no later than the 45th day after the
day on which the Secretary made the determination.
(D) Opportunity to request determination
The Secretary shall prescribe procedures under which --
(i) a payee may request a determination under subparagraph (A), and
(ii) the payee may provide information with respect to such request.
(4) Payor notifies payee of withholding because of payee
underreporting
Any payor required to withhold any tax under subsection (a)(1)(C)
shall, at the time such withholding begins, notify the payee of such
withholding.
(5) Payee may be required to notify Secretary who his payors and
brokers are
For purposes of this section, the Secretary may require any payee of
reportable interest or dividend payments who is subject to withholding
under subsection (a)(1)(C) to notify the Secretary of --
(A) all payors from whom the payee receives reportable interest or
dividend payments, and
(B) all brokers with whom the payee has accounts which may involve
reportable interest or dividend payments.
The Secretary may notify any such broker that such payee is subject
to withholding under subsection (a)(1)(C).
(d) Interest and dividend backup withholding applies to new accounts
and instruments unless payee certifies that he is not subject to such
withholding
(1) In general
There is a payee certification failure unless the payee has certified
to the payor, under penalty of perjury, that such payee is not subject
to withholding under subsection (a)(1)(C).
(2) Special rules for readily tradable instruments
(A) In general
Subsection (a)(1)(D) shall apply to any reportable interest or
dividend payment to any payee on any readily tradable instrument if (and
only if) the payor was notified by a broker under subparagraph (B) or no
certification was provided to the payor by the payee under paragraph (1)
and --
(i) such instrument was acquired directly by the payee from the
payor, or
(ii) such instrument is held by the payor as nominee for the payee.
(B) Broker notifies payor
If --
(i) a payee acquires any readily tradable instrument through a
broker, and
(ii) with respect to such acquisition --
(I) the payee fails to furnish his TIN to the broker in the manner
required under subsection (a)(1)(A),
(II) the Secretary notifies such broker before such acquisition that
the TIN furnished by the payee is incorrect,
(III) the Secretary notifies such broker before such acquisition that
such payee is subject to withholding under subsection (a)(1)(C), or
(IV) the payee does not provide a certification to such broker under
subparagraph (C),
such broker shall, within such period as the Secretary may
prescribe by regulations (but not later than 15 days after such
acquisition), notify the payor that such payee is subject to withholding
under subparagraph (A), (B), (C), or (D) of subsection (a)(1),
respectively.
(C) Time for payee to provide certification to broker
In the case of any readily tradable instrument acquired by a payee
through a broker, the certification described in paragraph (1) may be
provided by the payee to such broker --
(i) at any time after the payee's account with the broker was
established and before the acquisition of such instrument, or
(ii) in connection with the acquisition of such instrument.
(3) Exception for existing accounts, etc.
This subsection and subsection (a)(1)(D) shall not apply to any
reportable interest or dividend payment which is paid or credited --
(A) in the case of interest or any other amount of a kind reportable
under section 6049, with respect to any account (whatever called)
established before January 1, 1984, or with respect to any instrument
acquired before January 1, 1984,
(B) in the case of dividends or any other amount reportable under
section 6042, on any stock or other instrument acquired before January
1, 1984, or
(C) in the case of patronage dividends or other amounts of a kind
reportable under section 6044, with respect to any membership acquired,
or contract entered into, before January 1, 1984.
(4) Exception for readily tradable instruments acquired through
existing brokerage accounts
Subparagraph (B) of paragraph (2) shall not apply with respect to a
readily tradable instrument which was acquired through an account with a
broker if --
(A) such account was established before January 1, 1984, and
(B) during 1983, such broker bought or sold instruments for the payee
(or acted as a nominee for the payee) through such account.
The preceding sentence shall not apply with respect to any readily
tradable instrument acquired through such account after the broker was
notified by the Secretary that the payee is subject to withholding under
subsection (a)(1)(C).
(e) Period for which withholding is in effect
(1) Failure to furnish TIN
In the case of any failure by a payee to furnish his TIN to a payor
in the manner required, subsection (a) shall apply to any reportable
payment made by such payor during the period during which the TIN has
not been furnished in the manner required. The Secretary may require
that a TIN required to be furnished under subsection (a)(1)(A) be
provided under penalties of perjury only with respect to interest,
dividends, patronage dividends, and amounts subject to broker reporting.
(2) Notification of incorrect number
In any case in which the Secretary notifies the payor that the TIN
furnished by the payee is incorrect, subsection (a) shall apply to any
reportable payment made by such payor --
(A) after the close of the 30th day after the day on which the payor
received such notification, and
(B) before the payee furnishes another TIN in the manner required.
(3) Notified payee underreporting described in subsection (c)
(A) In general
In the case of any notified payee underreporting described in
subsection (c), subsection (a) shall apply to any reportable interest or
dividend payment made --
(i) after the close of the 30th day after the day on which the payor
received notification from the Secretary of such underreporting, and
(ii) before the stop date.
(B) Stop date
For purposes of this subsection, the term ''stop date'' means the
determination effective date or, if later, the earlier of --
(i) the day on which the payor received notification from the
Secretary under subsection (c)(3)(B) to stop withholding, or
(ii) the day on which the payor receives from the payee a
certification provided by the Secretary under subsection (c)(3)(B).
(C) Determination effective date
For purposes of this subsection --
(i) In general
Except as provided in clause (ii), the determination effective date
of any determination under subsection (c)(3)(A) which is made during the
12-month period ending on October 15 of any calendar year shall be the
first January 1 following such October 15.
(ii) Determination that there was no underreporting; hardship
In the case of any determination under clause (i) or (iii) of
subsection (c)(3)(A), the determination effective date shall be the date
on which the Secretary's determination is made.
(4) Failure to provide certification that payee is not subject to
withholding
(A) In general
In the case of any payee certification failure described in
subsection (d)(1), subsection (a) shall apply to any reportable interest
or dividend payment made during the period during which the
certification described in subsection (d)(1) has not been furnished to
the payor.
(B) Special rule for readily tradable instruments acquired through
broker where notification
In the case of any readily tradable instrument acquired by the payee
through a broker, the period described in subparagraph (A) shall start
with payments to the payee made after the close of the 30th day after
the payor receives notification from a broker under subsection
(d)(2)(B).
(5) 30-day grace periods
(A) Start-up
If the payor elects the application of this subparagraph with respect
to the payee, subsection (a) shall also apply to any reportable payment
made during the 30-day period described in paragraph (2)(A), (3)(A), or
(4)(B).
(B) Stopping
Unless the payor elects not to have this subparagraph apply with
respect to the payee, subsection (a) shall also apply to any reportable
payment made after the close of the period described in paragraph (1),
(2), or (4) (as the case may be) and before the 30th day after the close
of such period. A similar rule shall also apply with respect to the
period described in paragraph (3)(A) where the stop date is determined
under clause (i) or (ii) of paragraph (3)(B).
(C) Election of shorter grace period
The payor may elect a period shorter than the grace period set forth
in subparagraph (A) or (B), as the case may be.
(f) Confidentiality of information
(1) In general
No person may use any information obtained under this section
(including any failure to certify under subsection (d)) except for
purposes of meeting any requirement under this section or (subject to
the safeguards set forth in section 6103) for purposes permitted under
section 6103.
(2) Cross reference
For provision providing for civil damages for violation of paragraph
(1), see section 7431.
(g) Exceptions
(1) Payments to certain payees
Subsection (a) shall not apply to any payment made to --
(A) any organization or governmental unit described in subparagraph
(B), (C), (D), (E), or (F) of section 6049(b)(4), or
(B) any other person specified in regulations.
(2) Amounts for which withholding otherwise required
Subsection (a) shall not apply to any amount for which withholding is
otherwise required by this title.
(3) Exemption while waiting for TIN
The Secretary shall prescribe regulations for exemptions from the tax
imposed by subsection (a) during the period during which a person is
waiting for receipt of a TIN.
(h) Other definitions and special rules
For purposes of this section --
(1) Obviously incorrect number
A person shall be treated as failing to furnish his TIN if the TIN
furnished does not contain the proper number of digits.
(2) Payee furnishes 2 incorrect TINs
If the payee furnishes the payor 2 incorrect TINs in any 3-year
period, the payor shall, after receiving notice of the second incorrect
TIN, treat the payee as not having furnished another TIN under
subsection (e)(2)(B) until the day on which the payor receives
notification from the Secretary that a correct TIN has been furnished.
(3) Joint payees
Except to the extent otherwise provided in regulations, any payment
to joint payees shall be treated as if all the payment were made to the
first person listed in the payment.
(4) Payor defined
The term ''payor'' means, with respect to any reportable payment, a
person required to file a return described in paragraph (2) or (3) of
subsection (b) with respect to such payment.
(5) Broker
(A) In general
The term ''broker'' has the meaning given to such term by section
6045(c)(1).
(B) Only 1 broker per acquisition
If, but for this subparagraph, there would be more than 1 broker with
respect to any acquisition, only the broker having the closest contact
with the payee shall be treated as the broker.
(C) Payor not treated as broker
In the case of any instrument, such term shall not include any person
who is the payor with respect to such instrument.
(D) Real estate broker not treated as a broker
Except as provided by regulations, such term shall not include any
real estate broker (as defined in section 6045(e)(2)).
(6) Readily tradable instrument
The term ''readily tradable instrument'' means --
(A) any instrument which is part of an issue any portion of which is
traded on an established securities market (within the meaning of
section 453(f)(5)), and
(B) except as otherwise provided in regulations prescribed by the
Secretary, any instrument which is regularly quoted by brokers or
dealers making a market.
(7) Original issue discount
To the extent provided in regulations, rules similar to the rules of
paragraph (6) of section 6049(d) shall apply.
(8) Requirement of notice to payee
Whenever the Secretary notifies a payor under paragraph (1)(B) of
subsection (a) that the TIN furnished by any payee is incorrect, the
Secretary shall at the same time furnish a copy of such notice to the
payor, and the payor shall promptly furnish such copy to the payee.
(9) Requirement of notice to Secretary
If the Secretary notifies a payor under paragraph (1)(B) of
subsection (a) that the TIN furnished by any payee is incorrect and such
payee subsequently furnishes another TIN to the payor, the payor shall
promptly notify the Secretary of the other TIN so furnished.
(10) Coordination with other sections
For purposes of section 31, this chapter (other than section
3402(n)), and so much of subtitle F (other than section 7205) as relates
to this chapter, payments which are subject to withholding under this
section shall be treated as if they were wages paid by an employer to an
employee (and amounts deducted and withheld under this section shall be
treated as if deducted and withheld under section 3402).
(i) Regulations
The Secretary shall prescribe such regulations as may be necessary or
appropriate to carry out the purposes of this section.
(Added Pub. L. 98-67, title I, 104(a), Aug. 5, 1983, 97 Stat. 371;
amended Pub. L. 98-369, div. A, title I, 152(a), title VII, 722(h)(1),
(2), July 18, 1984, 98 Stat. 691, 975; Pub. L. 99-514, title XV,
1521(b), 1523(b)(1), title XVIII, 1899A(46), Oct. 22, 1986, 100 Stat.
2746, 2748, 2961; Pub. L. 100-647, title I, 1018(u)(44), Nov. 10,
1988, 102 Stat. 3592; Pub. L. 102-486, title XIX, 1935(a), Oct. 24,
1992, 106 Stat. 3032.)
1992 -- Subsec. (a)(1). Pub. L. 102-486, in closing provisions,
substituted ''31 percent'' for ''20 percent''.
1988 -- Subsec. (h)(5)(D). Pub. L. 100-647 inserted period at end of
subpar. (D).
1986 -- Subsec. (b)(3)(E). Pub. L. 99-514, 1523(b)(1), added
subpar. (E).
Subsec. (b)(6). Pub. L. 99-514, 1899A(46), substituted ''6041A(a)''
for ''6041(A)(a)'' in heading.
Subsec. (h)(5)(D). Pub. L. 99-514, 1521(b), added subpar. (D).
1984 -- Subsec. (c)(1). Pub. L. 98-369, 722(h)(2), substituted
''(but not the reasons for the withholding under subsection (a)(1)(C))''
for ''(but not the reasons therefor)''.
Subsec. (d)(2)(A). Pub. L. 98-369, 722(h)(1)(A), inserted ''the
payor was notified by a broker under subparagraph (B) or'' after ''if
(and only if)'' in provisions preceding cl. (i), struck out cl. (i)
which read as follows: ''the payor was notified by a broker under
subparagraph (B),'' and redesignated cls. (ii) and (iii) as (i) and
(ii), respectively.
Subsec. (d)(2)(B). Pub. L. 98-369, 722(h)(1)(B), in amending subpar.
(B) generally, reenacted cl. (i), in cl. (ii) inserted ''with respect
to such acquisition -- '', added subcls. (I) and (II), redesignated
former subcls. (I) and (II) as (III) and (IV), respectively, and in
subcl. (III) substituted ''the Secretary notifies such broker'' for
''such broker is notified by the Secretary'', and in provisions
following cl. (ii) substituted ''shall within such period as the
Secretary may prescribe by regulations (but not later than 15 days after
such acquisition), notify the payor that such payee is subject to
withholding under subparagraph (A), (B), (C) or (D) of subsection
(a)(1),'' for ''within 15 days after the date of the acquisition notify
the payor that such payee is subject to withholding under subsection
(a)(1)(D) (or subsection (a)(1)(C) in the case of a notification
described in clause (ii)(II).''
Subsec. (e)(1). Pub. L. 98-369, 152(a), inserted provision that the
Secretary may require that a TIN required to be furnished under
subsection (a)(1)(A) be provided under penalties of perjury only with
respect to interest, dividends, patronage dividends, and amounts subject
to broker reporting.
Section 1935(b) of Pub. L. 102-486 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to amounts
paid after December 31, 1992.''
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Amendment by section 1521(b) of Pub. L. 99-514 applicable to real
estate transactions closing after Dec. 31, 1986, see section 1521(c) of
Pub. L. 99-514, set out as a note under section 6045 of this title.
Amendment by section 1523(b)(1) of Pub. L. 99-514 applicable to
payments made after Dec. 31, 1986, see section 1523(d) of Pub. L.
99-514, set out as an Effective Date note under section 6050N of this
title.
Section 152(b) of Pub. L. 98-369 provided that: ''The amendment
made by this section (amending this section) shall take effect on the
date of the enactment of this Act (July 18, 1984).''
Amendment by section 722(h)(1), (2) of Pub. L. 98-369 applicable as
if included in amendments made by Interest and Dividend Tax Compliance
Act of 1983, Pub. L. 98-67, see section 722(h)(5)(A) of Pub. L.
98-369, set out as a note under section 643 of this title.
Section applicable with respect to payments made after Dec. 31,
1983, see section 110(a) of Pub. L. 98-67, set out as an Effective Date
of 1983 Amendment note under section 31 of this title.
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
26 USC ( 3451 to 3456. Repealed. Pub. L. 98-67, title I, 102(a), Aug.
5, 1983, 97 Stat. 369)
TITLE 26 -- INTERNAL REVENUE CODE
Section 3451, Pub. L. 97-248, title III, 301, Sept. 3, 1982, 96
Stat. 576, set forth withholding requirements respecting income tax
collected at source on interest, dividends, and patronage dividends.
Section 3452, Pub. L. 97-248, title III, 301, Sept. 3, 1982, 96
Stat. 577, related to exemptions from withholding requirements.
Section 3453, Pub. L. 97-248, title III, 301, Sept. 3, 1982, 96
Stat. 579; Pub. L. 97-354, 3(i)(1), Oct. 19, 1982, 96 Stat. 1690,
defined ''payor''.
Section 3454, Pub. L. 97-248, title III, 301, Sept. 3, 1982, 96
Stat. 580; Pub. L. 97-354, 3(i)(2), (3), Oct. 19, 1982, 96 Stat.
1690; Pub. L. 97-424, title V, 547(b)(3), Jan. 6, 1983, 96 Stat.
2200, defined the terms ''interest'', ''dividend'', and ''patronage
dividend''.
Section 3455, Pub. L. 97-248, title III, 301, Sept. 3, 1982, 96
Stat. 583, set forth definitions and other special rules.
Section 3456, Pub. L. 97-248, title III, 301, Sept. 3, 1982, 96
Stat. 585, set forth administrative provisions.
Pub. L. 97-248, title III, 308, Sept. 3, 1982, 96 Stat. 591, which
provided that the amendments made by sections 301 to 308 (enacting
subchapter B ( 3451-3456) of chapter 24 of this title and amending
sections 31, 274, 275, 643, 661, 3403, 3502, 3507, 6013, 6015, 6042,
6044, 6049, 6051, 6365, 6401, 6413, 6654, 6682, 7205, 7215, 7654, and
7701 of this title) would apply to payments of interest, dividends, and
patronage dividends paid or credited after June 30, 1983, provided for
the delay in applications for payors unable to comply with the
requirements of such provisions without undue hardship, provided a
temporary rule for certain withholding exemptions, and provided for
delays in making deposits, was repealed by Pub. L. 98-67, title I,
102(a), Aug. 5, 1983, 97 Stat. 369.
Pub. L. 98-67, title I, 102(a)-(d), Aug. 5, 1983, 97 Stat. 369, as
amended by Pub. L. 99-514, 2, Oct. 22, 1986, 100 Stat. 2095,
provided that:
''(a) In General. -- Subtitle A of title III of the Tax Equity and
Fiscal Responsibility Act of 1982 (relating to withholding of tax from
interest and dividends) (subtitle A ( 301-308) of title III of Pub. L.
97-248, which enacted this section and sections 3452 to 3456 of this
title, amended sections 31, 274, 275, 643, 661, 3403, 3502, 3507, 6013,
6015, 6042, 6044, 6051, 6365, 6401, 6413, 6654, 6682, 7205, 7215, 7654,
and 7701 of this title and enacted provisions set out as a note above)
is hereby repealed as of the close of June 30, 1983.
''(b) Conforming Amendment. -- Except as provided in this section,
the Internal Revenue Code of 1986 (formerly I.R.C. 1954) shall be
applied and administered as if such subtitle A (and the amendments made
by such subtitle A) had not been enacted.
''(c) Repeal Not To Apply to Amounts Deducted and Withheld Before
September 2, 1983. --
''(1) In general. -- If, notwithstanding the repeal made by
subsection (a) (and the provisions of subsection (b)), an amount is
deducted and withheld before September 2, 1983, under subchapter B of
chapter 24 of the Internal Revenue Code of 1986 (as in effect before its
repeal by subsection (a)), the repeal made by subsection (a) (and the
provisions of subsection (b)) shall not apply to the amount so deducted
and withheld.
''(2) Election to have paragraph (1) not apply. -- Paragraph (1)
shall not apply with respect to any payor who elects (at the time and in
the manner prescribed by the Secretary of the Treasury or his delegate)
to have paragraph (1) not apply.
''(d) Estimated Tax Payments. -- For purposes of determining the
amount of any addition to tax under section 6654 of the Internal Revenue
Code of 1986 with respect to any installment required to be paid before
July 1, 1983, the amount of the credit allowed by section 31 of such
Code for any taxable year which includes any portion of the period
beginning July 1, 1983, and ending December 31, 1983, shall be increased
by an amount equal to 10 percent of the aggregate amount of payments --
''(1) which are received during the portion of such taxable year
after June 30, 1983, and before January 1, 1984, and
''(2) which (but for the repeal made by subsection (a)) would have
been subject to withholding under subchapter B of chapter 24 of such
Code (determined without regard to any exemption described in section
3452 of such subchapter B).''
26 USC CHAPTER 25 -- GENERAL PROVISIONS RELATING TO EMPLOYMENT TAXES
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
3501. Collection and payment of taxes.
3502. Nondeductibility of taxes in computing taxable income.
3503. Erroneous payments.
3504. Acts to be performed by agents.
3505. Liability of third parties paying or providing for wages.
3506. Individuals providing companion sitting placement services.
3507. Advance payment of earned income credit.
3508. Treatment of real estate agents and direct sellers.
3509. Determination of employer's liability for certain employment
taxes.
(3510. Repealed.)
1990 -- Pub. L. 101-508, title XI, 11801(b)(16), Nov. 5, 1990, 104
Stat. 1388-522, struck out item 3510 ''Credit for increased social
security employee taxes and railroad retirement tier 1 employee taxes
imposed during 1984''.
1983 -- Pub. L. 98-67 repealed amendments made by section 307 of
Pub. L. 97-248. See 1982 Amendment note below.
Pub. L. 98-21, title I, 123(b)(2), Apr. 20, 1983, 97 Stat. 88,
added item 3510.
1982 -- Pub. L. 97-248, title II, 269(d), 270(b), Sept. 3, 1982,
96 Stat. 553, 554, added items 3508 and 3509.
Pub. L. 97-248, title III, 307(b)(5), 308(a), Sept. 3, 1982, 96
Stat. 591, provided that, applicable to payments of interest,
dividends, and patronage dividends paid or credited after June 30, 1983,
the caption of chapter 25 is amended by inserting ''AND COLLECTION OF
INCOME TAXES AT SOURCE''. Section 102(a), (b) of Pub. L. 98-67, title
I, Aug. 5, 1983, 97 Stat. 369, repealed subtitle A ( 301-308) of
title III of Pub. L. 97-248 as of the close of June 30, 1983, and
provided that the Internal Revenue Code of 1954 (now 1986) (this title)
shall be applied and administered (subject to certain exceptions) as if
such subtitle A (and the amendments made by such subtitle A) had not
been enacted.
1978 -- Pub. L. 95-600, title I, 105(b)(2), Nov. 6, 1978, 92 Stat.
2776, added item 3507.
1977 -- Pub. L. 95-171, 10(b), Nov. 12, 1977, 91 Stat. 1356,
added item 3506.
1966 -- Pub. L. 89-719, title I, 105(c), Nov. 2, 1966, 80 Stat.
1139, added item 3505.
26 USC 3501. Collection and payment of taxes
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
The taxes imposed by this subtitle shall be collected by the
Secretary and shall be paid into the Treasury of the United States as
internal-revenue collections.
(b) Taxes with respect to non-cash fringe benefits
The taxes imposed by this subtitle with respect to non-cash fringe
benefits shall be collected (or paid) by the employer at the time and in
the manner prescribed by the Secretary by regulations.
(Aug. 16, 1954, ch. 736, 68A Stat. 471; Oct. 4, 1976, Pub. L.
94-455, title XIX, 1906(b)(13)(A), 90 Stat. 1834; July 18, 1984, Pub.
L. 98-369, div. A, title V, 531(d)(5), 98 Stat. 885.)
1984 -- Pub. L. 98-369 designated existing provisions as subsec.
(a), added heading, and added subsec. (b).
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Amendment by Pub. L. 98-369 effective Jan. 1, 1985, see section
531(h) of Pub. L. 98-369, set out as an Effective Date note under
section 132 of this title.
26 USC 3502. Nondeductibility of taxes in computing taxable income
TITLE 26 -- INTERNAL REVENUE CODE
(a) The taxes imposed by section 3101 of chapter 21, and by sections
3201 and 3211 of chapter 22 shall not be allowed as a deduction to the
taxpayer in computing taxable income under subtitle A.
(b) The tax deducted and withheld under chapter 24 shall not be
allowed as a deduction either to the employer or to the recipient of the
income in computing taxable income under subtitle A.
(Aug. 16, 1954, ch. 736, 68A Stat. 471; Sept. 3, 1982, Pub. L.
97-248, title III, 305(b), 308(a), 96 Stat. 588, 591; Aug. 5, 1983,
Pub. L. 98-67, title I, 102(a), 97 Stat. 369.)
1983 -- Subsecs. (b), (c). Pub. L. 98-67 repealed amendments made
by Pub. L. 97-248. See 1982 Amendment note below.
1982 -- Subsecs. (b), (c). Pub. L. 97-248 provided that, applicable
to payments of interest, dividends, and patronage dividends paid or
credited after June 30, 1983, subsec. (b) is amended and a new subsec.
(c) is added. Section 102(a), (b) of Pub. L. 98-67, title I, Aug. 5,
1983, 97 Stat. 369, repealed subtitle A ( 301-308) of title III of
Pub. L. 97-248 as of the close of June 30, 1983, and provided that the
Internal Revenue Code of 1954 (now 1986) (this title) shall be applied
and administered (subject to certain exceptions) as if such subtitle A
(and the amendments made by such subtitle A) had not been enacted.
Credit for amount withheld, see section 31 of this title.
Taxes paid deductible from gross income, see section 164 of this
title.
26 USC 3503. Erroneous payments
TITLE 26 -- INTERNAL REVENUE CODE
Any tax paid under chapter 21 or 22 by a taxpayer with respect to any
period with respect to which he is not liable to tax under such chapter
shall be credited against the tax, if any, imposed by such other chapter
upon the taxpayer, and the balance, if any, shall be refunded.
(Aug. 16, 1954, ch. 736, 68A Stat. 471.)
Civil action for refund, see section 7422 of this title.
Jurisdiction of district courts of actions by taxpayers for refund,
see sections 1340 and 1346 of Title 28, Judiciary and Judicial
Procedure.
Refund to employer of overpayment of withholding tax, see section
6414 of this title.
26 USC 3504. Acts to be performed by agents
TITLE 26 -- INTERNAL REVENUE CODE
In case a fiduciary, agent, or other person has the control, receipt,
custody, or disposal of, or pays the wages of an employee or group of
employees, employed by one or more employers, the Secretary, under
regulations prescribed by him, is authorized to designate such
fiduciary, agent, or other person to perform such acts as are required
of employers under this title and as the Secretary may specify. Except
as may be otherwise prescribed by the Secretary, all provisions of law
(including penalties) applicable in respect of an employer shall be
applicable to a fiduciary, agent, or other person so designated but,
except as so provided, the employer for whom such fiduciary, agent, or
other person acts shall remain subject to the provisions of law
(including penalties) applicable in respect of employers.
(Aug. 16, 1954, ch. 736, 68A Stat. 471; Sept. 2, 1958, Pub. L.
85-866, title I, 71, 72 Stat. 1660; Oct. 4, 1976, Pub. L. 94-455,
title XIX, 1906(b)(13)(A), 90 Stat. 1834.)
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' in three places.
1958 -- Pub. L. 85-866 substituted ''title'' for ''subtitle'' in
first sentence.
Section 71 of Pub. L. 85-866 provided that the amendment made by
that section is effective with respect to remuneration paid after Dec.
31, 1954.
26 USC 3505. Liability of third parties paying or providing for wages
TITLE 26 -- INTERNAL REVENUE CODE
(a) Direct payment by third parties
For purposes of sections 3102, 3202, 3402, and 3403, if a lender,
surety, or other person, who is not an employer under such sections with
respect to an employee or group of employees, pays wages directly to
such an employee or group of employees, employed by one or more
employers, or to an agent on behalf of such employee or employees, such
lender, surety, or other person shall be liable in his own person and
estate to the United States in a sum equal to the taxes (together with
interest) required to be deducted and withheld from such wages by such
employer.
(b) Personal liability where funds are supplied
If a lender, surety, or other person supplies funds to or for the
account of an employer for the specific purpose of paying wages of the
employees of such employer, with actual notice or knowledge (within the
meaning of section 6323(i)(1)) that such employer does not intend to or
will not be able to make timely payment or deposit of the amounts of tax
required by this subtitle to be deducted and withheld by such employer
from such wages, such lender, surety, or other person shall be liable in
his own person and estate to the United States in a sum equal to the
taxes (together with interest) which are not paid over to the United
States by such employer with respect to such wages. However, the
liability of such lender, surety, or other person shall be limited to an
amount equal to 25 percent of the amount so supplied to or for the
account of such employer for such purpose.
(c) Effect of payment
Any amounts paid to the United States pursuant to this section shall
be credited against the liability of the employer.
(Added Pub. L. 89-719, title I, 105(a), Nov. 2, 1966, 80 Stat.
1138.)
Section applicable only with respect to wages paid on or after Jan.
1, 1967, see section 114(c)(1) of Pub. L. 89-719, set out as an
Effective Date of 1966 Amendment note under section 6323 of this title.
26 USC 3506. Individuals providing companion sitting placement
services
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
For purposes of this subtitle, a person engaged in the trade or
business of putting sitters in touch with individuals who wish to employ
them shall not be treated as the employer of such sitters (and such
sitters shall not be treated as employees of such person) if such person
does not pay or receive the salary or wages of the sitters and is
compensated by the sitters or the persons who employ them on a fee
basis.
(b) Definition
For purposes of this section, the term ''sitters'' means individuals
who furnish personal attendance, companionship, or household care
services to children or to individuals who are elderly or disabled.
(c) Regulations
The Secretary shall prescribe such regulations as may be necessary to
carry out the purpose of this section.
(Added Pub. L. 95-171, 10(a), Nov. 12, 1977, 91 Stat. 1356.)
Section 10(c) of Pub. L. 95-171 provided that: ''The amendments
made by this section (enacting this section) shall apply to remuneration
received after December 31, 1974.''
Section 10(d) of Pub. L. 95-171 provided that: ''The amendments
made by this section (enacting this section) shall not be construed as
affecting (1) any individual's right to receive unemployment
compensation based on services performed before the date of the
enactment of this Act (Nov. 12, 1977), or (2) any individual's
eligibility for social security benefits to the extent based on services
performed before that date (Nov. 12, 1977).''
26 USC 3507. Advance payment of earned income credit
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
Except as otherwise provided in this section, every employer making
payment of wages to an employee with respect to whom an earned income
eligibility certificate is in effect shall, at the time of paying such
wages, make an additional payment to such employee equal to such
employee's earned income advance amount.
(b) Earned income eligibility certificate
For purposes of this title, an earned income eligibility certificate
is a statement furnished by an employee to the employer which --
(1) certifies that the employee will be eligible to receive the
credit provided by section 32 for the taxable year,
(2) certifies that the employee does not have an earned income
eligibility certificate in effect for the calendar year with respect to
the payment of wages by another employer, and
(3) states whether or not the employee's spouse has an earned income
eligibility certificate in effect.
For purposes of this section, a certificate shall be treated as being
in effect with respect to a spouse if such a certificate will be in
effect on the first status determination date following the date on
which the employee furnishes the statement in question.
(c) Earned income advance amount
(1) In general
For purposes of this title, the term ''earned income advance amount''
means, with respect to any payroll period, the amount determined --
(A) on the basis of the employee's wages from the employer for such
period, and
(B) in accordance with tables prescribed by the Secretary.
(2) Advance amount tables
The tables referred to in paragraph (1)(B) --
(A) shall be similar in form to the tables prescribed under section
3402 and, to the maximum extent feasible, shall be coordinated with such
tables, and
(B) if the employee is not married, or if no earned income
eligibility certificate is in effect with respect to the spouse of the
employee, shall treat the credit provided by section 32 as if it were a
credit --
(i) of not more than the credit percentage under section 32(b)(1)
(without regard to subparagraph (D) thereof) for an eligible individual
with 1 qualifying child and with earned income not in excess of the
amount of earned income taken into account under section 32(a)(1), which
(ii) phases out between the amount of earned income at which the
phaseout begins under section 32(b)(1)(B)(ii) and the amount of income
at which the credit under section 32(a)(1) phases out for an eligible
individual with 1 qualifying child, or
(C) if an earned income eligibility certificate is in effect with
respect to the spouse of the employee, shall treat the credit as if it
were a credit determined under subparagraph (B) by substituting 1/2 of
the amounts of earned income described in such subparagraph for such
amounts.
(d) Payments to be treated as payments of withholding and FICA taxes
(1) In general
For purposes of this title, payments made by an employer under
subsection (a) to his employees for any payroll period --
(A) shall not be treated as the payment of compensation, and
(B) shall be treated as made out of --
(i) amounts required to be deducted and withheld for the payroll
period under section 3401 (relating to wage withholding), and
(ii) amounts required to be deducted for the payroll period under
section 3102 (relating to FICA employee taxes), and
(iii) amounts of the taxes imposed for the payroll period under
section 3111 (relating to FICA employer taxes),
as if the employer had paid to the Secretary, on the day on which the
wages are paid to the employees, an amount equal to such payments.
(2) Advance payments exceed taxes due
In the case of any employer, if for any payroll period the aggregate
amount of earned income advance payments exceeds the sum of the amounts
referred to in paragraph (1)(B), each such advance payment shall be
reduced by an amount which bears the same ratio to such excess as such
advance payment bears to the aggregate amount of all such advance
payments.
(3) Employer may make full advance payments
The Secretary shall prescribe regulations under which an employer may
elect (in lieu of any application of paragraph (2)) --
(A) to pay in full all earned income advance amounts, and
(B) to have additional amounts paid by reason of this paragraph
treated as the advance payment of taxes imposed by this title.
(4) Failure to make advance payments
For purposes of this title (including penalties), failure to make any
advance payment under this section at the time provided therefor shall
be treated as the failure at such time to deduct and withhold under
chapter 24 an amount equal to the amount of such advance payment.
(e) Furnishing and taking effect of certificates
For purposes of this section --
(1) When certificate takes effect
(A) First certificate furnished
An earned income eligibility certificate furnished the employer in
cases in which no previous such certificate had been in effect for the
calendar year shall take effect as of the beginning of the first payroll
period ending, or the first payment of wages made without regard to a
payroll period, on or after the date on which such certificate is so
furnished (or if later, the first day of the calendar year for which
furnished).
(B) Later certificate
An earned income eligibility certificate furnished the employer in
cases in which a previous such certificate had been in effect for the
calendar year shall take effect with respect to the first payment of
wages made on or after the first status determination date which occurs
at least 30 days after the date on which such certificate is so
furnished, except that at the election of the employer such certificate
may be made effective with respect to any payment of wages made on or
after the date on which such certificate is so furnished. For purposes
of this section, the term ''status determination date'' means January 1,
May 1, July 1, and October 1 of each year.
(2) Period during which certificate remains in effect
An earned income eligibility certificate which takes effect under
this section for any calendar year shall continue in effect with respect
to the employee during such calendar year until revoked by the employee
or until another such certificate takes effect under this section.
(3) Change of status
(A) Requirement to revoke or furnish new certificate
If, after an employee has furnished an earned income eligibility
certificate under this section, there has been a change of circumstances
which has the effect of --
(i) making the employee ineligible for the credit provided by section
32 for the taxable year, or
(ii) causing an earned income eligibility certificate to be in effect
with respect to the spouse of the employee,
the employee shall, within 10 days after such change in
circumstances, furnish the employer with a revocation of such
certificate or with a new certificate (as the case may be). Such a
revocation (or such a new certificate) shall take effect under the rules
provided by paragraph (1)(B) for a later certificate and shall be made
in such form as the Secretary shall by regulations prescribe.
(B) Certificate no longer in effect
If, after an employee has furnished an earned income eligibility
certificate under this section which certifies that such a certificate
is in effect with respect to the spouse of the employee, such a
certificate is no longer in effect with respect to such spouse, then the
employee may furnish the employer with a new earned income eligibility
certificate.
(4) Form and contents of certificate
Earned income eligibility certificates shall be in such form and
contain such other information as the Secretary may by regulations
prescribe.
(5) Taxable year defined
The term ''taxable year'' means the last taxable year of the employee
under subtitle A beginning in the calendar year in which the wages are
paid.
(Added Pub. L. 95-600, title I, 105(b)(1), Nov. 6, 1978, 92 Stat.
2773; amended Pub. L. 97-248, title III, 307(a)(3), 308(a), Sept. 3,
1982, 96 Stat. 589, 591; Pub. L. 98-67, title I, 102(a), Aug. 5, 1983,
97 Stat. 369; Pub. L. 98-369, div. A, title IV, 474(r)(30), title X,
1042(d)(3), (4), July 18, 1984, 98 Stat. 845, 1044; Pub. L. 99-514,
title I, 111(d)(2), (3), Oct. 22, 1986, 100 Stat. 2108; Pub. L.
101-508, title XI, 11111(c), Nov. 5, 1990, 104 Stat. 1388-412.)
1990 -- Subsec. (c)(2)(B), (C). Pub. L. 101-508 amended subpars.
(B) and (C) generally. Prior to amendment, subpars. (B) and (C) read
as follows:
''(B) if the employee is not married, or if no earned income
eligibility certificate is in effect with respect to the spouse of the
employee, shall treat the credit provided by section 32 as if it were a
credit --
''(i) of not more than 14 percent of earned income not in excess of
the amount of earned income taken into account under section 32(a),
which
''(ii) phases out between the amount of earned income at which the
phaseout begins under subsection (b) of section 32 and the amount of
earned income at which the credit under section 32 is phased out under
such subsection, or
''(C) if an earned income eligibility certificate is in effect with
respect to the spouse of the employee, shall treat the credit provided
by section 32 as if it were a credit --
''(i) of not more than 14 percent of earned income not in excess of
1/2 of the amount of earned income taken into account under section
32(a), which
''(ii) phases out between amounts of earned income which are 1/2 of
the amounts of earned income described in subparagraph (B)(ii).''
1986 -- Subsec. (c)(2)(B). Pub. L. 99-514, 111(d)(2), added cls.
(i) and (ii) and struck out former cls. (i) and (ii) which read as
follows:
''(i) of not more than 11 percent of the first $5,000 of earned
income, which
''(ii) phases out between $6,500 and $11,000 of earned income, or''.
Subsec. (c)(2)(C). Pub. L. 99-514, 111(d)(3), added cls. (i) and
(ii) and struck out former cls. (i) and (ii) which read as follows:
''(i) of not more than 11 percent of the first $2,500 of earned
income, which
''(ii) phases out between $3,250 and $5,500 of earned income.''
1984 -- Subsec. (b)(1). Pub. L. 98-369, 474(r)(30), substituted
''section 32'' for ''section 43''.
Subsec. (c)(2)(B). Pub. L. 98-369, 474(r)(30), substituted ''section
32'' for ''section 43'' in provisions preceding cl. (i).
Subsec. (c)(2)(B)(i). Pub. L. 98-369, 1042(d)(3), substituted ''11
percent'' for ''10 percent''.
Subsec. (c)(2)(B)(ii). Pub. L. 98-369, 1042(d)(3), substituted
''$6,500 and $11,000'' for ''$6,000 and $10,000''.
Subsec. (c)(2)(C). Pub. L. 98-369, 474(r)(30), substituted ''section
32'' for ''section 43'' in provisions preceding cl. (i).
Subsec. (c)(2)(C)(i). Pub. L. 98-369, 1042(d)(4), substituted ''11
percent'' for ''10 percent''.
Subsec. (c)(2)(C)(ii). Pub. L. 98-369, 1042(d)(4), substituted
''$3,250 and $5,500'' for ''$3,000 and $5,000''.
Subsec. (c)(3)(A)(i). Pub. L. 98-369, 474(r)(30), substituted
''section 32'' for ''section 43''.
1983 -- Subsec. (d)(4). Pub. L. 98-67 repealed amendments made by
Pub. L. 97-248. See 1982 Amendment note below.
1982 -- Subsec. (d)(4). Pub. L. 97-248 provided that, applicable to
payments of interest, dividends, and patronage dividends paid or
credited after June 30, 1983, par. (4) is amended by inserting
''subchapter A of'' before ''chapter 24''. Section 102(a), (b) of Pub.
L. 98-67, title I, Aug. 5, 1983, 97 Stat. 369, repealed subtitle A (
301-308) of title III of Pub. L. 97-248 as of the close of June 30,
1983, and provided that the Internal Revenue Code of 1954 (now 1986)
(this title) shall be applied and administered (subject to certain
exceptions) as if such subtitle A (and the amendments made by such
subtitle A) had not been enacted.
Amendment by Pub. L. 101-508 applicable to taxable years beginning
after Dec. 31, 1990, see section 11111(f) of Pub. L. 101-508, set out
as a note under section 32 of this title.
Amendment by Pub. L. 99-514 applicable to taxable years beginning
after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out as
a note under section 1 of this title.
Amendment by section 474(r)(30) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note
under section 21 of this title.
Amendment by section 1042(d)(3), (4) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1984, see section 1042(e) of
Pub. L. 98-369, set out as a note under section 32 of this title.
Section 105(g)(2) of Pub. L. 95-600, as amended by Pub. L. 96-222,
title I, 101(a)(2)(D), Apr. 1, 1980, 94 Stat. 195, provided that:
''The amendments made by subsections (b), (c), and (e) (enacting this
section and amending sections 6051 and 6302 of this title) shall apply
to remuneration paid after June 30, 1979.''
Section 11113 of title XI of Pub. L. 101-508 provided that:
''(a) In General. -- The Comptroller General of the United States
shall, in consultation with the Secretary of the Treasury, conduct a
study of advance payments required by section 3507 of the Internal
Revenue Code of 1986 to determine --
''(1) the effectiveness of the advance payment system (including an
analysis of why so few employees take advantage of such system), and
''(2) the manner in which such system can be implemented to alleviate
administrative complexity, if any, for small business, and
''(3) if there are any other problems in the administration of such
system.
''(b) Report. -- Not later than 1 year after the date of the
enactment of this title (Nov. 5, 1990), the Comptroller shall report the
results of the study conducted under subsection (a), together with any
recommendations, to the Committee on Finance of the United States Senate
and the Committee on Ways and Means of the House of Representatives.''
sections 602, 1382a, 1382b, 1383.
26 USC 3508. Treatment of real estate agents and direct sellers
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
For purposes of this title, in the case of services performed as a
qualified real estate agent or as a direct seller --
(1) the individual performing such services shall not be treated as
an employee, and
(2) the person for whom such services are performed shall not be
treated as an employer.
(b) Definitions
For purposes of this section --
(1) Qualified real estate agent
The term ''qualified real estate agent'' means any individual who is
a sales person if --
(A) such individual is a licensed real estate agent,
(B) substantially all of the remuneration (whether or not paid in
cash) for the services performed by such individual as a real estate
agent is directly related to sales or other output (including the
performance of services) rather than to the number of hours worked, and
(C) the services performed by the individual are performed pursuant
to a written contract between such individual and the person for whom
the services are performed and such contract provides that the
individual will not be treated as an employee with respect to such
services for Federal tax purposes.
(2) Direct seller
The term ''direct seller'' means any person if --
(A) such person --
(i) is engaged in the trade or business of selling (or soliciting the
sale of) consumer products to any buyer on a buy-sell basis, a
deposit-commission basis, or any similar basis which the Secretary
prescribes by regulations, for resale (by the buyer or any other person)
in the home or otherwise than in a permanent retail establishment, or
(ii) is engaged in the trade or business of selling (or soliciting
the sale of) consumer products in the home or otherwise than in a
permanent retail establishment,
(B) substantially all the remuneration (whether or not paid in cash)
for the performance of the services described in subparagraph (A) is
directly related to sales or other output (including the performance of
services) rather than to the number of hours worked, and
(C) the services performed by the person are performed pursuant to a
written contract between such person and the person for whom the
services are performed and such contract provides that the person will
not be treated as an employee with respect to such services for Federal
tax purposes.
(3) Coordination with retirement plans for selfemployed
This section shall not apply for purposes of subtitle A to the extent
that the individual is treated as an employee under section 401(c)(1)
(relating to self-employed individuals).
(Added Pub. L. 97-248, title II, 269(a), Sept. 3, 1982, 96 Stat.
551.)
Section 269(e) of Pub. L. 97-248 provided that:
''(1) In general. -- Except as provided in paragraph (2), the
amendments made by this section (enacting this section and amending
section 410 of Title 42, The Public Health and Welfare) shall apply to
services performed after December 31, 1982.
''(2) Subsection (c). -- The amendments made by subsection (c)
(amending provisions set out as a note under section 3401 of this title)
shall take effect on July 1, 1982.''
Section 269(c)(3) of Pub. L. 97-248 provided that: ''Nothing in
section 530 of the Revenue Act of 1978 (set out as a note under section
3401 of this title) shall be construed to prohibit the implementation of
the amendments made by this section (enacting this section, amending
section 410 of Title 42, The Public Health and Welfare, and amending
provisions set out as a note under section 3401 of this title).''
26 USC 3509. Determination of employer's liability for certain
employment taxes
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
If any employer fails to deduct and withhold any tax under chapter 24
or subchapter A of chapter 21 with respect to any employee by reason of
treating such employee as not being an employee for purposes of such
chapter or subchapter, the amount of the employer's liability for --
(1) Withholding taxes
Tax under chapter 24 for such year with respect to such employee
shall be determined as if the amount required to be deducted and
withheld were equal to 1.5 percent of the wages (as defined in section
3401) paid to such employee.
(2) Employee social security tax
Taxes under subchapter A of chapter 21 with respect to such employee
shall be determined as if the taxes imposed under such subchapter were
20 percent of the amount imposed under such subchapter without regard to
this subparagraph.
(b) Employer's liability increased where employer disregards
reporting requirements
(1) In general
In the case of an employer who fails to meet the applicable
requirements of section 6041(a), 6041A, or 6051 with respect to any
employee, unless such failure is due to reasonable cause and not willful
neglect, subsection (a) shall be applied with respect to such employee
--
(A) by substituting ''3 percent'' for ''1.5 percent'' in paragraph
(1); and
(B) by substituting ''40 percent'' for ''20 percent'' in paragraph
(2).
(2) Applicable requirements
For purposes of paragraph (1), the term ''applicable requirements''
means the requirements described in paragraph (1) which would be
applicable consistent with the employer's treatment of the employee as
not being an employee for purposes of chapter 24 or subchapter A of
chapter 21.
(c) Section not to apply in cases of intentional disregard
This section shall not apply to the determination of the employer's
liability for tax under chapter 24 or subchapter A of chapter 21 if such
liability is due to the employer's intentional disregard of the
requirement to deduct and withhold such tax.
(d) Special rules
For purposes of this section --
(1) Determination of liability
If the amount of any liability for tax is determined under this
section --
(A) the employee's liability for tax shall not be affected by the
assessment or collection of the tax so determined,
(B) the employer shall not be entitled to recover from the employee
any tax so determined, and
(C) sections /1/ 3402(d) and section 6521 shall not apply.
(2) Section not to apply where employer deducts wage but not social
security taxes
This section shall not apply to any employer with respect to any
wages if --
(A) the employer deducted and withheld any amount of the tax imposed
by chapter 24 on such wages, but
(B) failed to deduct and withhold the amount of the tax imposed by
subchapter A of chapter 21 with respect to such wages.
(3) Section not to apply to certain statutory employees
This section shall not apply to any tax under subchapter A of chapter
21 with respect to an individual described in subsection (d)(3) of
section 3121 (without regard to whether such individual is described in
paragraph (1) or (2) of such subsection).
(Added Pub. L. 97-248, title II, 270(a), Sept. 3, 1982, 96 Stat.
553; amended Pub. L. 100-647, title II, 2003(d), Nov. 10, 1988, 102
Stat. 3598; Pub. L. 101-508, title V, 5130(a)(4), Nov. 5, 1990, 104
Stat. 1388-289.)
1990 -- Subsec. (d)(3). Pub. L. 101-508 substituted ''subsection
(d)(3)'' for ''subsection (d)(4)''.
1988 -- Subsec. (d)(3). Pub. L. 100-647 substituted ''subsection
(d)(4)'' for ''subsection (d)(3)''.
Amendment by Pub. L. 101-508 effective as if included in the
enactment of Pub. L. 100-647, 2003(d), see section 5130(b) of Pub. L.
101-508, set out as a note under section 1402 of this title.
Section 270(c) of Pub. L. 97-248 provided that: ''The amendment
made by this section (enacting this section) shall take effect on the
date of the enactment of this Act (Sept. 3, 1982), except that such
amendments shall not apply to any assessment made before January 1,
1983.''
/1/ So in original. Probably should be ''section''.
26 USC ( 3510. Repealed. Pub. L. 101-508, title XI, 11801(a)(42), Nov.
5, 1990, 104 Stat. 1388-521)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added Pub. L. 98-21, title I, 123(b)(1), Apr. 20, 1983,
97 Stat. 88, provided a credit for increased social security employee
taxes and railroad retirement tier 1 employee taxes imposed during 1984.
For provisions that nothing in repeal by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit taken
into account prior to Nov. 5, 1990, for purposes of determining
liability for tax for periods ending after Nov. 5, 1990, see section
11821(b) of Pub. L. 101-508, set out as a note under section 29 of this
title.
26 USC Subtitle D -- Miscellaneous Excise Taxes
TITLE 26 -- INTERNAL REVENUE CODE
Chapter Sec. /1/
31.
Retail excise taxes 4001
32.
Manufacturers excise taxes 4061
33.
Facilities and services 4231
34.
Documentary stamp taxes /2/ 4371
35.
Taxes on wagering 4401
36.
Certain other excise taxes 4451
(37.
lRepealed.)
38.
Environmental taxes 4611
39.
Registration-required obligations 4701
40.
General provisions relating to occupational taxes 4901
41.
Public charities 4911
42.
Private foundations; and certain other tax-exempt organizations 4940
43.
Qualified pension, etc., plans 4971
44.
Real estate investment trusts 4981
(45.
lRepealed.)
46.
Golden parachute payments 4999
47.
Certain group health plans 5000
1990 -- Pub. L. 101-508, title XI, 11801(b)(17), Nov. 5, 1990, 104
Stat. 1388-522, struck out item for chapter 37 ''Sugar, coconut and
palm oil''.
1989 -- Pub. L. 101-239, title VI, 6202(b)(4)(B), title VII,
7841(d)(4), Dec. 19, 1989, 103 Stat. 2233, 2428, substituted semicolon
for comma in item for chapter 42 and struck out ''large'' after
''Certain'' in item for chapter 47.
1988 -- Pub. L. 100-418, title I, 1941(b)(3)(A), Aug. 23, 1988,
102 Stat. 1324, struck out item for chapter 45 ''Windfall profit tax on
domestic crude oil''.
1987 -- Pub. L. 100-203, title X, 10712(c)(8), Dec. 22, 1987, 101
Stat. 1330-467, substituted ''and certain other tax-exempt
organizations'' for ''black lung benefit trusts'' in item for chapter
42.
1986 -- Pub. L. 99-509, title IX, 9319(d)(2), Oct. 21, 1986, 100
Stat. 2012, added item for chapter 47.
1984 -- Pub. L. 98-369, div. A, title I, 67(d)(2), July 18, 1984,
98 Stat. 587, added item for chapter 46.
1983 -- Pub. L. 97-424, title V, 512(b)(2)(B), Jan. 6, 1983, 96
Stat. 2177, substituted ''Retail excise taxes'' for ''Special fuels''
in item for chapter 31.
1982 -- Pub. L. 97-248, title III, 310(b)(4)(B), Sept. 3, 1982, 96
Stat. 598, added item for chapter 39.
1980 -- Pub. L. 96-510, title II, 211(b), Dec. 11, 1980, 94 Stat.
2801, added item for chapter 38.
Pub. L. 96-223, 101(a)(2), Apr. 2, 1980, 94 Stat. 250, added item
for chapter 45.
1978 -- Pub. L. 95-227, 4(c)(2)(C), Feb. 10, 1978, 92 Stat. 22,
inserted '', black lung benefit trusts'' after ''foundations'' in item
for chapter 42.
1976 -- Pub. L. 94-455, title XIII, 1307(d)(3)(A), title XVI,
1605(c), title XIX, 1904(b)(7)(E), (10)(G), 1952(n)(6), Oct. 4, 1976,
90 Stat. 1728, 1755, 1815, 1818, 1846, substituted ''41. Public
charities'' for ''41. Interest equalization tax'' added item for
chapter 44 and struck out items for chapters ''38. Import taxes'' and
''39. Regulatory taxes''.
1974 -- Pub. L. 93-406, title II, 1016(b)(2), Sept. 2, 1974, 88
Stat. 932, added item for chapter 43.
1969 -- Pub. L. 91-172, title I, 101(j)(59), Dec. 30, 1969, 83
Stat. 532, added item for chapter 42.
1964 -- Pub. L. 88-563, 2(b), Sept. 2, 1964, 78 Stat. 841, added
item for chapter 41.
/1/ Section numbers editorially supplied.
/2/ Chapter heading amended by Pub. L. 94-455 without corresponding
amendment of analysis.
26 USC CHAPTER 31 -- RETAIL EXCISE TAXES
TITLE 26 -- INTERNAL REVENUE CODE
Subchapter Sec. /1/
A.
Certain luxury items 4001
B.
Special fuels 4041
C.
Heavy trucks and trailers 4051
The provisions of a prior chapter 31, Miscellaneous Excise Taxes,
were set out as:
Subchapter (A), Jewelry and related items, comprising sections 4001
to 4003;
Subchapter (B), Furs, comprising sections 4011 to 4013;
Subchapter (C), Toilet preparations, comprising sections 4021 and
4022;
Subchapter (D), Luggage, handbags, etc., comprising section 4031;
Subchapter (E), Special fuels, comprising sections 4041 and 4042;
and
Subchapter (F), Special provisions applicable to retailers tax,
comprising sections 4051 to 4058.
The headings for subchs. (A) to (D) were struck out by section
101(b)(1) and the listed sections were repealed by section 101(a) of
Pub. L. 89-44, title I, June 21, 1965, 79 Stat. 136, the Excise Tax
Reduction Act of 1965, applicable with respect to articles sold on or
after June 22, 1965, as provided in section 701(a) of Pub. L. 89-44,
set out as an Effective Date of 1965 Amendment note under section 4161
of this title.
The headings for subchs. (E) and (F) were stricken by section
1904(a)(1)(A) of Pub. L. 94-455, title XIX, Oct. 4, 1976, 90 Stat.
1810, the Tax Reform Act of 1976. Sections 4051 to 4053 were repealed
by section 101(b)(2) of Pub. L. 89-44, title I, June 21, 1965, 79 Stat.
136, applicable with respect to articles sold on or after June 22,
1965, as provided in section 701(a) of Pub. L. 89-44, set out as an
Effective Date of 1965 Amendment note under section 4061 of this title;
and sections 4042 and 4054 to 4058 were repealed by section
1904(a)(1)(D) of Pub. L. 94-455, title XIX, Oct. 4, 1976, 90 Stat.
1811, effective Feb. 1, 1977, as provided in section 1904(d) of Pub.
L. 94-455, set out as an Effective Date of 1976 Amendment note under
section 4041 of this title.
The subject matter of the prior sections was as follows:
A prior section 4001, acts Aug. 16, 1954, ch. 736, 68A Stat. 473;
Sept. 2, 1958, Pub. L. 85-859, title I, 101, 72 Stat. 1275; Sept.
21, 1959, Pub. L. 86-344, 1(a), 73 Stat. 617, imposed an excise tax
equivalent to 10 percent of selling price upon jewelry, stones, watches,
clocks, case and movements for watches and clocks, flatware and hollow
ware, opera glasses, lorgnettes, marine glasses, field glasses, and
binoculars.
A prior section 4002, act Aug. 16, 1954, ch. 736, 68A Stat. 473,
defined ''articles sold at retail'' to include articles sold at auction.
A prior section 4003, acts Aug. 16, 1954, ch. 736, 68A Stat. 474;
Sept. 2, 1958, Pub. L. 85-859, title I, 102, 72 Stat. 1276, specified
exemptions to tax imposed by section 4001.
A prior section 4011, act Aug. 16, 1954, ch. 736, 68A Stat. 475,
imposed an excise tax equivalent to 10 percent of selling price upon fur
articles.
A prior section 4012, act Aug. 16, 1954, ch. 736, 68A Stat. 475,
defined ''article sold at retail'' to include articles manufactured from
material supplied by customer and articles sold at auction.
A prior section 4013, act Aug. 16, 1954, ch. 736, 68A Stat. 475,
specified exemptions to tax imposed by section 4011.
A prior section 4021, acts Aug. 16, 1954, ch. 736, 68A Stat. 476;
Apr. 8, 1960, Pub. L. 86-413, 1, 74 Stat. 31, imposed an excise tax
equivalent to 10 percent of selling price upon toilet preparations.
A prior section 4022, act Aug. 16, 1954, ch. 736, 68A Stat. 476,
specified certain exemptions from tax imposed by section 4021, including
items for babies, items used in barber shops and beauty parlors, and
miniature samples.
A prior section 4031, acts Aug. 16, 1954, ch. 736, 68A Stat. 477;
Sept. 2, 1958, Pub. L. 85-859, title I, 103, 72 Stat. 1276, imposed
an excise tax equivalent to 10 percent of selling price upon luggage and
handbags, including billfolds and wallets, traveler's garment bags, and
briefcases.
A prior section 4042, act Aug. 16, 1954, ch. 736, 68A Stat. 478,
provided a cross reference to section 4222 for exemption from tax where
special motor fuels are sold for use for certain vessels.
A prior section 4051, act Aug. 16, 1954, ch. 736, 68A Stat. 479,
defined price for which articles were sold for purposes of determining
retailers excise taxes.
A prior section 4052, act Aug. 16, 1954, ch. 736, 68A Stat. 479,
provided that lease of an article would be considered sale of article
for excise tax purposes.
A prior section 4053, acts Aug. 16, 1954, ch. 736, 68A Stat. 479;
Sept. 2, 1958, Pub. L. 85-859, title I, 104, 72 Stat. 1276, made
provision for imposition of retailers tax on installment sales.
A prior section 4054, act Aug. 16, 1954, ch. 736, 68A Stat. 479,
related to application of taxes to retail sales by United States or by
any agency or instrumentality of United States unless specifically
exempted from such tax.
A prior section 4055, act Aug. 16, 1954, ch. 736, 68A Stat. 480;
June 21, 1965, Pub. L. 89-44, title I, 101(b)(3), 79 Stat. 136,
exempted from taxes articles sold for exclusive use of any State,
Territory of United States, or any political subdivision thereof, or
District of Columbia, including use by such entities of any liquid as a
fuel.
A prior section 4056, act Aug. 16, 1954, ch. 736, 68A Stat. 480,
provided that no tax shall be imposed upon sale of any article for
export, or for shipment to a possession of United States and in due
course so shipped and exported.
A prior section 4057, added Pub. L. 85-859, title I, 105(a), Sept.
2, 1958, 72 Stat. 1277; amended Pub. L. 86-344, 2(a), Sept. 21,
1959, 73 Stat. 617; Pub. L. 89-44, title I, 101(b)(4), June 21, 1965,
79 Stat. 136; Pub. L. 91-172, title I, 101(j)(25), Dec. 30, 1969, 83
Stat. 528, provided an exception with respect to sale of any article to
a non-profit educational organization for its exclusive use including
use of any liquid as a fuel and defined ''non-profit educational
organization''.
A prior section 4058, act Aug. 16, 1954, ch. 736, 68A Stat. 480,
4058, formerly 4057; renumbered Sept. 2, 1958, Pub. L. 85-859, title
I, 105(a), 72 Stat. 1277, related to cross references for exemption of
sales to United States in certain cases and administrative provisions of
general application.
1990 -- Pub. L. 101-508, title XI, 11221(e), Nov. 5, 1990, 104
Stat. 1388-444, added item for subchapter A and redesignated former
items for subchapters A and B as B and C, respectively.
1983 -- Pub. L. 97-424, title V, 512(b)(2)(A), Jan. 6, 1983, 96
Stat. 2177, substituted ''Retail Excise Taxes'' for ''Special Fuels''
in chapter heading, and added an analysis for subchapters A and B.
1976 -- Pub. L. 94-455, title XIX, 1904(a)(1)(A), Oct. 4, 1976, 90
Stat. 1810, substituted ''Special Fuels'' for ''Retailers Excise
Taxes'' in chapter heading.
/1/ Section numbers editorially supplied.
26 USC Subchapter A -- Certain Luxury Items
TITLE 26 -- INTERNAL REVENUE CODE
Part
I. Imposition of taxes.
II. Rules of general applicability.
A prior subchapter A of chapter 31 was redesignated subchapter B by
Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104 Stat.
1388-438.
26 USC PART I. IMPOSITION OF TAXES
TITLE 26 -- INTERNAL REVENUE CODE
Subpart
A. Passenger vehicles, boats, and aircraft.
B. Jewelry and furs.
26 USC Subpart A -- Passenger Vehicles, Boats, and Aircraft
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4001. Passenger vehicles.
4002. Boats.
4003. Aircraft.
4004. Rules applicable to subpart A.
26 USC 4001. Passenger vehicles
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
There is hereby imposed on the 1st retail sale of any passenger
vehicle a tax equal to 10 percent of the price for which so sold to the
extent such price exceeds $30,000.
(b) Passenger vehicle
(1) In general
For purposes of subsection (a), the term ''passenger vehicle'' means
any 4-wheeled vehicle --
(A) which is manufactured primarily for use on public streets, roads,
and highways, and
(B) which is rated at 6,000 pounds unloaded gross vehicle weight or
less.
(2) Special rules
(A) Trucks and vans
In the case of a truck or van, paragraph (1)(B) shall be applied by
substituting ''gross vehicle weight'' for ''unloaded gross vehicle
weight''.
(B) Limousines
In the case of a limousine, paragraph (1) shall be applied without
regard to subparagraph (B) thereof.
(c) Exceptions for taxicabs, etc.
The tax imposed by this section shall not apply to the sale of any
passenger vehicle for use by the purchaser exclusively in the active
conduct of a trade or business of transporting persons or property for
compensation or hire.
(Added Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104 Stat.
1388-439.)
Section 11221(f) of Pub. L. 101-508 provided that:
''(1) In general. -- The amendments made by this section (enacting
this subchapter, redesignating former subchapters A and B of this
chapter as subchapters B and C, respectively, and amending sections
4221, 4222, and 4293 of this title) shall take effect on January 1,
1991.
''(2) Exception for binding contracts. -- In determining whether any
tax imposed by subchapter A of chapter 31 of the Internal Revenue Code
of 1986, as added by this section, applies to any sale after December
31, 1990, there shall not be taken into account the amount paid for any
article (or any part or accessory therefor) if the purchaser held on
September 30, 1990, a contract (which was binding on such date and at
all times thereafter before the purchase) for the purchase of such
article (or such part or accessory).''
26 USC 4002. Boats
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
There is hereby imposed on the 1st retail sale of any boat a tax
equal to 10 percent of the price for which so sold to the extent such
price exceeds $100,000.
(b) Exceptions
The tax imposed by this section shall not apply to the sale of any
boat for use by the purchaser exclusively in the active conduct of --
(1) a trade or business of commercial fishing or transporting persons
or property for compensation or hire, or
(2) any other trade or business unless the boat is to be used
predominantly in any activity which is of a type generally considered to
constitute entertainment, amusement, or recreation.
(Added Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104 Stat.
1388-439.)
26 USC 4003. Aircraft
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
There is hereby imposed on the 1st retail sale of any aircraft a tax
equal to 10 percent of the price for which so sold to the extent such
price exceeds $250,000.
(b) Aircraft
For purposes of this section, the term ''aircraft'' means any
aircraft --
(1) which is propelled by a motor, and
(2) which is capable of carrying 1 or more individuals.
(c) 80 percent general business use
(1) In general
The tax imposed by this section shall not apply to the sale of any
aircraft if 80 percent of the use by the purchaser is in any trade or
business.
(2) Proof of business use
On the income tax return for each of the 1st 2 taxable years ending
after the date an aircraft on which no tax was imposed by this section
by reason of paragraph (1) was placed in service, the taxpayer filing
such return shall demonstrate to the satisfaction of the Secretary that
the use of such aircraft during each such year met the requirement of
paragraph (1).
(3) Imposition of luxury tax where failure of proof
If the requirement of paragraph (2) is not met for either of the
taxable years referred to therein, the taxpayer filing such returns
shall pay the tax which would (but for paragraph (1)) have been imposed
on such aircraft plus interest determined under subchapter C of chapter
67 during the period beginning on the date such tax would otherwise have
been imposed. If such taxpayer fails to pay the tax imposed pursuant to
the preceding sentence, no deduction shall be allowed under section 168
for any taxable year with respect to the aircraft involved.
(d) Other exceptions
The tax imposed by this section shall not apply to the sale of any
aircraft for use by the purchaser exclusively --
(1) in the aerial application of fertilizers or other substances,
(2) in the case of a helicopter, in a use described in paragraph (1)
or (2) of section 4261(e),
(3) in a trade or business of providing flight training, or
(4) in a trade or business of transporting persons or property for
compensation or hire.
(Added Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104 Stat.
1388-439.)
26 USC 4004. Rules applicable to subpart A
TITLE 26 -- INTERNAL REVENUE CODE
(a) Exemption for law enforcement uses, etc.
No tax shall be imposed under this subpart on the sale of any article
--
(1) to the Federal Government, or a State or local government, for
use exclusively in police, firefighting, search and rescue, or other law
enforcement or public safety activities, or in public works activities,
or
(2) to any person for use exclusively in providing emergency medical
services.
(b) Separate purchase of article and parts and accessories therefor
Under regulations prescribed by the Secretary --
(1) In general
Except as provided in paragraph (2), if --
(A) the owner, lessee, or operator of any article taxable under this
subpart (determined without regard to price) installs (or causes to be
installed) any part or accessory on such article, and
(B) such installation is not later than the date 6 months after the
date the article was 1st placed in service,
then there is hereby imposed on such installation a tax equal to 10
percent of the price of such part or accessory and its installation.
(2) Limitation
The tax imposed by paragraph (1) on the installation of any part or
accessory shall not exceed 10 percent of the excess (if any) of --
(A) the sum of --
(i) the price of such part or accessory and its installation,
(ii) the aggregate price of the parts and accessories (and their
installation) installed before such part or accessory, plus
(iii) the price for which the passenger vehicle, boat, or aircraft
was sold, over
(B) $30,000 in the case of a passenger vehicle, $100,000 in the case
of a boat, and $250,000 in the case of an aircraft.
(3) Exceptions
Paragraph (1) shall not apply if --
(A) the part or accessory installed is a replacement part or
accessory, or
(B) the aggregate price of the parts and accessories (and their
installation) described in paragraph (1) with respect to the taxable
article does not exceed $200 (or such other amount or amounts as the
Secretary may by regulation prescribe).
(4) Installers secondarily liable for tax
The owners of the trade or business installing the parts or
accessories shall be secondarily liable for the tax imposed by this
subsection.
(c) Imposition of tax on sales, etc., within 2 years of articles
purchased tax-free
(1) In general
If --
(A) no tax was imposed under this subchapter on the 1st retail sale
of any article by reason of its exempt use, and
(B) within 2 years after the date of such 1st retail sale, such
article is resold by the purchaser or such purchaser makes a substantial
non-exempt use of such article,
then such sale or use of such article by such purchaser shall be
treated as the 1st retail sale of such article for a price equal to its
fair market value at the time of such sale or use.
(2) Exempt use
For purposes of this subsection, the term ''exempt use'' means any
use of an article if the 1st retail sale of such article is not taxable
under this subchapter by reason of such use.
(Added Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104 Stat.
1388-440.)
26 USC Subpart B -- Jewelry and Furs
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4006. Jewelry.
4007. Furs.
26 USC 4006. Jewelry
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
There is hereby imposed on the 1st retail sale of any jewelry a tax
equal to 10 percent of the price for which so sold to the extent such
price exceeds $10,000.
(b) Jewelry
For purposes of subsection (a), the term ''jewelry'' means all
articles commonly or commercially known as jewelry, whether real or
imitation, including watches.
(c) Manufacture from customer's material
If --
(1) a person, in the course of a trade or business, produces jewelry
from material furnished directly or indirectly by a customer, and
(2) the jewelry is for the use of, and not for resale by, such
customer,
the delivery of such jewelry to such customer shall be treated as the
1st retail sale of such jewelry for a price equal to its fair market
value at the time of such delivery.
(Added Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104 Stat.
1388-441.)
26 USC 4007. Furs
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
There is hereby imposed on the 1st retail sale of the following
articles a tax equal to 10 percent of the price for which so sold to the
extent such price exceeds $10,000:
(1) Articles made of fur on the hide or pelt.
(2) Articles of which such fur is a major component.
(b) Manufacture from customer's material
If --
(1) a person, in the course of a trade or business, produces an
article of the kind described in subsection (a) from fur on the hide or
pelt furnished, directly or indirectly, by a customer, and
(2) the article is for the use of, and not for resale by, such
customer,
the delivery of such article to such customer shall be treated as the
1st retail sale of such article for a price equal to its fair market
value at the time of such delivery.
(Added Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104 Stat.
1388-442.)
26 USC PART II -- RULES OF GENERAL APPLICABILITY
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4011. Definitions and special rules.
4012. Termination.
26 USC 4011. Definitions and special rules
TITLE 26 -- INTERNAL REVENUE CODE
(a) 1st retail sale
For purposes of this subchapter, the term ''1st retail sale'' means
the 1st sale, for a purpose other than resale, after manufacture,
production, or importation.
(b) Use treated as sale
(1) In general
If any person uses an article taxable under this subchapter
(including any use after importation) before the 1st retail sale of such
article, then such person shall be liable for tax under this subchapter
in the same manner as if such article were sold at retail by him.
(2) Exemption for further manufacture
Paragraph (1) shall not apply to use of an article as material in the
manufacture or production of, or as a component part of, another article
taxable under this subchapter to be manufactured or produced by him.
(3) Exemption for demonstration use of passenger vehicles
Paragraph (1) shall not apply to any use of a passenger vehicle as a
demonstrator for a potential customer while the potential customer is in
the vehicle.
(4) Exception for use after importation of certain articles
Paragraph (1) shall not apply to the use of an article after
importation if the user or importer establishes to the satisfaction of
the Secretary that the 1st use of the article occurred before January 1,
1991, outside the United States.
(5) Computation of tax
In the case of any person made liable for tax by paragraph (1), the
tax shall be computed on the price at which similar articles are sold at
retail in the ordinary course of trade, as determined by the Secretary.
(c) Leases considered as sales
For purposes of this subchapter --
(1) In general
Except as otherwise provided in this subsection, the lease of an
article (including any renewal or any extension of a lease or any
subsequent lease of such article) by any person shall be considered a
sale of such article at retail.
(2) Special rules for certain leases of passenger vehicles, boats,
and aircraft
(A) Tax not imposed on sale for leasing in a qualified lease
The sale of a passenger vehicle, boat, or aircraft to a person
engaged in a leasing or rental trade or business of the article involved
for leasing by such person in a qualified lease shall not be treated as
the 1st retail sale of such article.
(B) Qualified lease
For purposes of subparagraph (A), the term ''qualified lease'' means
--
(i) any lease in the case of a boat or an aircraft, and
(ii) any long-term lease (as defined in section 4052) in the case of
any passenger vehicle.
(C) Special rules
In the case of a qualified lease of an article which is treated as
the 1st retail sale of such article --
(i) Determination of price
The tax under this subchapter shall be computed on the lowest price
for which the article is sold by retailers in the ordinary course of
trade.
(ii) Payment of tax
Rules similar to the rules of section 4217(e)(2) shall apply.
(iii) No tax where exempt use by lessee
No tax shall be imposed on any lease payment under a qualified lease
if the lessee's use of the article under such lease is an exempt use (as
defined in section 4004(c)) of such article.
(d) Determination of price
(1) In general
In determining price for purposes of this subchapter --
(A) there shall be included any charge incident to placing the
article in condition ready for use,
(B) there shall be excluded --
(i) the amount of the tax imposed by this subchapter,
(ii) if stated as a separate charge, the amount of any retail sales
tax imposed by any State or political subdivision thereof or the
District of Columbia, whether the liability for such tax is imposed on
the vendor or vendee, and
(iii) the value of any component of such article if --
(I) such component is furnished by the 1st user of such article, and
(II) such component has been used before such furnishing, and
(C) the price shall be determined without regard to any trade-in.
Subparagraph (B)(iii) shall not apply for purposes of the taxes
imposed by sections 4006 and 4007.
(2) Other rules
Rules similar to the rules of paragraphs (2) and (4) of section
4052(b) shall apply for purposes of this subchapter.
(e) Parts and accessories sold with taxable article
Parts and accessories sold on, in connection with, or with the sale
of any article taxable under this subchapter shall be treated as part of
the article.
(f) Partial payments, etc.
In the case of a contract, sale, or arrangement described in
paragraph (2), (3), or (4) of section 4216(c), rules similar to the
rules of section 4217(e)(2) shall apply for purposes of this subchapter.
(Added Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104 Stat.
1388-442.)
26 USC 4012. Termination
TITLE 26 -- INTERNAL REVENUE CODE
The taxes imposed by this subchapter shall not apply to any sale or
use after December 31, 1999.
(Added Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104 Stat.
1388-444.)
26 USC Subchapter B -- Special Fuels
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4041. Imposition of tax
4042. Tax on fuel used in commercial transportation on inland
waterways.
A prior subchapter B of chapter 31 was redesignated subchapter C by
Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104 Stat.
1388-438.
1990 -- Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104
Stat. 1388-438, redesignated this subchapter, formerly subchapter A, as
subchapter B. Former subchapter B redesignated C.
1978 -- Pub. L. 95-502, title II, 202(c), Oct. 21, 1978, 92 Stat.
1697, added item 4042.
1976 -- Pub. L. 94-455, title XIX, 1904(a)(1)(A), Oct. 4, 1976, 90
Stat. 1810, added item 4041.
26 USC 4041. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Diesel fuel and special motor fuels
(1) Tax on diesel fuel where no tax imposed on fuel under section
4091
There is hereby imposed a tax on any liquid (other than any product
taxable under section 4081) --
(A) sold by any person to an owner, lessee, or other operator of a
diesel-powered highway vehicle for use as a fuel in such vehicle, or
(B) used by any person as a fuel in a diesel-powered highway vehicle
unless there was a taxable sale of such liquid under subparagraph (A).
The rate of the tax imposed by this paragraph shall be the sum of the
Highway Trust Fund financing rate and the diesel fuel deficit reduction
rate in effect under section 4091 at the time of such sale or use. No
tax shall be imposed by this paragraph on the sale or use of any liquid
if there was a taxable sale of such liquid under section 4091.
(2) Special motor fuels
There is hereby imposed a tax on benzol, benzene, naphtha, liquefied
petroleum gas, casing head and natural gasoline, or any other liquid
(other than kerosene, gas oil, or fuel oil, or any product taxable under
section 4081 or paragraph (1) of this subsection) --
(A) sold by any person to an owner, lessee, or other operator of a
motor vehicle or motorboat for use as a fuel in such motor vehicle or
motorboat, or
(B) used by any person as a fuel in a motor vehicle or motorboat
unless there was a taxable sale of such liquid under subparagraph (A).
The rate of the tax imposed by this paragraph shall be the sum of the
Highway Trust Fund financing rate and the deficit reduction rate in
effect under section 4081 at the time of such sale or use.
(b) Exemption for off-highway business use; reduction in tax for
qualified methanol and ethanol fuel
(1) Exemption for off-highway business use
(A) In general
No tax shall be imposed by subsection (a) or (d)(1) on liquids sold
for use or used in an off-highway business use.
(B) Tax where other use
If a liquid on which no tax was imposed by reason of subparagraph (A)
is used otherwise than in an off-highway business use, a tax shall be
imposed by paragraph (1)(B) or (2)(B) of subsection (a) (whichever is
appropriate) and by the corresponding provision of subsection (d)(1).
(C) Off-highway business use defined
For purposes of this subsection, the term ''off-highway business
use'' has the meaning given to such term by section 6421(e)(2).
(2) Qualified methanol and ethanol fuel
(A) In general
In the case of any qualified methanol or ethanol fuel --
(i) the Highway Trust Fund financing rate applicable under subsection
(a)(2) shall be 5.4 cents per gallon less than the otherwise applicable
rate (6 cents per gallon in the case of a mixture none of the alcohol in
which consists of ethanol), and
(ii) subsection (d)(1) shall be applied by substituting ''0.05 cent''
for ''0.1 cent'' with respect to the sales and uses to which clause (i)
applies.
(B) Qualified methanol or ethanol fuel
The term ''qualified methanol or ethanol fuel'' means any liquid at
least 85 percent of which consists of methanol, ethanol, or other
alcohol produced from a substance other than petroleum or natural gas.
(C) Termination
On and after October 1, 2000, subparagraph (A) shall not apply.
(c) Noncommercial aviation
(1) Tax on nongasoline fuels where no tax imposed on fuel under
section 4091
There is hereby imposed a tax of 17.5 cents a gallon upon any liquid
(other than any product taxable under section 4081) --
(A) sold by any person to an owner, lessee, or other operator of an
aircraft, for use as a fuel in such aircraft in noncommercial aviation;
or
(B) used by any person as a fuel in an aircraft in noncommercial
aviation, unless there was a taxable sale of such liquid under this
section.
No tax shall be imposed by this paragraph on the sale or use of any
liquid if there was a taxable sale of such liquid under section 4091.
(2) Gasoline
There is hereby imposed a tax (at the rate specified in paragraph
(3)) upon any product taxable under section 4081 --
(A) sold by any person to an owner, lessee, or other operator of an
aircraft, for use as a fuel in such aircraft in noncommercial aviation;
or
(B) used by any person as a fuel in an aircraft in noncommercial
aviation, unless there was a taxable sale of such product under
subparagraph (A).
The tax imposed by this paragraph shall be in addition to any tax
imposed under section 4081.
(3) Rate of tax
The rate of tax imposed by paragraph (2) on any gasoline is the
excess of 15 cents a gallon over the sum of the Highway Trust Fund
financing rate plus the deficit reduction rate at which tax was imposed
on such gasoline under section 4081.
(4) Definition of noncommercial aviation
For purposes of this chapter, the term ''noncommercial aviation''
means any use of an aircraft, other than use in a business of
transporting persons or property for compensation or hire by air. The
term also includes any use of an aircraft, in a business described in
the preceding sentence, which is properly allocable to any
transportation exempt from the taxes imposed by sections 4261 and 4271
by reason of section 4281 or 4282.
(5) Termination
The taxes imposed by paragraphs (1) and (2) shall apply during the
period beginning on September 1, 1982, and ending on December 31, 1995.
(d) Additional taxes to fund Leaking Underground Storage Tank Trust
Fund
(1) Tax on sales and uses subject to tax under subsection (a)
In addition to the taxes imposed by subsection (a), there is hereby
imposed a tax of 0.1 cent a gallon on the sale or use of any liquid
(other than liquefied petroleum gas) if tax is imposed by subsection (a)
on such sale or use.
(2) Tax on diesel fuel used in trains
There is hereby imposed a tax of 0.1 cent a gallon on any liquid
(other than a product taxable under section 4081) --
(A) sold by any person to an owner, lessee, or other operator of a
diesel-powered train for use as a fuel in such train, or
(B) used by any person as a fuel in a diesel-powered train unless
there was a taxable sale of such liquid under subparagraph (A).
No tax shall be imposed by this paragraph on the sale or use of any
liquid if there was a taxable sale of such liquid under section 4091.
(3) Liquids used in aviation
In addition to the taxes imposed by subsection (c), there is hereby
imposed a tax of 0.1 cent a gallon on any liquid (other than any product
taxable under section 4081) --
(A) sold by any person to an owner, lessee, or other operator of an
aircraft for use as a fuel in such aircraft, or
(B) used by any person as a fuel in an aircraft unless there was a
taxable sale of such liquid under subparagraph (A).
No tax shall be imposed by this paragraph on the sale or use of any
liquid if there was a taxable sale of such liquid under section 4091.
(4) Termination
The taxes imposed by this subsection shall not apply during any
period during which the Leaking Underground Storage Tank Trust Fund
financing rate under section 4081 does not apply.
(e) Additional tax
If a liquid on which tax was imposed on the sale thereof is taxable
at a higher rate under subsection (c)(1) of this section on the use
thereof, there is hereby imposed a tax equal to the difference between
the tax so imposed and the tax payable at such higher rate.
(f) Exemption for farm use
(1) Exemption
Under regulations prescribed by the Secretary, no tax shall be
imposed under this section on any liquid sold for use or used on a farm
for farming purposes.
(2) Use on a farm for farming purposes
For purposes of paragraph (1) of this subsection, use on a farm for
farming purposes shall be determined in accordance with paragraphs (1),
(2), and (3) of section 6420(c).
(3) Termination
Except with respect to the taxes imposed by subsection (d), paragraph
(1) shall not apply on and after October 1, 1999.
(g) Other exemptions
Under regulations prescribed by the Secretary, no tax shall be
imposed under this section --
(1) on any liquid sold for use or used as supplies for vessels or
aircraft (within the meaning of section 4221(d)(3));
(2) with respect to the sale of any liquid for the exclusive use of
any State, any political subdivision of a State, or the District of
Columbia, or with respect to the use by any of the foregoing of any
liquid as a fuel;
(3) upon the sale of any liquid for export, or for shipment to a
possession of the United States, and in due course so exported or
shipped; and
(4) with respect to the sale of any liquid to a nonprofit educational
organization for its exclusive use, or with respect to the use by a
nonprofit educational organization of any liquid as a fuel.
For purposes of paragraph (4), the term ''nonprofit educational
organization'' means an educational organization described in section
170(b)(1)(A)(ii) which is exempt from income tax under section 501(a).
The term also includes a school operated as an activity of an
organization described in section 501(c)(3) which is exempt from income
tax under section 501(a), if such school normally maintains a regular
faculty and curriculum and normally has a regularly enrolled body of
pupils or students in attendance at the place where its educational
activities are regularly carried on. Except with respect to the taxes
imposed by subsection (d), paragraphs (2) and (4) shall not apply on and
after October 1, 1999.
(h) Exemption for use by certain aircraft museums
(1) Exemption
Under regulations prescribed by the Secretary, no tax shall be
imposed under this section on any liquid sold for use or used by an
aircraft museum in an aircraft or vehicle owned by such museum and used
exclusively for purposes set forth in paragraph (2)(C).
(2) Definition of aircraft museum
For purposes of this subsection, the term ''aircraft museum'' means
an organization --
(A) described in section 501(c)(3) which is exempt from income tax
under section 501(a),
(B) operated as a museum under charter by a State or the District of
Columbia, and
(C) operated exclusively for the procurement, care, and exhibition of
aircraft of the type used for combat or transport in World War II.
(i) Registration
If any liquid is sold by any person for use as a fuel in an aircraft,
it shall be presumed for purposes of this section that a tax imposed by
this section applies to the sale of such liquid unless the purchaser is
registered in such manner (and furnished such information in respect of
the use of the liquid) as the Secretary shall by regulations provide.
(j) Sales by United States, etc.
The taxes imposed by this section shall apply with respect to liquids
sold at retail by the United States, or by any agency or instrumentality
of the United States, unless sales by such agency or instrumentality are
by statute specifically exempted from such taxes.
(k) Fuels containing alcohol
(1) In general
Under regulations prescribed by the Secretary, in the case of the
sale or use of any liquid at least 10 percent of which consists of
alcohol (as defined in section 4081(c)(3)) --
(A) the Highway Trust Fund financing rates under paragraphs (1) and
(2) of subsection (a) shall be the comparable rates under sections
4081(c) and 4091(c), as the case may be,
(B) the rate of the tax imposed by subsection (c)(1) shall be the
comparable rate under section 4091(d), and
(C) no tax shall be imposed by subsection (c)(2).
(2) Later separation
If any person separates the liquid fuel from a mixture of the liquid
fuel and alcohol to which paragraph (1) applied, such separation shall
be treated as a sale of the liquid fuel. Any tax imposed on such sale
shall be reduced by the amount (if any) of the tax imposed on the sale
of such mixture.
(3) Termination
Paragraph (1) shall not apply to any sale or use after September 30,
2000.
(l) Exemption for certain helicopter uses
No tax shall be imposed under this section on any liquid sold for use
in, or used in, a helicopter for purposes of providing transportation
with respect to which the requirements of subsection (e) or (f) of
section 4261 are met.
(m) Certain alcohol fuels
(1) In general
In the case of the sale or use of any partially exempt methanol or
ethanol fuel --
(A) under subsection (a)(2) the Highway Trust Fund financing rate
shall be 5.75 cents per gallon and the deficit reduction rate shall be
1.25 cents per gallon, and
(B) the rate of the tax imposed by subsection (c)(1) shall be the
comparable rate under section 4091(d)(1).
(2) Partially exempt methanol or ethanol fuel
The term ''partially exempt methanol or ethanol fuel'' means any
liquid at least 85 percent of which consists of methanol, ethanol, or
other alcohol produced from natural gas.
(Aug. 16, 1954, ch. 736, 68A Stat. 478; Mar. 30, 1955, ch. 18,
3(a)(1), 69 Stat. 14; Mar. 29, 1956, ch. 115, 3(a)(1), 70 Stat. 66;
Apr. 2, 1956, ch. 160, 2(a)(1), 70 Stat. 89; June 29, 1956, ch. 462,
title II, 202, 70 Stat. 387; Sept. 2, 1958, Pub. L. 85-859, title I,
119(b)(1), 72 Stat. 1286; Sept. 21, 1959, Pub. L. 86-342, title II,
201(b), 73 Stat. 613; June 29, 1961, Pub. L. 87-61, title II, 201(a),
(c), (d), 75 Stat. 123, 124; June 21, 1965, Pub. L. 89-44, title VIII,
802(a)(2), 79 Stat. 159; May 21, 1970, Pub. L. 91-258, title II,
202, 84 Stat. 237; Dec. 31, 1970, Pub. L. 91-605, title III,
303(a)(1), (2), 84 Stat. 1743; May 5, 1976, Pub. L. 94-280, title III,
303(a)(1), (2), 90 Stat. 456; Oct. 4, 1976, Pub. L. 94-455, title
XIX, 1904(a)(1)(B), (C), 1906(b)(13)(A), 90 Stat. 1810, 1811, 1834;
Oct. 17, 1976, Pub. L. 94-530, 1(a), 90 Stat. 2487; Nov. 6, 1978,
Pub. L. 95-599, title V, 502(a)(1), (b), 92 Stat. 2756, 2757; Nov. 6,
1978, Pub. L. 95-600, title VII, 703(l)(1), (2), 92 Stat. 2942; Nov.
9, 1978, Pub. L. 95-618, title II, 221(b)(1), 222(a)(2), 233(a)(3)(B),
92 Stat. 3185, 3187, 3191; Apr. 2, 1980, Pub. L. 96-223, title II,
232(a)(2), 94 Stat. 273; July 1, 1980, Pub. L. 96-298, 1(a), 94 Stat.
829; Sept. 3, 1982, Pub. L. 97-248, title II, 279(a), (b)(1), 96 Stat.
563; Jan. 6, 1983, Pub. L. 97-424, title V, 511(a)(2), (b)(1),
(c)(2), (d)(2), (g)(1), 516(a)(1), (b)(1), 96 Stat. 2169-2171, 2173,
2182, 2183; July 18, 1984, Pub. L. 98-369, div. A, title IX, 911(a),
912(a), 913(a), title X, 1018(a), 98 Stat. 1005, 1007, 1008, 1021;
Oct. 17, 1986, Pub. L. 99-499, title V, 521(a)(2), (d)(1)-(3), 100
Stat. 1776, 1779; Oct. 22, 1986, Pub. L. 99-514, title IV, 422(a)(1),
(2), title XVII, 1702(a), title XVIII, 1878(c)(1), 100 Stat. 2229,
2773, 2903; Apr. 2, 1987, Pub. L. 100-17, title V, 502(a)(1),
(b)(1)-(3), (c)(1), 101 Stat. 256, 257; Dec. 22, 1987, Pub. L. 100-203,
title X, 10502(b), 101 Stat. 1330-441; Dec. 30, 1987, Pub. L. 100-223,
title IV, 402(b), 404(b), 405(b)(3), 101 Stat. 1532, 1533, 1535; Nov.
10, 1988, Pub. L. 100-647, title I, 1017(c)(3), (4), title II,
2001(d)(2), (3)(A)-(D), 102 Stat. 3576, 3595; Nov. 5, 1990, Pub. L.
101-508, title XI, 11211(a)(4), (b)(3), (6)(C)-(E)(i), (F), (d)(1),
(2), (e)(1), (2), 11213(b)(2)(A), (B), (d)(2)(B), (e)(3), 104 Stat.
1388-423, 1388-425 to 1388-427, 1388-433, 1388-436; Dec. 18, 1991, Pub.
L. 102-240, title VIII, 8002(b)(1), (2), 105 Stat. 2203.)
1991 -- Subsecs. (f)(3), (g). Pub. L. 102-240 substituted ''1999''
for ''1995''.
1990 -- Subsec. (a)(1). Pub. L. 101-508, 11211(b)(6)(C)(i), struck
out ''of 15 cents a gallon'' after ''imposed a tax'' in introductory
provisions and inserted before last sentence ''The rate of the tax
imposed by this paragraph shall be the sum of the Highway Trust Fund
financing rate and the diesel fuel deficit reduction rate in effect
under section 4091 at the time of such sale or use.''
Subsec. (a)(2). Pub. L. 101-508, 11211(b)(3), substituted ''imposed
a tax'' for ''imposed a tax of 9 cents a gallon'' in introductory
provisions and inserted at end ''The rate of the tax imposed by this
paragraph shall be the sum of the Highway Trust Fund financing rate and
the deficit reduction rate in effect under section 4081 at the time of
such sale or use.''
Subsec. (a)(3). Pub. L. 101-508, 11211(b)(6)(C)(ii), struck out par.
(3) which provided that on and after Oct. 1, 1993, the taxes imposed
by subsec. (a) shall not apply.
Subsec. (b)(2)(A)(i). Pub. L. 101-508, 11211(b)(6)(D), amended cl.
(i) generally. Prior to amendment, cl. (i) read as follows:
''subsection (a)(2) shall be applied by substituting '3 cents' for '9
cents', and''.
Subsec. (b)(2)(C). Pub. L. 101-508, 11211(e)(1), substituted
''2000'' for ''1993''.
Subsec. (c)(1). Pub. L. 101-508, 11213(b)(2)(A), substituted ''17.5
cents'' for ''14 cents''.
Subsec. (c)(3). Pub. L. 101-508, 11211(a)(4), substituted ''15
cents'' for ''12 cents'' and ''the sum of the Highway Trust Fund
financing rate plus the deficit reduction rate'' for ''the Highway Trust
Fund financing rate''.
Subsec. (c)(5). Pub. L. 101-508, 11213(d)(2)(B), substituted
''1995'' for ''1990''.
Subsec. (c)(6). Pub. L. 101-508, 11213(e)(3), struck out par. (6)
which provided cross reference to section 4283 for reduction of rates of
taxes imposed by subsec. (c)(1) and (2) in certain circumstances.
Subsecs. (f)(3), (g). Pub. L. 101-508, 11211(d)(1), (2),
substituted ''1995'' for ''1993''.
Subsec. (k)(1)(A). Pub. L. 101-508, 11211(b)(6)(E)(i), amended
subpar. (A) generally. Prior to amendment, subpar. (A) read as
follows: ''subsection (a)(1) shall be applied by substituting '9 cents'
for '15 cents', and''.
Subsec. (k)(1)(B). Pub. L. 101-508, 11213(b)(2)(B)(i), amended
subpar. (B) generally. Prior to amendment, subpar. (B) read as
follows: ''no tax shall be imposed by subsection (c)(1), and''.
Pub. L. 101-508, 11211(b)(6)(E)(i), amended subpar. (B) generally.
Prior to amendment, subpar. (B) read as follows: ''subsection (a)(2)
shall be applied by substituting '3 cents' for '9 cents', and''.
Subsec. (k)(1)(C). Pub. L. 101-508, 11211(b)(6)(E)(i), amended
subpar. (C) generally. Prior to amendment, subpar. (C) read as
follows: ''no tax shall be imposed by subsection (c).''
Subsec. (k)(3). Pub. L. 101-508, 11211(e)(2), substituted ''2000''
for ''1993''.
Subsec. (m)(1)(A). Pub. L. 101-508, 11211(b)(6)(F), amended subpar.
(A) generally. Prior to amendment, subpar. (A) read as follows:
''subsection (a)(2) shall be applied by substituting '4 1/2 cents' for
'9 cents', and''.
Subsec. (m)(1)(B). Pub. L. 101-508, 11213(b)(2)(B)(ii), amended
subpar. (B) generally. Prior to amendment, subpar. (B) read as
follows: ''no tax shall be imposed by subsection (c).''
1988 -- Subsec. (b)(1)(A). Pub. L. 100-647, 2001(d)(3)(A), inserted
reference to subsection (d)(1).
Subsec. (b)(1)(B). Pub. L. 100-647, 2001(d)(3)(B), inserted ''and by
the corresponding provision of subsection (d)(1)'' before the period.
Subsec. (b)(1)(C). Pub. L. 100-647, 1017(c)(3), substituted
''section 6421(e)(2)'' for ''section 6421(d)(2)''.
Subsec. (b)(2)(A). Pub. L. 100-647, 2001(d)(3)(D), amended subpar.
(A) generally, inserting ''(i)'' before ''subsection (a)(2)'' and adding
cl. (ii).
Subsec. (b)(3). Pub. L. 100-647, 2001(d)(3)(C), struck out par. (3)
which coordinated subsec. (b) with taxes imposed by subsec. (d).
Subsec. (c)(3). Pub. L. 100-647, 2001(d)(2), substituted ''the
Highway Trust Fund financing rate at which'' for ''the rate at which''.
Subsec. (f)(3). Pub. L. 100-647, 1017(c)(4), amended par. (3)
generally, substituting ''paragraph (1) shall not apply on and after
October 1, 1993'' for ''on and after October 1, 1993, paragraph (1)
shall not apply''.
1987 -- Subsec. (a)(1). Pub. L. 100-203, 10502(b)(1), in heading
substituted ''Tax on diesel fuel where no tax imposed on fuel under
section 4091'' for ''Diesel fuel'' and in text inserted sentence at end
that no tax be imposed by this paragraph on the sale or use of any
liquid if there was a taxable sale of such liquid under section 4091.
Subsec. (a)(3). Pub. L. 100-17, 502(a)(1), substituted ''1993'' for
''1988''.
Subsec. (b)(2)(C). Pub. L. 100-17, 502(b)(1), substituted ''1993''
for ''1988''.
Subsec. (c)(1). Pub. L. 100-203, 10502(b)(2), in heading substituted
''Tax on nongasoline fuels where no tax imposed on fuel under section
4091'' for ''In general'' and in text inserted sentence at end that no
tax be imposed by this paragraph on the sale or use of any liquid if
there was a taxable sale of such liquid under section 4091.
Subsec. (c)(5). Pub. L. 100-223, 402(b), substituted ''1990'' for
''1987''.
Subsec. (c)(6). Pub. L. 100-223, 405(b)(3), added par. (6).
Subsec. (d)(1). Pub. L. 100-203, 10502(b)(3), added par. (1),
substituting new heading for ''Liquids other than gasoline, etc., used
in motor vehicles, motorboats, or trains'', and struck out text of
former par. (1) which read as follows: ''In addition to the taxes
imposed by subsection (a), there is hereby imposed a tax of 0.1 cents a
gallon on benzol, benzene, naphtha, casing head and natural gasoline, or
any other liquid (other than kerosene, gas oil, liquefied petroleum gas,
or fuel oil, or any product taxable under section 4081) --
''(A) sold by any person to an owner, lessee, or other operator of a
motor vehicle, motorboat, or train for use as a fuel in such motor
vehicle, motorboat, or train, or
''(B) used by any person as a fuel in a motor vehicle, motorboat, or
train unless there was a taxable sale of such liquid under subparagraph
(A).''
Subsec. (d)(2). Pub. L. 100-203, 10502(b)(3), added par. (2),
substituting new heading for ''Liquids used in aviation'', and struck
out text of former par. (2) which read as follows: ''In addition to
the taxes imposed by subsection (c) and section 4081, there is hereby
imposed a tax of 0.1 cents a gallon on any liquid --
''(A) sold by any person to an owner, lessee, or other operator of an
aircraft for use as a fuel in such aircraft, or
''(B) used by any person as a fuel in an aircraft unless there was a
taxable sale of such liquid under subparagraph (A).
The tax imposed by this paragraph shall not apply to any product
taxable under section 4081 which is used as a fuel in an aircraft other
than in noncommercial aviation.''
Subsec. (d)(3), (4). Pub. L. 100-203, 10502(b)(3), added par. (3)
and redesignated former par. (3) as (4).
Subsecs. (f)(3), (g). Pub. L. 100-17, 502(b)(2), (3), substituted
''1993'' for ''1988''.
Subsec. (k)(3). Pub. L. 100-17, 502(c)(1), substituted ''September
30, 1993'' for ''December 31, 1992''.
Subsec. (l). Pub. L. 100-223, 404(b), amended subsec. (l)
generally. Prior to amendment, subsec. (l) read as follows: ''No tax
shall be imposed under this section on any liquid sold for use in, or
used in, a helicopter for the purpose of --
''(1) transporting individuals, equipment, or supplies in the
exploration for, or the development or removal of, hard minerals, oil,
or gas, or
''(2) the planting, cultivation, cutting or transportation of, or
caring for, trees (including logging operation),
but only if the helicopter does not take off from, or land at, a
facility eligible for assistance under the Airport and Airway
Development Act of 1970, or otherwise use services provided pursuant to
the Airport and Airway Improvement Act of 1982 during such use.''
Subsec. (n). Pub. L. 100-203, 10502(b)(4), struck out subsec. (n)
which related to tax on diesel fuel for highway vehicle use being
imposed on sale to retailer.
1986 -- Subsec. (b). Pub. L. 99-514, 422(a)(2), substituted
''reduction in tax'' for ''exemption'' in heading.
Subsec. (b)(2)(A). Pub. L. 99-514, 422(a)(1), amended subpar. (A)
generally. Prior to amendment, subpar. (A) read as follows: ''No tax
shall be imposed by subsection (a) on any qualified methanol or ethanol
fuel.''
Subsec. (b)(3). Pub. L. 99-499, 521(d)(1), added par. (3).
Subsecs. (d), (e). Pub. L. 99-499, 521(a)(2), added subsec. (d)
and redesignated former subsec. (d) as (e).
Subsec. (f)(3). Pub. L. 99-499, 521(d)(2), substituted ''Except with
respect to the taxes imposed by subsection (d), on and after'' for ''On
and after''.
Subsec. (g). Pub. L. 99-499, 521(d)(3), substituted ''Except with
respect to the taxes imposed by subsection (d), paragraphs'' for
''Paragraphs'' in last sentence.
Subsec. (l)(1). Pub. L. 99-514, 1879(c)(1), amended par. (1)
generally. Prior to amendment, par. (1) read as follows:
''transporting individuals, equipment, or supplies in --
''(A) the exploration for, or the development or removal of, hard
minerals, or
''(B) the exploration for oil or gas, or''.
Subsec. (n). Pub. L. 99-514, 1702(a), added subsec. (n).
1984 -- Subsec. (a)(1). Pub. L. 98-369, 911(a), substituted ''15
cents'' for ''9 cents''.
Subsec. (k)(1). Pub. L. 98-369, 912(a), in amending par. (1)
generally, substituted ''liquid'' for ''liquid fuel'' in provisions
preceding subpar. (A), in subpar. (A), substituted ''subsection (a)(1)
shall be applied by substituting '9 cents' for '15 cents', and'' for
''subsection (a) shall be applied by substituting '4 cents' for '9
cents' each place it appears, and'', added subpar. (B), and
redesignated former subpar. (B) as (C).
Subsec. (l)(1). Pub. L. 98-369, 1018(a), designated existing
provisions as subpar. (A) and added subpar. (B).
Subsec. (m). Pub. L. 98-369, 913(a), added subsec. (m).
1983 -- Subsec. (a). Pub. L. 97-424, 511(a)(2), 516(a)(1)(A),
added subsec. (a), and struck out former subsec. (a) which provided
for a tax of 4 cents a gallon on diesel fuel.
Subsec. (b). Pub. L. 97-424, 511(b)(1), (c)(2), added subsec. (b),
and struck out former subsec. (b) which provided for a tax of 4 cents a
gallon on special motor fuels.
Subsec. (c)(3). Pub. L. 97-424, 511(g)(1), substituted provision
that the rate of tax imposed by par. (2) on any gasoline is the excess
of 12 cents a gallon over the rate at which tax was imposed on such
gasoline under section 4081 for provision that the rate of tax imposed
by par. (2) was 8 cents a gallon (10 1/2 cents a gallon in the case of
any gasoline with respect to which a tax was imposed under section 4081
at the rate set forth in subsec. (b) thereof).
Subsec. (e). Pub. L. 97-424, 516(a)(1)(B), struck out subsec. (e)
which provided that the taxes imposed by subsecs. (a) and (b) would be
1 1/2 cents a gallon and that second and third sentences of subsecs.
(a) and (b) would not apply on and after Oct. 1, 1984.
Subsec. (f)(3). Pub. L. 97-424, 516(b)(1)(A), added par. (3).
Subsec. (g). Pub. L. 97-424, 516(b)(1)(B), inserted provision that
pars. (2) and (4) shall not apply on and after Oct. 1, 1988.
Subsec. (k). Pub. L. 97-424, 511(d)(2), in par. (1) substituted
provisions for a 4-cent tax on the sale or use of any liquid fuel at
least 10 percent of which consists of alcohol for provisions that no tax
be imposed by this section on the sale or use of such fuel, and in par.
(2) substituted ''to which paragraph (1) applied'' for ''on which tax
was not imposed by reason of this subsection'' after ''alcohol'' and
inserted provision that any tax imposed on such sale shall be reduced by
the amount (if any) of the tax imposed on the sale of such mixture.
1982 -- Subsec. (c). Pub. L. 97-248, 279(a), in par. (1)
substituted ''14 cents'' for ''7 cents'', in par. (3) substituted ''8
cents a gallon (10 1/2 cents a gallon in the case of any gasoline with
respect to which a tax is imposed under section 4081 at the rate set
forth in subsection (b) thereof)'' for ''3 cents a gallon'', and in par.
(5) substituted provisions that the taxes imposed by pars. (1) and (2)
shall apply during the period beginning on Sept. 1, 1982, and ending on
Dec. 31, 1987, for provisions that on and after Oct. 1, 1980, the
taxes imposed by pars. (1) and (2) would not apply.
Subsec. (l). Pub. L. 97-248, 279(b)(1), added subsec. (l).
1980 -- Subsec. (c)(5). Pub. L. 96-298 extended termination date to
''October 1, 1980'' from ''July 1, 1980''.
Subsec. (k)(3). Pub. L. 96-223 added par. (3).
1978 -- Subsec. (b). Pub. L. 95-618, 222(a)(2), 233(a)(3)(B),
substituted '', in a qualified business use'' for ''otherwise than as a
fuel in a highway vehicle (A) which (at the time of such sale or use) is
registered, or is required to be registered, for highway use under the
laws of any State or foreign country, or (B) which, in the case of a
highway vehicle owned by the United States, is used on the highway'' and
''is used otherwise than in a qualified business use'' for ''is used as
a fuel in a highway vehicle (A) which (at the time of such use) is
registered, or is required to be registered, for highway use under the
laws of any State or foreign country, or (B) which, in the case of a
highway vehicle owned by the United States, is used on the highway'' and
inserted provision that for purposes of this subsection ''qualified
business use'' has the meaning given to such term by section 6421(d)(2).
Subsec. (c)(3). Pub. L. 95-599, 502(b), struck out termination date
of Sept. 30, 1979 for 3 cents per gallon rate of tax and struck out
provision for a 5 1/2 cents per gallon rate of tax after such date.
Subsec. (e). Pub. L. 95-599, 502(a)(1), substituted ''1984'' for
''1979''.
Subsec. (h)(2). Pub. L. 95-600, 703(l)(1), substituted ''term
'aircraft museum' means'' for ''term 'aircraft' means''.
Subsecs. (i), (j). Pub. L. 95-600, 703(l)(2), redesignated subsec.
(i), relating to sales by United States, or by any agency or
instrumentality of United States, as (j).
Subsec. (k). Pub. L. 95-618, 221(b)(1), added subsec. (k).
1976 -- Subsec. (c)(3). Pub. L. 94-280, 303(a)(1), substituted
''1979'' for ''1977'' in two places.
Subsec. (e). Pub. L. 94-280, 303(a)(2), substituted ''1979'' for
''1977''.
Subsec. (f)(1). Pub. L. 94-455, 1906(b)(13(A), struck out ''or his
delegate'' after ''Secretary''.
Subsec. (g). Pub. L. 94-455, 1904(a)(1)(B), 1906(b)(13)(A),
designated existing provisions as par. (1), substituted ''Other
exemptions'' for ''Exemptions for use as supplies for vessels'' after
''(g)'', struck out ''or his delegate'' after ''Secretary'', and added
pars. (2) to (4) and definition of ''nonprofit educational
organization''.
Subsec. (h). Pub. L. 94-530 added subsec. (h). Former subsec. (h)
redesignated ''(i) Registration''.
Pub. L. 94-455, 1906(b)(13)(A), struck out ''or his delegate'' after
''Secretary''.
Subsec. (i). Pub. L. 94-455, 1904(a)(1)(C), added subsec. (i)
relating to sales by United States.
Pub. L. 94-530 redesignated former subsec. (h) as ''(i)
Registration''.
1970 -- Subsec. (b). Pub. L. 91-258, 202(b)(1) and (2), substituted
''motor vehicle or motorboat'' for ''motor vehicle, motorboat, or
airplane'', twice in par. (1) and once in par. (2), and ''in'' for
''for the propulsion of'' in par. (1) preceding ''such motor vehicle'',
in par. (2) preceding ''a motor vehicle'' and in text following par.
(2) before ''a highway vehicle (A)'' in two places, respectively.
Subsec. (c). Pub. L. 91-258, 202(a), added subsec. (c). Former
subsec. (c) redesignated (e).
Subsec. (c)(3). Pub. L. 91-605, 303(a)(1), substituted ''1977'' for
''1972'' in two places.
Subsec. (d). Pub. L. 91-258, 202(a), added subsec. (d). Former
subsec. (d) redesignated (f).
Subsec. (e). Pub. L. 91-605, 303(a)(2), substituted ''1977'' for
''1972''.
Pub. L. 91-258, 202(a), redesignated former subsec. (c) as (e),
substituting in par. (1) ''subsections (a) and (b)'' and '','' for
''this section'' and '';''. Former subsec. (e) redesignated (g).
Subsec. (f). Pub. L. 91-258, 202(a), redesignated former subsec.
(d) as (f), substituting in par. (1) prohibition against imposition of
tax ''under this section on any liquid sold for use or used on a farm
for farming purposes'' for prior provisions that ''(A) no tax shall be
imposed under subsection (a)(1) or (b)(1) on the sale of any liquid sold
for use on a farm for farming purposes, and (B) no tax shall be imposed
under subsection (a)(2) or (b)(2) on the use of any liquid used on a
farm for farming purposes''.
Subsec. (g). Pub. L. 91-258, 202(a), redesignated former subsec.
(e) as (g), substituting ''this section on any liquid sold'' for
''subsection (b) in the case of any fuel sold''.
Subsec. (h). Pub. L. 91-258, 202(a), added subsec. (h).
1965 -- Subsec. (b). Pub. L. 89-44 inserted ''casinghead and natural
gasoline,'' after ''liquefied petroleum gas,'' in text preceding par.
(1).
1961 -- Subsec. (a). Pub. L. 87-61, 201(a), increased tax on diesel
fuel from 3 to 4 cents a gallon, and substituted ''a tax of 2 cents a
gallon shall be imposed under paragraph (2)'' for ''a tax of 1 cent a
gallon shall be imposed under paragraph (2)''.
Subsec. (b). Pub. L. 87-61, 201(a), increased tax on special motor
fuels from 3 to 4 cents a gallon, and substituted ''a tax of 2 cents a
gallon shall be imposed under paragraph (2)'' for ''a tax of 1 cent a
gallon shall be imposed under paragraph (2)''.
Subsec. (c). Pub. L. 87-61, 201(c), substituted ''October 1, 1972''
for ''July 1, 1972''.
Subsec. (f). Pub. L. 87-61, 201(d), repealed subsec. (f) which
authorized a temporary increase in taxes under subsecs. (a) and (b).
1959 -- Subsecs. (a), (b). Pub. L. 86-342, 201(b)(2), struck out
''in lieu of 3 cents a gallon'' after ''shall be 2 cents a gallon''.
Subsec. (f). Pub. L. 86-342, 201(b)(1), added subsec. (f).
1958 -- Subsec. (e). Pub. L. 85-859 added subsec. (e).
1956 -- Subsec. (a). Act June 29, 1956, 202(a), increased tax on
diesel fuel from 2 cents a gallon to 3 cents a gallon, and inserted
provisions which retained tax at 2 cents a gallon for diesel fuel used
in vehicles not registered, and not required to be registered, for
highway use, or vehicles owned by the United States and not used on the
highway.
Subsec. (b). Act June 29, 1956, 202(b), increased tax on special
motor fuels from 2 cents a gallon to 3 cents a gallon, and inserted
provisions which retained tax at 2 cents a gallon for special motor
fuels sold for use or used otherwise than as a fuel for the propulsion
of a highway vehicle which is registered, or is required to be
registered, for highway use, or vehicles owned by the United States used
on the highway.
Subsec. (c). Act June 29, 1956, 202(c), substituted ''July 1, 1972''
for ''April 1, 1956'' and provided for nonapplication of second and
third sentences of subsec. (a) and (b).
Act Mar. 29, 1956, substituted ''April 1, 1957'' for ''April 1,
1956''.
Subsec. (d). Act Apr. 2, 1956, added subsec. (d).
1955 -- Subsec. (c). Act Mar. 30, 1955, substituted ''April 1,
1956'' for ''April 1, 1955''.
Section 11211(a)(6) of Pub. L. 101-508 provided that: ''Except as
otherwise provided in this subsection, the amendments made by this
subsection (amending this section and sections 4081 and 9503 of this
title) shall apply to gasoline removed (as defined in section 4082 of
the Internal Revenue Code of 1986) after November 30, 1990.''
Section 11211(b)(7) of Pub. L. 101-508 provided that: ''The
amendments made by this subsection (amending this section and sections
4091, 4093, 6427, 9502, and 9503 of this title) shall take effect on
December 1, 1990.''
Section 11213(b)(4) of Pub. L. 101-508 provided that: ''The
amendments made by this subsection (amending this section and sections
4091 and 6427 of this title) shall take effect on December 1, 1990.''
Amendment by section 1017(c)(3), (4) of Pub. L. 100-647 effective,
except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates,
see section 1019(a) of Pub. L. 100-647, set out as a note under section
1 of this title.
Amendment by section 2001(d)(2), (3)(A)-(D) of Pub. L. 100-647
effective, except as otherwise provided, as if included in the provision
of the Superfund Revenue Act of 1986, Pub. L. 99-499, title V, to which
it relates, see section 2001(e) of Pub. L. 100-647, set out as a note
under section 56 of this title.
Section 2001(d)(1)(A) of Pub. L. 100-647 provided that: ''The
amendments made by subsections (b)(3) and (d)(17) of section 10502 of
the Revenue Act of 1987 (Pub. L. 100-203, amending this section and
section 9508 of this title) shall be treated as if included in the
amendments made by section 521 of the Superfund Revenue Act of 1986
(Pub. L. 99-499) except that the last sentence of paragraphs (2) and (3)
of section 4041(d) of the Internal Revenue Code of 1986 (as amended by
such subsection (b)(3)) and the reference to section 4091 of such Code
in section 9508(c)(2)(A) of such Code (as amended by such subsection
(d)(1) ((d)(17))) shall not apply to sales before April 1, 1988.''
Section 404(d)(2) of Pub. L. 100-223 provided that: ''The amendment
made by subsection (b) (amending this section) shall take effect on
October 1, 1988.''
Amendment by Pub. L. 100-203 applicable to sales after Mar. 31,
1988, see section 10502(e) of Pub. L. 100-203, set out as a note under
section 40 of this title.
Section 422(a)(3) of Pub. L. 99-514 provided that: ''The amendments
made by this subsection (amending this section) shall take effect on
January 1, 1987.''
Section 1702(c) of Pub. L. 99-514 provided that: ''The amendments
made by this section (amending this section and section 6652 of this
title) shall apply to sales after the first calendar quarter beginning
more than 60 days after the date of the enactment of this Act (Oct. 22,
1986).''
Amendment by section 1878(c)(1) of Pub. L. 99-514 effective, except
as otherwise provided, as if included in the provisions of the Tax
Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment
relates, see section 1881 of Pub. L. 99-514, set out as a note under
section 48 of this title.
Section 521(e) of Pub. L. 99-499 provided that: ''The amendments
made by this section (amending this section and sections 4042, 4081,
4221, 6416, 6420, 6421, 6427, 9502, 9503, and 9506 of this title) shall
take effect on January 1, 1987.''
Amendment by section 911(a) of Pub. L. 98-369 effective Aug. 1,
1984, see section 911(e) of Pub. L. 98-369, set out as a note under
section 6427 of this title.
Amendment by section 912(a) of Pub. L. 98-369 effective Jan. 1,
1985, see section 912(g) of Pub. L. 98-369, set out as a note under
section 40 of this title.
Section 913(c) of Pub. L. 98-369 provided that: ''The amendments
made by this section (amending this section and section 40 of this
title) shall take effect on August 1, 1984.''
Section 1018(c)(1) of Pub. L. 98-369 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect on
April 1, 1984.''
Section 511(h) of Pub. L. 97-424 provided that:
''(1) In general. -- Except as otherwise provided in this subsection,
the amendments made by this section (amending this section and sections
44E, 4081, 6416, 6420, 6421, and 6427 of this title) shall take effect
on April 1, 1983.
''(2) Tariff on imported alcohol. -- The amendment made by subsection
(d)(5) (amending item 901.50 of the Tariff Schedules, which are not set
out in the Code) shall apply with respect to articles entered, or
withdrawn from warehouse for consumption, after March 31, 1983.
''(3) For subsection (e)(2). -- The amendment made by subsection
(e)(2) (amending section 6427 of this title) shall take effect on
January 1, 1983.
''(4) Shared transportation requirement. -- The amendment made by
subsection (e)(3) (amending section 6427 of this title) shall apply with
respect to fuel purchased after December 31, 1982, and before January 1,
1984.''
Section 279(c) of Pub. L. 97-248 provided that: ''The amendments
made by this section (amending this section and section 6427 of this
title) shall take effect on September 1, 1982.''
Section 221(b)(2) of Pub. L. 95-618, as amended by Pub. L. 96-223,
title II, 232(a)(3), Apr. 2, 1980, 94 Stat. 273, provided that:
''The amendment made by paragraph (1) (amending this section) shall
apply to sales or use after December 31, 1978.''
Section 222(b) of Pub. L. 95-618 provided that: ''The amendments
made by subsection (a) (amending this section and sections 6421 and 6424
of this title) shall apply with respect to uses after December 31,
1978.''
Amendment by section 233(a)(3)(B) of Pub. L. 95-618 effective on
first day of first calendar month which begins more than 10 days after
Nov. 9, 1978, see section 233(d) of Pub. L. 95-618, set out as a note
under section 34 of this title.
Amendment by Pub. L. 95-600 effective Oct. 4, 1976, see section
703(r) of Pub. L. 95-600, set out as a note under section 46 of this
title.
Section 1(d) of Pub. L. 94-530 provided that: ''The amendments made
by this section (amending this section and sections 39, 6427, 7210,
7603, 7604, and 7605 of this title) shall take effect on October 1,
1976.''
Section 1904(d) of Pub. L. 94-455 provided that: ''Except as
otherwise provided in this section, the amendments made by this section
(amending this section and sections 263, 861, 1232, 4042, 4216, 4217,
4227, 4253, 4261, 4271, 4371 to 4374, 4482, 4493, 4901, 4905, 4973,
6011, 6416, 6611, 6651, 6808, 7012, 7234, 7240, 7265, 7270, 7272, 7303,
7611, and 7655 of this title and repealing sections 4042, 4054 to 4058,
4226, 4292, 4294, 4295, 4591 to 4597, 4801 to 4806, 4811 to 4826, 4881
to 4886, 4911 to 4931, 6076, 6680, 6681, 6689, 7235, 7239, 7241, 7264,
7267, 7274, and 7328 of this title) shall take effect on the first day
of the first month which begins more than 90 days after the date of the
enactment of this Act (Oct. 4, 1976).''
Section 211 of title II of Pub. L. 91-258 provided that:
''(a) General Rule. -- Except as provided in subsection (b), the
amendments made by this title (see Short Title of 1970 Amendment note
below) shall take effect on July 1, 1970.
''(b) Exceptions. -- The amendments made by sections 203 (enacting
section 7275 and amending sections 4261 and 4262 of this title) and 204
(enacting sections 4271 and 4272 of this title) shall apply to
transportation beginning after June 30, 1970. The amendments made by
subsections (a), (b), and (c) of section 207 (enacting section 6427 and
amending sections 39, 6420, 6421, and 6424) shall apply with respect to
taxable years ending after June 30, 1970.''
Section 802(d)(2) of Pub. L. 89-44 provided that: ''The amendment
made by subsection (a)(2) (amending this section) shall apply with
respect to casinghead and natural gasoline sold or used on or after July
1, 1965, except that such amendment shall not apply to a sale or use of
casinghead or natural gasoline which was sold by a producer or importer
before such date if tax under section 4081 of the Code (as in effect
prior to the amendment made by subsection (a)(1) (amending section 4082
of this title)) was imposed with respect to such sale.''
Section 208 of title II of Pub. L. 87-61 provided that:
''(a) Except as provided in subsection (b), the amendments made by
this title (enacting section 6156 of this title, amending this section
and sections 4061, 4071, 4081, 4218, 4221, 4226, 4481, 4482, 6412, 6416,
6421, and 6601 of this title, and amending section 209 of The Highway
Revenue Act of 1956, set out as a note under section 120 of Title 23,
Highways) shall take effect on the date of the enactment of this Act
(June 29, 1961).
''(b)(1) The amendments made by sections 201, 202, and 203 (enacting
section 6156 of this title and amending this section and sections 4071,
4081, 4481, 4482, 6421, and 6601 of this title) shall take effect on
July 1, 1961.
''(2) The amendments made by section 205(a), (c), and (d) (amending
sections 4221 and 6416 of this title) shall apply only in the case of
gasoline sold on or after October 1, 1961.
''(3) The amendment made by section 205(b) (amending section 4218 of
this title) shall apply only in the case of gasoline used on or after
October 1, 1961.''
Amendment by Pub. L. 85-859 effective on first day of first calendar
quarter which begins more than 60 days after Sept. 2, 1958, see section
1(c) of Pub. L. 85-859.
Section 211 of title II of act June 29, 1956, provided that: ''This
title (enacting sections 173 and 174 of Title 23, Highways, and sections
4426, 4481 to 4484 of this title, amending this section and sections
4061, 4071, 4072, 4073, 4081, 4084, 6206, 6412, 6416, 6504, 6511, 6612,
6675, 7210, 7603, 7604, and 7605 of this title, and renumbering sections
4227 and 6422 of this title) shall take effect on the date of its
enactment (June 29, 1956), except that the amendments made by sections
202, 203, 204, and 205 (amending this section and sections 4061, 4071,
4072, 4073, and 4081 of this title) shall take effect on July 1, 1956.''
Section 2(a)(2) of act Apr. 2, 1956, provided that: ''The amendment
made by paragraph (1) (amending this section) shall take effect on the
day after the date of the enactment of this Act (Apr. 2, 1956).''
Section 201(a) of title II of Pub. L. 91-258 provided that: ''This
title (enacting sections 4271, 4272, 4281, 4282, 4491 to 4494, 6426,
6427, and 7275 of this title and section 1742 of Title 49, Appendix,
Transportation, amending this section and sections 39, 874, 4082, 4261,
4262, 4291 to 4294, 6156, 6201, 6206, 6401, 6415, 6416, 6420, 6421,
6424, 6675, 7210, and 7603 to 7605 of this title, repealing former
section 4263 of this title, enacting provisions set out as notes under
section 104 of Title 4, Flag and Seal, Seat of Government, and the
States, and section 1742 of Title 49, Appendix, and amending provision
set out as a note under section 120 of Title 23, Highways) may be cited
as the 'Airport and Airway Revenue Act of 1970'.''
Section 201(a) of title II of act June 29, 1956, provided that:
''This title (enacting sections 173 and 174 of Title 23, Highways, and
sections 4426, 4481 to 4484 of this title, amending this section and
sections 4061, 4071, 4072, 4073, 4081, 4084, 6206, 6412, 6416, 6504,
6511, 6612, 6675, 7210, 7603, 7604, and 7605 of this title, and
renumbering sections 4227 and 6422 of this title) may be cited as the
'Highway Revenue Act of 1956'.''
Section 1 of act Mar. 29, 1956, provided: ''That this Act (amending
this section and sections 11, 821, 4061, 4081, 5001, 5022, 5041, 5051,
5063, 5134, 5701, 5701 note, 5707, and 6412 of this title) may be cited
as the 'Tax Rate Extension Act of 1956'.''
Section 1 of act Mar. 30, 1955, provided: ''That this Act (amending
this section and sections 11, 821, 4061, 4081, 5001, 5022, 5041, 5051,
5063, 5134, 5701, 5701 note, 5707, and 6412 of this title) may be cited
as the 'Tax Rate Extension Act of 1955'.''
Section 11213(b)(5) of Pub. L. 101-508 provided that:
''(A) Imposition of tax. -- In the case of aviation fuel on which tax
was imposed under section 4041(c)(1) or 4091 of the Internal Revenue
Code of 1986 before December 1, 1990, and which is held on such date by
any person, there is hereby imposed a floor stocks tax on such fuel.
''(B) Rate of tax. -- The rate of the tax imposed by subparagraph (A)
shall be 3.5 cents per gallon.
''(C) Liability for tax and method of payment. --
''(i) Liability for tax. -- A person holding fuel on December 1,
1990, to which the tax imposed by this paragraph applies shall be liable
for such tax.
''(ii) Method of payment. -- The tax imposed by this paragraph shall
be paid in such manner as the Secretary shall prescribe.
''(iii) Time for payment. -- The tax imposed by this paragraph shall
be paid on or before May 31, 1991.
''(D) Definitions. -- For purposes of this paragraph --
''(i) Held by a person. -- Fuel shall be considered as 'held by a
person' if title thereto has passed to such person (whether or not
delivery to the person has been made).
''(ii) Aviation fuel. -- The term 'aviation fuel' has the meaning
given such term by section 4092(a) of such Code.
''(iii) Secretary. -- The term 'Secretary' means the Secretary of the
Treasury or his delegate.
''(E) Exception for exempt uses. -- The tax imposed by this paragraph
shall not apply to fuel held by any person exclusively for any use which
is a nontaxable use (as defined in section 6427(l) of such Code).
''(F) Other laws applicable. -- All provisions of law, including
penalties, applicable with respect to the taxes imposed by section 4091
of such Code shall, insofar as applicable and not inconsistent with the
provisions of this paragraph, apply with respect to the floor stock
taxes imposed by this paragraph to the same extent as if such taxes were
imposed by such section 4091.''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
Pub. L. 96-451, title II, 204, Oct. 14, 1980, 94 Stat. 1988,
directed Secretary of the Treasury, after consultation with Secretary of
department in which Coast Guard was operating, to conduct a study to
determine portion of taxes imposed by sections 4041(b) and 4081 of the
Internal Revenue Code of 1954 which were attributable to fuel used in
recreational motorboats, and to report to Congress on his findings under
such study, not later than 2 years after Oct. 14, 1980.
Section 232(f) of Pub. L. 96-223 required, within 180 days after
Apr. 2, 1980, Secretary of the Treasury to furnish specific
Congressional committees recommendations for limiting import of alcohol
into United States for fuel purposes.
Section 221(c) of Pub. L. 95-618, as amended by Pub. L. 96-223,
232(g), Apr. 2, 1980, 94 Stat. 280; Pub. L. 99-514, 2, Oct. 22,
1986, 100 Stat. 2095, provided that: ''On April 1 of each year,
beginning with April 1, 1981, and ending with April 1, 1992, the
Secretary of Energy, in consultation with the Secretary of the Treasury
and the Secretary of Transportation, shall submit to the Congress a
report on the use of alcohol in fuel. The report shall include --
''(1) a description of the firms engaged in the alcohol fuel
industry,
''(2) the amount of alcohol fuel sold in each State, and the amount
of gasoline saved in each State by reason of the use of alcohol fuels,
''(3) the revenue loss resulting from the exemptions from tax for
alcohol fuels under sections 4041(k) and 4081(c) of the Internal Revenue
Code of 1986 (formerly I.R.C. 1954) and the credit allowable under
section 44E (now 40) of such Code and the impact of such revenue loss on
the Highway Trust Fund, and
''(4) the cost of production and the retail cost of alcohol fuels as
compared to gasoline and special fuels not mixed with alcohol.''
Penalty for representation that tax is excluded from price of
article, see section 7261 of this title.
26 USC 4042. Tax on fuel used in commercial transportation on inland
waterways
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
There is hereby imposed a tax on any liquid used during any calendar
quarter by any person as a fuel in a vessel in commercial waterway
transportation.
(b) Amount of tax
(1) In general
The rate of the tax imposed by subsection (a) is the sum of --
(A) the Inland Waterways Trust Fund financing rate, and
(B) the Leaking Underground Storage Tank Trust Fund financing rate.
(2) Rates
For purposes of paragraph (1) --
(A) The Inland Waterways Trust Fund financing rate is the rate
determined in accordance with the following table:
The tax per If the use occurs: gallon is:
Before 1990 10 cents
During 1990 11 cents
During 1991 13 cents
During 1992 15 cents
During 1993 17 cents
During 1994 19 cents
After 1994 20 cents.
(B) The Leaking Underground Storage Tank Trust Fund financing rate is
0.1 cent per gallon.
(3) Exception for fuel taxed under section 4041(d)
The Leaking Underground Storage Tank Trust Fund financing rate under
paragraph (2)(B) shall not apply to the use of any fuel if tax under
section 4041(d) was imposed on the sale of such fuel or is imposed on
such use.
(4) Termination of Leaking Underground Storage Tank Trust Fund
financing rate
The Leaking Underground Storage Tank Trust Fund financing rate under
paragraph (2)(B) shall not apply during any period during which the
Leaking Underground Storage Tank Trust Fund financing rate under section
4081 does not apply.
(c) Exemptions
(1) Deep-draft ocean-going vessels
The tax imposed by subsection (a) shall not apply with respect to any
vessel designed primarily for use on the high seas which has a draft of
more than 12 feet.
(2) Passenger vessels
The tax imposed by subsection (a) shall not apply with respect to any
vessel used primarily for the transportation of persons.
(3) Use by State or local government in transporting property in a
state or local business
Subparagraph (B) of subsection (d)(1) shall not apply with respect to
use by a State or political subdivision thereof.
(4) Use in moving lash and seabee ocean-going barges
The tax imposed by subsection (a) shall not apply with respect to use
for movement by tug of exclusively LASH (Lighter-aboard-ship) and SEABEE
ocean-going barges released by their ocean-going carriers solely to pick
up or deliver international cargoes.
(d) Definitions
For purposes of this section --
(1) Commercial waterway transportation
The term ''commercial waterway transportation'' means any use of a
vessel on any inland or intracoastal waterway of the United States --
(A) in the business of transporting property for compensation or
hire, or
(B) in transporting property in the business of the owner, lessee, or
operator of the vessel (other than fish or other aquatic animal life
caught on the voyage).
(2) Inland or intracoastal waterway of the United States
The term ''inland or intracoastal waterway of the United States''
means any inland or intracoastal waterway of the United States which is
described in section 206 of the Inland Waterways Revenue Act of 1978.
(3) Person
The term ''person'' includes the United States, a State, a political
subdivision of a State, or any agency or instrumentality of any of the
foregoing.
(e) Date for filing return
The date for filing the return of the tax imposed by this section for
any calendar quarter shall be the last day of the first month following
such quarter.
(Added Pub. L. 95-502, title II, 202(a), Oct. 21, 1978, 92 Stat.
1696; amended Pub. L. 99-499, title V, 521(a)(3), Oct. 17, 1986, 100
Stat. 1777; Pub. L. 99-662, title XIV, 1404(a), Nov. 17, 1986, 100
Stat. 4270; Pub. L. 100-647, title II, 2002(a)(2), Nov. 10, 1988, 102
Stat. 3597.)
Section 206 of the Inland Waterways Revenue Act of 1978, referred to
in subsec. (d)(2), is section 206 of Pub. L. 95-502, title II, Oct.
21, 1978, 92 Stat. 1700, which is classified to section 1804 of Title
33, Navigation and Navigable Waters.
A prior section 4042, act Aug. 16, 1954, ch. 736, 68A Stat. 478,
which provided a cross reference to section 4222 of this title for
exemption from tax where special motor fuels are sold for use for
certain vessels, was repealed by Pub. L. 94-455, title XIX,
1904(a)(1)(D), Oct. 4, 1976, 90 Stat. 1811.
1988 -- Subsec. (b)(2). Pub. L. 100-647 amended par. (2) generally.
Prior to amendment, par. (2) read as follows: ''For purposes of
paragraph (1) --
''(A) the Inland Waterways Trust Fund financing rate is 10 cents a
gallon, and
''(B) the Leaking Underground Storage Tank Trust Fund financing rate
is 0.1 cents a gallon.''
1986 -- Subsec. (b). Pub. L. 99-499 and Pub. L. 99-662 both amended
subsec. (b) generally, effective Jan. 1, 1987. Pub. L. 100-647,
2002(a)(1) (see Construction of 1986 Amendments note below), provided
that for purposes of this section, the amendment made by Pub. L. 99-499
be treated as enacted after the amendment made by Pub. L. 99-662.
Prior to amendment by Pub. L. 99-499 and Pub. L. 99-662, subsec. (b)
read as follows:
Section 2002(d) of Pub. L. 100-647, as amended by Pub. L. 101-239,
title VII, 7812(b), Dec. 19, 1989, 103 Stat. 2412, provided that:
''The amendments made by subsections (b) and (c) (amending section 4462
of this title and provisions set out as a note under section 4461 of
this title) shall take effect as if included in the provision of the
Harbor Maintenance Revenue Act of 1986 (Pub. L. 99-662, title XIV) to
which it relates, and the amendment made by subsection (a)(2) (amending
this section) shall take effect as if included in the amendment made by
section 521(a)(3) of the Superfund Revenue Act of 1986 (Pub. L. 99-499,
title V).''
Section 1404(c) of Pub. L. 99-662 provided that: ''The amendments
made by this section (amending this section and section 1804 of Title
33, Navigation and Navigable Waters) shall take effect on January 1,
1987.''
Amendment by Pub. L. 99-499 effective Jan. 1, 1987, see section
521(e) of Pub. L. 99-499, set out as a note under section 4041 of this
title.
Section 202(d) of Pub. L. 95-502 provided that: ''The amendments
made by this section (enacting this section and amending section 4293 of
this title) shall take effect on October 1, 1980.''
Section 2002(a)(1) of Pub. L. 100-647 provided that: ''For purposes
of section 4042 of the 1986 Code, the amendment made by section
521(a)(3) of the Superfund Revenue Act of 1986 (Pub. L. 99-499,
amending this section) shall be treated as enacted after the amendment
made by section 1404(a) of the Harbor Maintenance Revenue Act of 1986
(Pub. L. 99-662, amending this section).''
26 USC Subchapter C -- Heavy Trucks and Trailers
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4051. Imposition of tax on heavy trucks and trailers sold at retail.
4052. Definitions and special rules.
4053. Exemptions.
1990 -- Pub. L. 101-508, title XI, 11221(a), Nov. 5, 1990, 104
Stat. 1388-438, redesignated this subchapter, formerly subchapter B, as
subchapter C.
26 USC 4051. Imposition of tax on heavy trucks and trailers sold at
retail
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
(1) In general
There is hereby imposed on the first retail sale of the following
articles (including in each case parts or accessories sold on or in
connection therewith or with the sale thereof) a tax of 12 percent of
the amount for which the article is so sold:
(A) Automobile truck chassis.
(B) Automobile truck bodies.
(C) Truck trailer and semitrailer chassis.
(D) Truck trailer and semitrailer bodies.
(E) Tractors of the kind chiefly used for highway transportation in
combination with a trailer or semitrailer.
(2) Exclusion for trucks weighing 33,000 pounds or less
The tax imposed by paragraph (1) shall not apply to automobile truck
chassis and automobile truck bodies, suitable for use with a vehicle
which has a gross vehicle weight of 33,000 pounds or less (as determined
under regulations prescribed by the Secretary).
(3) Exclusion for trailers weighing 26,000 pounds or less
The tax imposed by paragraph (1) shall not apply to truck trailer and
semitrailer chassis and bodies, suitable for use with a trailer or
semitrailer which has a gross vehicle weight of 26,000 pounds or less
(as determined under regulations prescribed by the Secretary. /1/
(4) Sale of trucks, etc., treated as sale of chassis and body
For purposes of this subsection, a sale of an automobile truck or
truck trailer or semitrailer shall be considered to be a sale of a
chassis and of a body described in paragraph (1).
(b) Separate purchase of truck or trailer and parts and accessories
therefor
Under regulations prescribed by the Secretary --
(1) In general
If --
(A) the owner, lessee, or operator of any vehicle which contains an
article taxable under subsection (a) installs (or causes to be
installed) any part or accessory on such vehicle, and
(B) such installation is not later than the date 6 months after the
date such vehicle (as it contains such article) was first placed in
service,
then there is hereby imposed on such installation a tax equal to 12
percent of the price of such part or accessory and its installation.
(2) Exceptions
Paragraph (1) shall not apply if --
(A) the part or accessory installed is a replacement part or
accessory, or
(B) the aggregate price of the parts and accessories (and their
installation) described in paragraph (1) with respect to any vehicle
does not exceed $200 (or such other amount or amounts as the Secretary
may by regulations prescribe).
(3) Installers secondarily liable for tax
The owners of the trade or business installing the parts or
accessories shall be secondarily liable for the tax imposed by paragraph
(1).
(c) Termination
On and after October 1, 1999, the taxes imposed by this section shall
not apply.
(d) Temporary reduction in tax on certain piggyback trailers
(1) In general
In the case of piggyback trailers or semitrailers sold within the
1-year period beginning on July 18, 1984, subsection (a) shall be
applied by substituting ''6 percent'' for ''12 percent''.
(2) Piggyback trailers or semitrailers
For purposes of this subsection, the term ''piggyback trailers or
semitrailers'' means any trailer or semitrailer --
(A) which is designed for use principally in connection with
trailer-on-flatcar service by rail, and
(B)(i) both the seller and the purchaser of which are registered in a
manner similar to registration under section 4222, and
(ii) with respect to which the purchaser certifies (at such time and
in such form and manner as the Secretary prescribes by regulations) to
the seller that such trailer or semitrailer --
(I) will be used, or resold for use, principally in connection with
such service, or
(II) will be incorporated into an article which will be so used or
resold.
(3) Additional tax where nonqualified use
If any piggyback trailer or semitrailer was subject to tax under
subsection (a) at the 6 percent rate and such trailer or semitrailer is
used or resold for use other than for a use described in paragraph (2)
--
(A) such use or resale shall be treated as a sale to which subsection
(a) applies,
(B) the amount of the tax imposed under subsection (a) on such sale
shall be equal to the amount of the tax which was imposed on the first
retail sale, and
(C) the person so using or reselling such trailer or semitrailer
shall be liable for the tax imposed by subsection (a).
No tax shall be imposed by reason of this paragraph on any use or
resale which occurs more than 6 years after the date of the first retail
sale.
(e) Transitional rule
In the case of any article taxable under subsection (a) on which tax
was imposed under section 4061(a), /2/ subsection (a) shall be applied
by substituting ''2 percent'' for ''12 percent''.
(Added Pub. L. 97-424, title V, 512(b)(1), Jan. 6, 1983, 96 Stat.
2174; amended Pub. L. 98-369, div. A, title VII, 734(g), title IX,
921, July 18, 1984, 98 Stat. 980, 1009; Pub. L. 99-514, title XVIII,
1877(c), 1899A(47), Oct. 22, 1986, 100 Stat. 2902, 2961; Pub. L.
100-17, title V, 502(a)(2), Apr. 2, 1987, 101 Stat. 256; Pub. L.
101-508, title XI, 11211(c)(1), Nov. 5, 1990, 104 Stat. 1388-426; Pub.
L. 102-240, title VIII, 8002(a)(1), Dec. 18, 1991, 105 Stat. 2203.)
Section 4061, referred to in subsec. (e), was repealed by Pub. L.
98-369, div. A, title VII, 735(a)(1), July 18, 1984, 98 Stat. 980.
A prior section 4051, act Aug. 16, 1954, ch. 736, 68A Stat. 479,
which defined the price for which articles were sold for purposes of
determining retailers excise taxes, was repealed by Pub. L. 94-455,
title XIX, 1904(a)(1)(D), Oct. 4, 1976, 90 Stat. 1811.
1991 -- Subsec. (c). Pub. L. 102-240 substituted ''1999'' for
''1995''.
1990 -- Subsec. (c). Pub. L. 101-508 substituted ''1995'' for
''1993''.
1987 -- Subsec. (c). Pub. L. 100-17 substituted ''1993'' for
''1988''.
1986 -- Subsec. (d)(1). Pub. L. 99-514, 1899A(47), substituted
''July 18, 1984'' for ''the date of the enactment of the Tax Reform Act
of 1984''.
Subsec. (d)(3). Pub. L. 99-514, 1877(c), inserted at end ''No tax
shall be imposed by reason of this paragraph on any use or resale which
occurs more than 6 years after the date of the first retail sale.''
1984 -- Subsec. (b)(3). Pub. L. 98-369, 734(g), substituted ''The
owners of the trade or business installing the parts or accessories
shall be secondarily liable for the tax imposed by paragraph (1)'' for
''In addition to the owner, lessee, or operator of the vehicle, the
owner of the trade or business installing the part or accessory shall be
liable for the tax imposed by paragraph (1)''.
Subsecs. (d), (e). Pub. L. 98-369, 921, added subsec. (d) and
redesignated former subsec. (d) as (e).
Amendment by section 1877(c) of Pub. L. 99-514 effective, except as
otherwise provided, as if included in the provisions of the Tax Reform
Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates,
see section 1881 of Pub. L. 99-514, set out as a note under section 48
of this title.
Section 736 of subtitle C ( 731-736) of title VII of div. A of Pub.
L. 98-369 provided that: ''Except as otherwise provided in this
subtitle, any amendment made by this subtitle (amending this section and
sections 48, 1366, 4052, 4053, 4071 to 4073, 4081, 4082, 4216, 4218,
4221 to 4223, 4227, 4481, 6401, 6412, 6416, 6427, 6511, and 9502 of this
title, repealing sections 4061 to 4063 of this title, and amending
provisions set out as notes under sections 4061 and 4081 of this title)
shall take effect as if included in the provisions of the Highway
Revenue Act of 1982 (Pub. L. 97-424) to which such amendment relates.''
Section 512(b)(3) of Pub. L. 97-424 provided that: ''The amendments
made by this subsection (enacting this subchapter and amending section
6416 of this title) shall take effect on April 1, 1983.''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
/1/ So in original. Probably should be preceded by a closing
parenthesis.
/2/ See References in Text note below.
26 USC 4052. Definitions and special rules
TITLE 26 -- INTERNAL REVENUE CODE
(a) First retail sale
For purposes of this subchapter --
(1) In general
The term ''first retail sale'' means the first sale, for a purpose
other than for resale or leasing in a long-term lease, after production,
manufacture, or importation.
(2) Leases considered as sales
Rules similar to the rules of section 4217 shall apply.
(3) Use treated as sale
(A) In general
If any person uses an article taxable under section 4051 before the
first retail sale of such article, then such person shall be liable for
tax under section 4051 in the same manner as if such article were sold
at retail by him.
(B) Exemption for use in further manufacture
Subparagraph (A) shall not apply to use of an article as material in
the manufacture or production of, or as a component part of, another
article to be manufactured or produced by him.
(C) Computation of tax
In the case of any person made liable for tax by subparagraph (A),
the tax shall be computed on the price at which similar articles are
sold at retail in the ordinary course of trade, as determined by the
Secretary.
(b) Determination of price
(1) In general
In determining price for purposes of this subchapter --
(A) there shall be included any charge incident to placing the
article in condition ready for use,
(B) there shall be excluded --
(i) the amount of the tax imposed by this subchapter,
(ii) if stated as a separate charge, the amount of any retail sales
tax imposed by any State or political subdivision thereof or the
District of Columbia, whether the liability for such tax is imposed on
the vendor or vendee,
(iii) the fair market value (including any tax imposed by section
4071) at retail of any tires (not including any metal rim or rim base),
and
(iv) the value of any component of such article if --
(I) such component is furnished by the first user of such article,
and
(II) such component has been used before such furnishing, and
(C) the price shall be determined without regard to any trade-in.
(2) Sales not at arm's length
In the case of any article sold (otherwise than through an
arm's-length transaction) at less than the fair market price, the tax
under this subchapter shall be computed on the price for which similar
articles are sold at retail in the ordinary course of trade, as
determined by the Secretary.
(3) Long-term lease
(A) In general
In the case of any long-term lease of an article which is treated as
the first retail sale of such article, the tax under this subchapter
shall be computed on a price equal to --
(i) the sum of --
(I) the price (determined under this subchapter but without regard to
paragraph (4)) at which such article was sold to the lessor, and
(II) the cost of any parts and accessories installed by the lessor on
such article before the first use by the lessee or leased in connection
with such long-term lease, plus
(ii) an amount equal to the presumed markup percentage of the sum
described in clause (i).
(B) Presumed markup percentage
For purposes of subparagraph (A), the term ''presumed markup
percentage'' means the average markup percentage of retailers of
articles of the type involved, as determined by the Secretary.
(C) Exceptions under regulations
To the extent provided in regulations prescribed by the Secretary,
subparagraph (A) shall not apply to specified types of leases where its
application is not necessary to carry out the purposes of this
subsection.
(4) Special rule where tax paid by manufacturer, producer, or
importer
(A) In general
In any case where the manufacturer, producer, or importer of any
article (or a related person) is liable for tax imposed by this
subchapter with respect to such article, the tax under this subchapter
shall be computed on a price equal to the sum of --
(i) the price which would (but for this paragraph) be determined
under this subchapter, plus
(ii) the product of the price referred to in clause (i) and the
presumed markup percentage determined under paragraph (3)(B).
(B) Related person
For purposes of this paragraph --
(i) In general
Except as provided in clause (ii), the term ''related person'' means
any person who is a member of the same controlled group (within the
meaning of section 5061(e)(3)) as the manufacturer, producer, or
importer.
(ii) Exception for retail establishment
To the extent provided in regulations prescribed by the Secretary, a
person shall not be treated as a related person with respect to the sale
of any article if such article is sold through a permanent retail
establishment in the normal course of the trade or business of being a
retailer.
(c) Certain combinations not treated as manufacture
(1) In general
For purposes of this subchapter (other than subsection (a)(3)(B)), a
person shall not be treated as engaged in the manufacture of any article
by reason of merely combining such article with any item listed in
paragraph (2).
(2) Items
The items listed in this paragraph are any coupling device (including
any fifth wheel), wrecker crane, loading and unloading equipment
(including any crane, hoist, winch, or power liftgate), aerial ladder or
tower, snow and ice control equipment, earthmoving, excavation and
construction equipment, spreader, sleeper cab, cab shield, or wood or
metal floor.
(d) Certain other rules made applicable
Under regulations prescribed by the Secretary, rules similar to the
rules of --
(1) subsections (c) and (d) of section 4216 (relating to partial
payments), and
(2) section 4222 (relating to registration),
shall apply for purposes of this subchapter.
(f) /1/ Long-term lease
For purposes of this section, the term ''long-term lease'' means any
lease with a term of 1 year or more. In determining a lease term for
purposes of the preceding sentence, the rules of section 168(i)(3)(A)
shall apply.
(Added Pub. L. 97-424, title V, 512(b)(1), Jan. 6, 1983, 96 Stat.
2175; amended Pub. L. 98-369, div. A, title VII, 731, 735(b)(2), July
18, 1984, 98 Stat. 976, 981; Pub. L. 100-17, title V, 505(a)-(c),
506(a), Apr. 2, 1987, 101 Stat. 258, 259; Pub. L. 100-647, title VI,
6111(a), Nov. 10, 1988, 102 Stat. 3713.)
A prior section 4052, act Aug. 16, 1954, ch. 736, 68A Stat. 479,
which provided that the lease of an article would be considered the sale
of the article for excise tax purposes, was repealed by Pub. L. 94-455,
title XIX, 1904(a)(1)(D), Oct. 4, 1976, 90 Stat. 1811.
1988 -- Subsec. (a)(1). Pub. L. 100-647 substituted ''production,
manufacture'' for ''manufacture, production''.
1987 -- Subsec. (a)(1). Pub. L. 100-17, 505(a), inserted ''or
leasing in a long-term lease'' after ''resale''.
Subsec. (b)(3). Pub. L. 100-17, 505(b), added par. (3).
Subsec. (b)(4). Pub. L. 100-17, 506(a), added par. (4).
Subsec. (f). Pub. L. 100-17, 505(c), added subsec. (f).
1984 -- Subsec. (b)(1)(B)(iv). Pub. L. 98-369, 731, added cl.
(iv).
Subsec. (c). Pub. L. 98-369, 735(b)(2), in amending subsec. (c)
generally, designated existing provisions as par. (1), in par. (1) as
so designated substituted ''by reason of merely combining such article
with any article listed in paragraph (2)'' for ''with any equipment or
other item listed in section 4063(d)'', and added par. (2).
Section 6111(b) of Pub. L. 100-647 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect on
January 1, 1988.''
Section 505(d) of Pub. L. 100-17 provided that: ''The amendments
made by this section (amending this section) shall apply with respect to
articles sold by the manufacturer, producer, or importer on or after the
first day of the first calendar quarter which begins more than 90 days
after the date of the enactment of this Act (Apr. 2, 1987).''
Section 506(b) of Pub. L. 100-17 provided that: ''The amendment
made by this section (amending this section) shall apply with respect to
articles sold by the manufacturer, producer, or importer on or after the
1st day of the 1st calendar quarter which begins more than 90 days after
the date of the enactment of this Act (Apr. 2, 1987).''
Amendment by Pub. L. 98-369 effective, except as otherwise provided,
as if included in the provisions of the Highway Revenue Act of 1982,
title V of Pub. L. 97-424, to which such amendment relates, see section
736 of Pub. L. 98-369, set out as a note under section 4051 of this
title.
/1/ So in original. No subsec. (e) has been enacted.
26 USC 4053. Exemptions
TITLE 26 -- INTERNAL REVENUE CODE
No tax shall be imposed by section 4051 on any of the following
articles:
(1) Camper coaches bodies for self-propelled mobile homes
Any article designed --
(A) to be mounted or placed on automobile trucks, automobile truck
chassis, or automobile chassis, and
(B) to be used primarily as living quarters or camping
accommodations.
(2) Feed, seed, and fertilizer equipment
Any body primarily designed --
(A) to process or prepare seed, feed, or fertilizer for use on farms,
(B) to haul feed, seed, or fertilizer to and on farms,
(C) to spread feed, seed, or fertilizer on farms,
(D) to load or unload feed, seed, or fertilizer on farms, or
(E) for any combination of the foregoing.
(3) House trailers
Any house trailer.
(4) Ambulances, hearses, etc.
Any ambulance, hearse, or combination ambulance-hearse.
(5) Concrete mixers
Any article designed --
(A) to be placed or mounted on an automobile truck chassis or truck
trailer or semitrailer chassis, and
(B) to be used to process or prepare concrete.
(6) Trash containers, etc.
Any box, container, receptacle, bin or other similar article --
(A) which is designed to be used as a trash container and is not
designed for the transportation of freight other than trash, and
(B) which is not designed to be permanently mounted on or permanently
affixed to an automobile truck chassis or body.
(7) Rail trailers and rail vans
Any chassis or body of a trailer or semitrailer which is designed for
use both as a highway vehicle and a railroad car. For purposes of the
preceding sentence, piggy-back trailer or semitrailer shall not be
treated as designed for use as a railroad car.
(Added Pub. L. 97-424, title V, 512(b)(1), Jan. 6, 1983, 96 Stat.
2176; amended Pub. L. 98-369, div. A, title VII, 735(b)(1), July 18,
1984, 98 Stat. 981.)
A prior section 4053, acts Aug. 16, 1954, ch. 736, 68A Stat. 479;
Sept. 2, 1958, Pub. L. 85-859, title I, 104, 72 Stat. 1276, which
made provision for the imposition of the retailers tax on installment
sales, was repealed by Pub. L. 94-455, title XIX, 1904(a)(1)(D), Oct.
4, 1976, 90 Stat. 1811.
For provisions of prior sections 4054 to 4058 of this title, see
Prior Provisions note set out preceding section 4041 of this title.
1984 -- Pub. L. 98-369 amended section generally, substituting
provisions listing articles on which no tax under section 4051 shall be
imposed for former provisions which stated that no tax be imposed under
section 4051 on any article specified in subsection (a) of section 4063
and that the exemptions provided by section 4221(a) extended to the tax
imposed by section 4051.
Amendment by Pub. L. 98-369 effective, except as otherwise provided,
as if included in the provisions of the Highway Revenue Act of 1982,
title V of Pub. L. 97-424, to which such amendment relates, see section
736 of Pub. L. 98-369, set out as a note under section 4051 of this
title.
26 USC CHAPTER 32 -- MANUFACTURERS EXCISE TAXES
TITLE 26 -- INTERNAL REVENUE CODE
Subchapter Sec. /1/
A.
Automotive and related items 4061
B.
Coal 4121
C.
Certain vaccines 4131
D.
Recreational equipment 4161
(E.
lRepealed.)
F.
Special provisions applicable to manufacturers tax 4216
G.
Exemptions, registration, etc 4221
1987 -- Pub. L. 100-203, title IX, 9201(c), Dec. 22, 1987, 101
Stat. 1330-330, added item for subchapter C.
1978 -- Pub. L. 95-227, 2(c), Feb. 10, 1978, 92 Stat. 12, added
item for subchapter B.
1965 -- Pub. L. 89-44, title II, 203, 204, 206, June 21, 1965, 79
Stat. 139, 140, struck out items for subchapters B, C and E.
/1/ Section numbers editorially supplied.
26 USC Subchapter A -- Automotive and Related Items
TITLE 26 -- INTERNAL REVENUE CODE
Part
I. Gas guzzlers.
II. Tires.
III. Petroleum products.
1984 -- Pub. L. 98-369, div. A, title VII, 735(a)(3), (c)(5)(B),
July 18, 1984, 98 Stat. 980, 982, substituted ''Gas guzzlers'' for
''Motor vehicles'' in item for part I, and struck out ''and tubes'' in
item for part II.
26 USC PART I -- GAS GUZZLERS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
(4061 to 4063. Repealed.)
4064. Gas guzzler tax.
1986 -- Pub. L. 99-514, title XVIII, 1875(f), Oct. 22, 1986, 100
Stat. 2897, substituted ''guzzler'' for ''guzzlers'' in item 4064.
1984 -- Pub. L. 98-369, div. A, title VII, 735(a)(2), July 18,
1984, 98 Stat. 980, substituted ''GAS GUZZLERS'' for ''MOTOR VEHICLES''
in part I heading, struck out items 4061 ''Imposition of tax'', 4062
''Articles classified as parts'', and 4063 ''Exemptions'', and
substituted ''guzzlers'' for ''guzzler'' in item 4064.
1978 -- Pub. L. 95-618, title II, 201(f), Nov. 9, 1978, 92 Stat.
3184, added item 4064.
1971 -- Pub. L. 92-178, title IV, 401(g)(2)(D), Dec. 10, 1971, 85
Stat. 533, substituted ''Articles classified as parts'' for
''Definitions'' in item 4062.
26 USC ( 4061 to 4063. Repealed. Pub. L. 98-369, div. A, title VII,
735(a)(1), July 18, 1984, 98 Stat. 980)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4061, acts Aug. 16, 1954, ch. 736, 68A Stat. 481; Mar.
30, 1955, ch. 18, 3(a)(2), 69 Stat. 14; Aug. 12, 1955, ch. 865, 1,
69 Stat. 709; Mar. 29, 1956, ch. 115, 3(a)(2), 70 Stat. 66; June
29, 1956, ch. 462, title II, 203, 70 Stat. 388; Mar. 29, 1957, Pub.
L. 85-12, 3(a)(1), 71 Stat. 9; June 30, 1958, Pub. L. 85-475,
3(a)(1), 72 Stat. 259; June 30, 1959, Pub. L. 86-75, 3(a)(1), 73
Stat. 157; June 30, 1960, Pub. L. 86-564, title II 202(a)(1), 74
Stat. 290; June 29, 1961, Pub. L. 87-61, title II, 204, 75 Stat.
126; June 30, 1961, Pub. L. 87-72, 3(a)(1), 75 Stat. 193; June 28,
1962, Pub. L. 87-508, 3(a)(1), 76 Stat. 114; June 29, 1963, Pub. L.
88-52, 3(a)(1), 77 Stat. 72; June 30, 1964, Pub. L. 88-348,
2(a)(1), 78 Stat. 237; June 21, 1965, Pub. L. 89-44, title II, 201,
79 Stat. 136; Mar. 15, 1966, Pub. L. 89-368, title II, 201(a), 80
Stat. 65; Apr. 12, 1968, Pub. L. 90-285, 1(a)(1), 82 Stat. 92;
June 28, 1968, Pub. L. 90-364, title I, 105(a)(1), 82 Stat. 265;
Dec. 30, 1969, Pub. L. 91-172, title VII, 702(a)(1), 83 Stat. 660;
Dec. 31, 1970, Pub. L. 91-605, title III, 303(a)(3), (4), 84 Stat.
1743; Dec. 31, 1970, Pub. L. 91-614, title II, 201(a)(1), 84 Stat.
1843; Dec. 10, 1971, Pub. L. 92-178, title IV, 401(a)(1), (g) (1), 85
Stat. 530, 533; May 5, 1976, Pub. L. 94-280, title III, 303(a)(3),
(4), 90 Stat. 456; Oct. 4, 1976, Pub. L. 94-455, title XIX,
1906(b)(13)(A), 90 Stat. 1834; Nov. 6, 1978, Pub. L. 95-599, title V,
502(a)(2), (3), 92 Stat. 2756; Jan. 6, 1983, Pub. L. 97-424, title
V, 512(a)(1), (2), 96 Stat. 2173, 2174, related to imposition of tax
on trucks, buses, tractors, etc.
Section 4062, acts Aug. 16, 1954, ch. 736, 68A Stat. 482; Oct.
13, 1964, Pub. L. 88-653, 5(b), 78 Stat. 1086; Nov. 13, 1966, Pub.
L. 89-809, title II, 212(a), 80 Stat. 1585; Dec. 10, 1971, Pub. L.
92-178, title IV, 401(g)(2)(A)-(C), 85 Stat. 533, related to articles
classified as parts.
Section 4063, acts Aug. 16, 1954, ch. 736, 68A Stat. 482; Aug.
11, 1955, ch. 805, 1(g), 69 Stat. 690; Oct. 13, 1964, Pub. L.
88-653, 5(a), 78 Stat. 1086; June 21, 1965, Pub. L. 89-44, title
VIII, 801(a), 79 Stat. 157; Dec. 30, 1969, Pub. L. 91-172, title IX,
931(a), 83 Stat. 724; Dec. 31, 1970, Pub. L. 91-614, title III,
303(a), 84 Stat. 1845; Dec. 10, 1971, Pub. L. 92-178, title IV,
401(a)(2), (g)(3), 85 Stat. 530, 533; Oct. 4, 1976, Pub. L. 94-455,
title XIX, 1906(b)(13)(A), title XXI, 2109(a), 90 Stat. 1834, 1904;
Nov. 6, 1978, Pub. L. 95-600, title VII, 701(ff)(1), 92 Stat. 2924;
Nov. 9, 1978, Pub. L. 95-618, title II, 231(a), 92 Stat. 3187; Jan.
6, 1983, Pub. L. 97-424, title V, 512(a)(3), 96 Stat. 2174, related
to exemptions from tax.
Repeal effective as if included in the provisions of the Highway
Revenue Act of 1982, Pub. L. 97-424, see section 736 of Pub. L.
98-369, set out as an Effective Date of 1984 Amendment note under
section 4051 of this title.
26 USC 4064. Gas guzzler tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
There is hereby imposed on the sale by the manufacturer of each
automobile a tax determined in accordance with the following table:
If the fuel economy of the model type
in which the automobile falls is: The tax is: At least 22.5 $0
At least 21.5 but less than 22.5 1,000 At least 20.5 but less than
21.5 1,300 At least 19.5 but less than 20.5 1,700 At least 18.5
but less than 19.5 2,100 At least 17.5 but less than 18.5 2,600 At
least 16.5 but less than 17.5 3,000 At least 15.5 but less than
16.5 3,700 At least 14.5 but less than 15.5 4,500 At least 13.5
but less than 14.5 5,400 At least 12.5 but less than 13.5 6,400
Less than 12.5 7,700.
(b) Definitions
For purposes of this section --
(1) Automobile
(A) In general
The term ''automobile'' means any 4-wheeled vehicle propelled by fuel
--
(i) which is manufactured primarily for use on public streets, roads,
and highways (except any vehicle operated exclusively on a rail or
rails), and
(ii) which is rated at 6,000 pounds unloaded gross vehicle weight or
less.
In the case of a limousine, the preceding sentence shall be applied
without regard to clause (ii).
(B) Exception for certain vehicles
The term ''automobile'' does not include any vehicle which is treated
as a nonpassenger automobile under the rules which were prescribed by
the Secretary of Transportation for purposes of section 501 of the Motor
Vehicle Information and Cost Savings Act (15 U.S.C. 2001) and which
were in effect on the date of the enactment of this section.
(C) Exception for emergency vehicles
The term ''automobile'' does not include any vehicle sold for use and
used --
(i) as an ambulance or combination ambulance-hearse,
(ii) by the United States or by a State or local government for
police or other law enforcement purposes, or
(iii) for other emergency uses prescribed by the Secretary by
regulations.
(2) Fuel economy
The term ''fuel economy'' means the average number of miles traveled
by an automobile per gallon of gasoline (or equivalent amount of other
fuel) consumed, as determined by the EPA Administrator in accordance
with procedures established under subsection (c).
(3) Model type
The term ''model type'' means a particular class of automobile as
determined by regulation by the EPA Administrator.
(4) Model year
The term ''model year'', with reference to any specific calendar
year, means a manufacturer's annual production period (as determined by
the EPA Administrator) which includes January 1 of such calendar year.
If a manufacturer has no annual production period, the term ''model
year'' means the calendar year.
(5) Manufacturer
(A) In general
The term ''manufacturer'' includes a producer or importer.
(B) Lengthening treated as manufacture
For purposes of this section, subchapter G of this chapter, and
section 6416(b)(3), the lengthening of an automobile by any person shall
be treated as the manufacture of an automobile by such person.
(6) EPA Administrator
The term ''EPA Administrator'' means the Administrator of the
Environmental Protection Agency.
(7) Fuel
The term ''fuel'' means gasoline and diesel fuel. The Secretary
(after consultation with the Secretary of Transportation) may, by
regulation, include any product of petroleum or natural gas within the
meaning of such term if he determines that such inclusion is consistent
with the need of the Nation to conserve energy.
(c) Determination of fuel economy
For purposes of this section --
(1) In general
Fuel economy for any model type shall be measured in accordance with
testing and calculation procedures established by the EPA Administrator
by regulation. Procedures so established shall be the procedures
utilized by the EPA Administrator for model year 1975 (weighted 55
percent urban cycle, and 45 percent highway cycle), or procedures which
yield comparable results. Procedures under this subsection, to the
extent practicable, shall require that fuel economy tests be conducted
in conjunction with emissions tests conducted under section 206 of the
Clean Air Act. The EPA Administrator shall report any measurements of
fuel economy to the Secretary.
(2) Special rule for fuels other than gasoline
The EPA Administrator shall by regulation determine that quantity of
any other fuel which is the equivalent of one gallon of gasoline.
(3) Time by which regulations must be issued
Testing and calculation procedures applicable to a model year, and
any amendment to such procedures (other than a technical or clerical
amendment), shall be promulgated not less than 12 months before the
model year to which such procedures apply.
(Added Pub. L. 95-618, title II, 201(a), Nov. 9, 1978, 92 Stat.
3180; amended Pub. L. 99-514, title XVIII, 1812(e)(1)(B)(i), (ii),
Oct. 22, 1986, 100 Stat. 2836; Pub. L. 101-508, title XI,
11216(a)-(d), Nov. 5, 1990, 104 Stat. 1388-437.)
The date of enactment of this section, referred to in subsec.
(b)(1)(B), is Nov. 9, 1978.
Section 206 of the Clean Air Act, referred to in subsec. (c)(1), is
section 206 of act July 14, 1955, ch. 360, title II, as added Dec. 31,
1970, Pub. L. 91-604, 8(a), 84 Stat. 1694, which is classified to
section 7525 of Title 42, The Public Health and Welfare.
1990 -- Subsec. (a). Pub. L. 101-508, 11216(a), amended subsec.
(a) generally, substituting present provisions for provisions which set
forth gas guzzler tax tables in the case of automobiles built in each of
the model years 1980 through 1986 and later.
Subsec. (b)(1)(A). Pub. L. 101-508, 11216(b), inserted at end ''In
the case of a limousine, the preceding sentence shall be applied without
regard to clause (ii).''
Subsec. (b)(5)(B). Pub. L. 101-508, 11216(c), substituted heading
for one which read: ''Exception for certain small manufacturers'' and
amended text generally. Prior to amendment, text read as follows: ''A
person shall not be treated as the manufacturer of any automobile if --
''(i) such person would (but for this subparagraph) be so treated
solely by reason of lengthening an existing automobile, and
''(ii) such person is a small manufacturer (as defined in subsection
(d)(4)) for the model year in which such lengthening occurs.''
Subsec. (d). Pub. L. 101-508, 11216(d), struck out subsec. (d)
which prescribed special rules for small manufacturers.
1986 -- Subsec. (b)(1)(A)(ii). Pub. L. 99-514, 1812(e)(1)(B)(i),
substituted ''unloaded gross vehicle weight'' for ''gross vehicle
weight''.
Subsec. (b)(5). Pub. L. 99-514, 1812(e)(1)(B)(ii), amended par. (5)
generally, designating existing provisions as subpar. (A), adding
subpar. (A) heading, and adding subpar. (B).
Section 11216(e) of Pub. L. 101-508 provided that:
''(1) Subsections (a) and (b). -- The amendments made by subsections
(a) and (b) (amending this section) shall apply to sales after December
31, 1990.
''(2) Subsection (c). -- The amendments made by subsection (c)
(amending this section) shall take effect on January 1, 1991.
''(3) Subsection (d). -- The amendment made by subsection (d)
(amending this section) shall take effect on the date of the enactment
of this section (Nov. 5, 1990).''
Section 1812(e)(1)(B)(iii) of Pub. L. 99-514 provided that: ''The
amendments made by clauses (i) and (ii) (amending this section) shall
take effect as if included in the amendments made by section 201 of
Public Law 95-618 (see Effective Date note below); except that the
amendment made by clause (i) shall not apply to any station wagon if --
''(I) such station wagon is originally equipped with more than 6 seat
belts,
''(II) such station wagon was manufactured before November 1, 1985,
and
''(III) such station wagon is of the 1985 or 1986 model year.''
Section 201(g) of Pub. L. 95-618, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that: ''The amendments made
by this section (enacting this section and amending sections 1016, 4217,
4221, 4222, 4293, and 6416 of this title) shall apply with respect to
1980 and later model year automobiles (as defined in section 4064(b) of
the Internal Revenue Code of 1986 (formerly I.R.C. 1954)).''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
26 USC PART II -- TIRES
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4071. Imposition of tax.
4072. Definitions.
4073. Exemption for tires with internal wire fastening.
1984 -- Pub. L. 98-369, div. A, title VII, 735(c)(5)(A), (C), July
18, 1984, 98 Stat. 982, struck out ''AND TUBES'' from heading of part
II and substituted ''Exemption for tires with internal wire fastening''
for ''Exemptions'' in item 4073.
1956 -- Act June 29, 1956, ch. 462, title II, 204(d), 70 Stat.
389, substituted ''Definitions'' for ''Definition of rubber'' in item
4072.
26 USC 4071. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition and rate of tax
There is hereby imposed on tires of the type used on highway
vehicles, if wholly or in part made of rubber, sold by the manufacturer,
producer, or importer a tax at the following rates:
(b) Special rule for manufacturers who sell at retail
Under regulations prescribed by the Secretary, if the manufacturer,
producer, or importer of any tire delivers such tire to a retail store
or retail outlet of such manufacturer, producer, or importer, he shall
be liable for tax under subsection (a) in respect of such tire in the
same manner as if it had been sold at the time it was delivered to such
retail store or outlet. This subsection shall not apply to an article
in respect to which tax has been imposed by subsection (a). Subsection
(a) shall not apply to an article in respect of which tax has been
imposed by this subsection.
(c) Determination of weight
For purposes of this section, weight shall be based on total weight
exclusive of metal rims or rim bases. Total weight of the articles
shall be determined under regulations prescribed by the Secretary.
(d) Termination
On and after October 1, 1999, the taxes imposed by subsection (a)
shall not apply.
(e) Tires on imported articles
For the purposes of subsection (a), if an article imported into the
United States is equipped with tires --
(1) the importer of the article shall be treated as the importer of
the tires with which such article is equipped, and
(2) the sale of the article by the importer thereof shall be treated
as the sale of the tires with which such article is equipped.
This subsection shall not apply with respect to the sale of an
automobile bus chassis or an automobile bus body.
(Aug. 16, 1954, ch. 736, 68A Stat. 482; June 29, 1956, ch. 462,
title II, 204(a), 70 Stat. 388; Apr. 22, 1960, Pub. L. 86-440, 1(a),
74 Stat. 80; June 29, 1961, Pub. L. 87-61, title II, 202, 75 Stat.
124; Aug. 1, 1966, Pub. L. 89-523, 1(a), 80 Stat. 331; Dec. 31,
1970, Pub. L. 91-605, title III, 303(a)(5), 84 Stat. 1744; Dec. 10,
1971, Pub. L. 92-178, title IV, 401(f), 85 Stat. 533; May 5, 1976,
Pub. L. 94-280, title III, 303(a)(5), 90 Stat. 456; Oct. 4, 1976, Pub.
L. 94-455, title XIX, 1906(b)(13)(A), 90 Stat. 1834; Nov. 6, 1978,
Pub. L. 95-599, title V, 502(a)(4), 92 Stat. 2756; Apr. 1, 1980, Pub.
L. 96-222, title I, 108(c)(2)(C), 94 Stat. 227; Dec. 24, 1980, Pub. L.
96-596, 4(a)(1), 94 Stat. 3475; Dec. 24, 1980, Pub. L. 96-598, 1(d),
94 Stat. 3486; Jan. 6, 1983, Pub. L. 97-424, title V, 514(a),
516(a)(2), 96 Stat. 2181, 2182; July 18, 1984, Pub. L. 98-369, div. A,
title VII, 735(c)(2), 98 Stat. 982; Apr. 2, 1987, Pub. L. 100-17,
title V, 502(a)(3), 101 Stat. 256; Nov. 5, 1990, Pub. L. 101-508,
title XI, 11211(c)(2), 104 Stat. 1388-426; Dec. 18, 1991, Pub. L.
102-240, title VIII, 8002(a)(2), 105 Stat. 2203.)
1991 -- Subsec. (d). Pub. L. 102-240 substituted ''1999'' for
''1995''.
1990 -- Subsec. (d). Pub. L. 101-508 substituted ''1995'' for
''1993''.
1987 -- Subsec. (d). Pub. L. 100-17 substituted ''1993'' for
''1988''.
1984 -- Subsec. (b). Pub. L. 98-369, 735(c)(2)(A), struck out ''or
inner tube'' after ''any tire'', and struck out ''or tube'' after ''such
tire'' in two places in first sentence.
Subsec. (c). Pub. L. 98-369, 735(c)(2)(B), substituted ''on total
weight exclusive'' for ''on total weight, except that in the case of
tires such total weight shall be exclusive''.
Subsec. (e). Pub. L. 98-369, 735(c)(2)(C), struck out ''or inner
tubes (other than bicycle tires and inner tubes)'' after ''equipped with
tires'' in provisions preceding par. (1), struck out ''and inner
tubes'' before ''with which such article is equipped'' in pars. (1) and
(2), and substituted ''sale of an automobile bus chassis or an
automobile bus body'' for ''sale of an article if a tax on such sale is
imposed under section 4061 or if such article is an automobile bus
chassis or an automobile bus body'' in provisions following par. (2).
Subsec. (f). Pub. L. 98-369, 735(c)(2)(D), struck out subsec. (f)
which related to imported recapped or retreaded United States tires.
1983 -- Subsec. (a). Pub. L. 97-424, 514(a), amended subsec. (a)
generally. Prior to amendment, subsec. (a) read as follows: ''There
is hereby imposed upon the following articles, if wholly or in part of
rubber, sold by the manufacturer, producer, or importer, a tax at the
following rates:
''(1) Tires of the type used on highway vehicles, 9.75 cents a pound.
''(2) Other tires (other than laminated tires to which paragraph (5)
applies), 4.875 cents a pound.
''(3) Inner tubes, for tires, 10 cents a pound.
''(4) Tread rubber, 5 cents a pound.
''(5) Laminated tires (not of the type used on highway vehicles)
which consist wholly of scrap rubber from used tire casings with an
internal metal fastening agent, 1 cent a pound.''
Subsec. (d). Pub. L. 97-424, 516(a)(2), substituted provision that,
on and after Oct. 1, 1988, the taxes imposed by subsec. (a) shall not
apply, for provision that, on and after Oct. 1, 1984, the tax imposed
by subsec. (a)(1) would be 4.875 cents a pound, that by subsec. (a)(3)
would be 9 cents a pound, and that subsec. (a)(4) would not apply.
1980 -- Subsec. (a)(1). Pub. L. 96-596, 4(a)(1)(A), substituted
''9.75 cents'' for ''10 cents''.
Subsec. (a)(2). Pub. L. 96-596, 4(a)(1)(B), substituted ''4.875
cents'' for ''5 cents''.
Subsec. (d)(1). Pub. L. 96-596, 4(a)(1)(C), substituted ''4.875
cents'' for ''5 cents''.
Subsec. (e). Pub. L. 96-222 inserted references to an automobile bus
chassis or body.
Subsec. (f). Pub. L. 96-598 added subsec. (f).
1978 -- Subsec. (d). Pub. L. 95-599 substituted ''1984'' for
''1979''.
1976 -- Subsecs. (b), (c). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary''.
Subsec. (d). Pub. L. 94-280 substituted ''1979'' for ''1977''.
1971 -- Subsec. (e). Pub. L. 92-178 added subsec. (e).
1970 -- Subsec. (d). Pub. L. 91-605 substituted ''1977'' for
''1972''.
1966 -- Subsecs. (b) to (d). Pub. L. 89-523 added subsec. (b) and
redesignated former subsec. (b) and (c) as (c) and (d), respectively.
1961 -- Subsec. (a)(1). Pub. L. 87-61, 202(a), increased tax from 8
to 10 cents a pound.
Subsec. (a)(3). Pub. L. 87-61, 202(c), increased tax from 9 to 10
cents a pound.
Subsec. (a)(4). Pub. L. 87-61, 202(c), increased tax from 3 to 5
cents a pound.
Subsec. (c). Pub. L. 87-61, 202(d), substituted ''October 1, 1972''
for ''July 1, 1972'', added par. (2), and redesignated former par. (2)
as (3).
1960 -- Subsec. (a)(2). Pub. L. 86-440, 1(a)(1), inserted ''(other
than laminated tires to which paragraph (5) applies)'' after ''other
tires''.
Subsec. (a)(5). Pub. L. 86-440, 1(a)(2), added par. (5).
1956 -- Act June 29, 1956, increased tax on tires of type used on
highway vehicles from 5 cents a pound to 8 cents a pound, provided for a
tax of 3 cents a pound on tread rubber, and required on and after July
1, 1972, a reduction in tax on tires of type used on highway vehicles
from 8 cents a pound to 5 cents a pound, and elimination of tax on tread
rubber.
Amendment by Pub. L. 98-369 effective, except as otherwise provided,
as if included in the provisions of the Highway Revenue Act of 1982,
title V of Pub. L. 97-424, to which such amendment relates, see section
736 of Pub. L. 98-369, set out as a note under section 4051 of this
title.
Section 514(b) of Pub. L. 97-424 provided that: ''The amendment
made by this section (amending this section) shall apply to articles
sold on or after January 1, 1984''.
Section 1(e) of Pub. L. 96-598 provided that: ''The amendments made
by this section (amending this section and sections 6416 and 6511 of
this title) shall take effect on the first day of the first calendar
month which begins more than 10 days after the date of the enactment of
this Act (Dec. 24, 1980).''
Section 4(a)(2) of Pub. L. 96-596 provided that: ''The amendments
made by this subsection (amending this section) shall apply on and after
January 1, 1981.''
Amendment by Pub. L. 96-222 effective as if included in the
provision of the Energy Tax Act of 1978, Pub. L. 95-618, Nov. 9, 1978,
92 Stat. 3174, to which such amendment relates, see section 108(c)(7)
of Pub. L. 96-222, set out as a note under section 48 of this title.
Section 401(h) of Pub. L. 92-178 provided that:
''(1) Except as otherwise provided in this section, the amendments
made by subsections (a), (f), and (g) (amending this section and
sections 4061, 4062, 4063, 4216, 4221, 4222, 6412, and 6416 of this
title) of this section shall apply with respect to articles sold on or
after the day after the date of the enactment of this Act (Dec. 10,
1971).
''(2) For purposes of paragraph (1), an article shall not be
considered sold before the day after the date of the enactment of this
Act (Dec. 10, 1971) unless possession or right to possession passes to
the purchaser before such day.
''(3) In the case of --
''(A) a lease,
''(B) a contract for the sale of an article where it is provided that
the price shall be paid by installments and title to the article sold
does not pass until a future date notwithstanding partial payment by
installments,
''(C) a conditional sale, or
''(D) a chattel mortgage arrangement wherein it is provided that the
sale price shall be paid in installments,
entered into on or before the date of the enactment of this Act (Dec.
10, 1971), payments made after such date, with respect to the article
leased or sold shall, for purposes of this subsection, be considered as
payments made with respect to an article sold after such date, if the
lessor or vendor establishes that the amount of payments payable after
such date with respect to such article has been reduced by an amount
equal to that portion of the tax applicable with respect to the lease or
sale of such article which is due and payable after such date. If the
lessor or vendor does not establish that the payments have been so
reduced, they shall be treated as payments made in respect of an article
sold before the day after the date of the enactment of this Act.''
Section 1(b) of Pub. L. 89-523 provided that: ''The amendments made
by subsection (a) (amending this section) shall take effect on the first
day of the first calendar quarter which begins more than 20 days after
the date on which this Act is enacted (Aug. 1, 1966).''
Amendment by Pub. L. 87-61 effective July 1, 1961, see section 208
of Pub. L. 87-61, set out as a note under section 4041 of this title.
Section 1(b) of Pub. L. 86-440 provided that: ''The amendment made
by subsection (a) (amending this section) shall apply with respect to
articles sold on or after the first day of the first month which begins
more than 10 days after the date of the enactment of this Act (April 22,
1960).''
Amendment by act June 29, 1956, effective July 1, 1956, see section
211 of act June 29, 1956, set out as a note under section 4041 of this
title.
Section 4(b) of Pub. L. 96-596 provided that:
''(b) Determination of Overpayment. --
''(1) In general. -- The determination of the extent to which any
overpayment of tax imposed by section 4071(a)(1) or (2) or section
4071(b) has arisen by reason of an adjustment of a tire after the
original sale pursuant to a warranty or guarantee, and the allowance of
a credit or refund of any such overpayment, shall be determined in
accordance with the principles set forth in regulations and rulings
relating thereto to the extent in effect on March 31, 1978.
''(2) Effective date. -- This subsection shall apply to the
adjustment of any tire after March 31, 1978, and prior to January 1,
1983.''
Floor stocks refunds, see section 6412 of this title.
26 USC 4072. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Rubber
For purposes of this chapter, the term ''rubber'' includes synthetic
and substitute rubber.
(b) Tires of the type used on highway vehicles
For purposes of this part, the term ''tires of the type used on
highway vehicles'' means tires of the type used on --
(1) motor vehicles which are highway vehicles, or
(2) vehicles of the type used in connection with motor vehicles which
are highway vehicles.
(Aug. 16, 1954, ch. 736, 68A Stat. 482; June 29, 1956, ch. 462,
title II, 204(b), 70 Stat. 389; July 18, 1984, Pub. L. 98-369, div.
A, title VII, 735(c)(3), 98 Stat. 982.)
1984 -- Subsecs. (b), (c). Pub. L. 98-369 redesignated subsec. (c)
as (b) and struck out former subsec. (b) which defined ''tread
rubber''.
1956 -- Act June 29, 1956, substituted ''Definitions'' for
''Definition of rubber'' in section catchline.
Act June 29, 1956, designated existing provisions as subsec. (a) and
added subsecs. (b) and (c).
Amendment by Pub. L. 98-369 effective, except as otherwise provided,
as if included in the provisions of the Highway Revenue Act of 1982,
title V of Pub. L. 97-424, to which such amendment relates, see section
736 of Pub. L. 98-369, set out as a note under section 4051 of this
title.
Amendment by act June 29, 1956, effective July 1, 1956, see section
211 of act June 29, 1956, set out as a note under section 4041 of this
title.
26 USC 4073. Exemption for tires with internal wire fastening
TITLE 26 -- INTERNAL REVENUE CODE
The tax imposed by section 4071 shall not apply to tires of extruded
tiring with an internal wire fastening agent.
(Aug. 16, 1954, ch. 736, 68A Stat. 482; June 29, 1956, ch. 462,
title II, 204(c), 70 Stat. 389; Oct. 4, 1976, Pub. L. 94-455, title
XIX, 1906(b)(13)(A), 90 Stat. 1834; July 18, 1984, Pub. L. 98-369,
div. A, title VII, 735(c)(4), 98 Stat. 982.)
1984 -- Pub. L. 98-369 substituted ''Exemption for tires with
internal wire fastening'' for ''Exemptions'' in section catchline, and
in text struck out subsec. (a) relating to exemption from tax on tires
not more than 20 inches in diameter and not more than 1 3/4 inches in
cross section, struck out subsec. (c) relating to exemption from tax on
tread rubber in certain cases, and struck out letter designation ''(b)''
and subsection heading for subsec. (b) thereby designating text of
former subsec. (b) as entire text of section.
1976 -- Subsec. (c). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
1956 -- Subsec. (c). Act June 29, 1956, added subsec. (c).
Amendment by Pub. L. 98-369 effective, except as otherwise provided,
as if included in the provisions of the Highway Revenue Act of 1982,
title V of Pub. L. 97-424, to which such amendment relates, see section
736 of Pub. L. 98-369, set out as a note under section 4051 of this
title.
Amendment by act June 29, 1956, effective July 1, 1956, see section
211 of act June 29, 1956, set out as a note under section 4041 of this
title.
26 USC PART III -- PETROLEUM PRODUCTS
TITLE 26 -- INTERNAL REVENUE CODE
Subpart
A. Gasoline.
B. Diesel fuel and aviation fuel.
C. Special provisions applicable to petroleum products.
26 USC Subpart A -- Gasoline
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4081. Imposition of tax.
4082. Definitions.
4083. Cross references.
1987 -- Pub. L. 100-203, title X, 10502(d)(18), Dec. 22, 1987, 101
Stat. 1330-445, added item relating to subpart B.
1986 -- Pub. L. 99-514, title XVII, 1703(a), Oct. 22, 1986, 100
Stat. 2774, struck out item 4083 ''Exemption of sales to producer'' and
redesignated former item 4084 as 4083.
1983 -- Pub. L. 97-424, title V, 515(b)(13), Jan. 6, 1983, 96
Stat. 2182, struck out the item for subpart B ''Lubricating oil''.
1956 -- Act June 29, 1956, ch. 462, title II, 208(e)(2), 70 Stat.
397, substituted ''Cross references'' for ''Relief of farmers from tax
in case of gasoline used on the farm'' in item 4084.
Act Apr. 2, 1956, ch. 160, 4(a)(2), 70 Stat. 90, added item 4084.
26 USC 4081. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax imposed
(1) Tax on removal, entry, or sale
(A) In general
There is hereby imposed a tax at the rate specified in paragraph (2)
on --
(i) the removal of gasoline from any refinery,
(ii) the removal of gasoline from any terminal,
(iii) the entry into the United States of gasoline for consumption,
use, or warehousing, and
(iv) the sale of gasoline to any person who is not registered under
section 4101 unless there was a prior taxable removal or entry of such
gasoline under clause (i), (ii), or (iii).
(B) Exception for bulk transfers to registered terminals
The tax imposed by this paragraph shall not apply to any removal or
entry of gasoline transferred in bulk to a terminal if the person
removing or entering the gasoline and the operator of such terminal are
registered under section 4101.
(2) Rates of tax
(A) In general
The rate of the tax imposed by this section is the sum of --
(i) the Highway Trust Fund financing rate,
(ii) the Leaking Underground Storage Tank Trust Fund financing rate,
and
(iii) the deficit reduction rate.
(B) Rates
For purposes of subparagraph (A) --
(i) the Highway Trust Fund financing rate is 11.5 cents a gallon,
(ii) the Leaking Underground Storage Tank Trust Fund financing rate
is 0.1 cent a gallon, and
(iii) the deficit reduction rate is 2.5 cents a gallon.
(b) Treatment of removal or subsequent sale by blender or compounder
(1) In general
There is hereby imposed a tax at the rate specified in subsection (a)
on gasoline removed or sold by the blender or compounder thereof.
(2) Credit for tax previously paid
If --
(A) tax is imposed on the removal or sale of gasoline by reason of
paragraph (1), and
(B) the blender or compounder establishes the amount of the tax paid
with respect to such gasoline by reason of subsection (a),
the amount of the tax so paid shall be allowed as a credit against
the tax imposed by reason of paragraph (1).
(c) Gasoline mixed with alcohol at refinery, etc.
(1) In general
Under regulations prescribed by the Secretary, subsection (a) shall
be applied by multiplying the otherwise applicable rate by a fraction
the numerator of which is 10 and the denominator of which is --
(A) 9 in the case of 10 percent gasohol,
(B) 9.23 in the case of 7.7 percent gasohol, and
(C) 9.43 in the case of 5.7 percent gasohol,
in the case of the removal or entry of any gasoline for use in
producing gasohol at the time of such removal or entry. Subject to such
terms and conditions as the Secretary may prescribe (including the
application of section 4101), the treatment under the preceding sentence
also shall apply to use in producing gasohol after the time of such
removal or entry.
(2) Later separation of gasoline from gasohol
If any person separates the gasoline from a mixture of gasoline and
alcohol on which tax was imposed under subsection (a) at a Highway Trust
Fund financing rate equivalent to an otherwise applicable rate by reason
of this subsection (or with respect to which a credit or payment was
allowed or made by reason of section 6427(f)(1)), such person shall be
treated as the refiner of such gasoline. The amount of tax imposed on
any sale of such gasoline by such person shall be reduced by the amount
of tax imposed (and not credited or refunded) on any prior removal or
sale of such fuel.
(3) Alcohol defined
For purposes of this subsection, the term ''alcohol'' includes
methanol and ethanol but does not include alcohol produced from
petroleum, natural gas, or coal (including peat). Such term does not
include alcohol with a proof of less than 190 (determined without regard
to any added denaturants).
(4) Otherwise applicable rate
For purposes of this subsection --
(A) In general
In the case of the Highway Trust Fund financing rate, the term
''otherwise applicable rate'' means --
(i) 6.1 cents a gallon for 10 percent gasohol,
(ii) 7.342 cents a gallon for 7.7 percent gasohol, and
(iii) 8.422 cents a gallon for 5.7 percent gasohol.
In the case of gasohol none of the alcohol in which consists of
ethanol, clauses (i), (ii), and (iii) shall be applied by substituting
''5.5 cents'' for ''6.1 cents'', ''6.88 cents'' for ''7.342 cents'', and
''8.08 cents'' for ''8.422 cents''.
(B) 10 percent gasohol
The term ''10 percent gasohol'' means any mixture of gasoline with
alcohol if at least 10 percent of such mixture is alcohol.
(C) 7.7 percent gasohol
The term ''7.7 percent gasohol'' means any mixture of gasoline with
alcohol if at least 7.7 percent, but not 10 percent or more, of such
mixture is alcohol.
(D) 5.7 percent gasohol
The term ''5.7 percent gasohol'' means any mixture of gasoline with
alcohol if at least 5.7 percent, but not 7.7 percent or more, of such
mixture is alcohol.
(5) Termination
Paragraph (1) shall not apply to any removal or sale after September
30, 2000.
(d) Termination
(1) Highway Trust Fund financing rate
On and after October 1, 1999, the Highway Trust Fund financing rate
under subsection (a)(2) shall not apply.
(2) Leaking Underground Storage Tank Trust Fund financing rate
The Leaking Underground Storage Tank Trust Fund financing rate under
subsection (a)(2) shall not apply after December 31, 1995.
(3) Deficit reduction rate
On and after October 1, 1995, the deficit reduction rate under
subsection (a)(2) shall not apply.
(e) Refunds in certain cases
Under regulations prescribed by the Secretary, if any person who paid
the tax imposed by this section with respect to any gasoline establishes
to the satisfaction of the Secretary that a prior tax was paid (and not
credited or refunded) with respect to such gasoline, then an amount
equal to the tax paid by such person shall be allowed as a refund
(without interest) to such person in the same manner as if it were an
overpayment of tax imposed by this section.
(Aug. 16, 1954, ch. 736, 68A Stat. 483; Mar. 30, 1955, ch. 18,
3(a)(3), 69 Stat. 14; Mar. 29, 1956, ch. 115, 3(a)(3), 70 Stat. 66;
June 29, 1956, ch. 462, title II, 205, 70 Stat. 389; Sept. 21, 1959,
Pub. L. 86-342, title II, 201(a), 73 Stat. 613; June 29, 1961, Pub. L.
87-61, title II, 201(b)-(d), 75 Stat. 123, 124; Dec. 31, 1970, Pub. L.
91-605, title III, 303(a)(6), 84 Stat. 1744; May 5, 1976, Pub. L.
94-280, title III, 303(a)(6), 90 Stat. 456; Nov. 6, 1978, Pub. L.
95-599, title V, 502(a)(5), 92 Stat. 2756; Nov. 9, 1978, Pub. L.
95-618, title II, 221(a)(1), 92 Stat. 3185; Apr. 2, 1980, Pub. L.
96-223, title II, 232(a)(1), (b)(3)(A), (d)(3), 94 Stat. 273, 276, 277;
Jan. 6, 1983, Pub. L. 97-424, title V, 511(a)(1), (d)(1), 516(a)(3),
96 Stat. 2169, 2171, 2182; July 18, 1984, Pub. L. 98-369, div. A, title
VII, 732(a)(1), (2), title IX, 912(b), (f), 98 Stat. 976, 977, 1007;
Oct. 17, 1986, Pub. L. 99-499, title V, 521(a)(1), 100 Stat. 1774;
Oct. 22, 1986, Pub. L. 99-514, title XVII, 1703(a), 100 Stat. 2774;
Apr. 2, 1987, Pub. L. 100-17, title V, 502(a)(4), (c)(2), 101 Stat.
256, 257; Dec. 22, 1987, Pub. L. 100-203, title X, 10502(d)(2), 101
Stat. 1330-444; Nov. 10, 1988, Pub. L. 100-647, title I, 1017(c)(1),
(14), title II, 2001(d)(5), title VI, 6104(a), 102 Stat. 3575, 3577,
3595, 3711; Nov. 5, 1990, Pub. L. 101-508, title XI, 11211(a)(1)-(3),
(5)(A)-(C), (c)(3), (e)(3), 11212(a), (d)(1), (e)(2), 11215(a), 104
Stat. 1388-423, 1388-424, 1388-426, 1388-427, 1388-430, 1388-432,
1388-436; Dec. 18, 1991, Pub. L. 102-240, title VIII, 8002(a)(3), 105
Stat. 2203; Oct. 24, 1992, Pub. L. 102-486, title XIX, 1920(a), (b),
106 Stat. 3026.)
1992 -- Subsec. (c)(1). Pub. L. 102-486, 1920(a), amended par. (1)
generally. Prior to amendment, par. (1) read as follows: ''Under
regulations prescribed by the Secretary, subsection (a) shall be applied
by substituting rates which are 10/9th of the otherwise applicable rates
in the case of the removal or sale of any gasoline for use in producing
gasohol at the time of such removal or sale. Subject to such terms and
conditions as the Secretary may prescribe (including the application of
section 4101), the treatment under the preceding sentence also shall
apply to use in producing gasohol after the time of such removal or
sale. For purposes of this paragraph, the term 'gasohol' means any
mixture of gasoline if at least 10 percent of such mixture is alcohol.
For purposes of this subsection, in the case of the Highway Trust Fund
financing rate, the otherwise applicable rate is 6.1 cents a gallon.''
Subsec. (c)(2). Pub. L. 102-486, 1920(b)(1), substituted ''an
otherwise applicable rate'' for ''6.1 cents a gallon''.
Subsec. (c)(4). Pub. L. 102-486, 1920(b)(2), substituted heading for
one which read: ''Lower rate on gasohol made other than from ethanol'',
added text, and struck out former text which read as follows: ''In the
case of gasohol none of the alcohol in which consists of ethanol,
paragraphs (1) and (2) shall be applied by substituting '5.5 cents' for
'6.1 cents'.''
1991 -- Subsec. (d)(1). Pub. L. 102-240 substituted ''1999'' for
''1995''.
1990 -- Subsec. (a)(1). Pub. L. 101-508, 11212(a), substituted
heading for one which read: ''In general'' and amended text generally.
Prior to amendment, text read as follows: ''There is hereby imposed a
tax at the rate specified in paragraph (2) on the earlier of --
''(A) the removal, or
''(B) the sale,
of gasoline by the refiner or importer thereof or the terminal
operator.''
Subsec. (a)(2)(A)(iii). Pub. L. 101-508, 11211(a)(1), added cl.
(iii).
Subsec. (a)(2)(B)(i). Pub. L. 101-508, 11211(a)(2)(A), substituted
''11.5 cents'' for ''9 cents''.
Subsec. (a)(2)(B)(iii). Pub. L. 101-508, 11211(a)(2)(B), (C), added
cl. (iii).
Subsec. (a)(3). Pub. L. 101-508, 11212(e)(2), struck out par. (3)
which read as follows: ''For purposes of paragraph (1), the bulk
transfer of gasoline to a terminal operator by a refiner or importer
shall not be considered a removal or sale of gasoline by such refiner or
importer.''
Subsec. (c)(1). Pub. L. 101-508, 11211(a)(5)(A), substituted
''applied by substituting rates which are 10/9th of the otherwise
applicable rates'' for ''applied by substituting '3 1/3 cents' for '9
cents' and by substituting ' 1/9 cent' for '0.1 cent''' and inserted
''For purposes of this subsection, in the case of the Highway Trust Fund
financing rate, the otherwise applicable rate is 6.1 cents a gallon.''
Subsec. (c)(2). Pub. L. 101-508, 11211(a)(5)(B), which directed the
substitution of ''at a Highway Trust Fund financing rate equivalent to
6.1 cents'' for ''at a rate equivalent to 3 cents'', was executed by
making the substitution for ''at a Highway Trust Fund financing rate
equivalent to 3 cents'' to reflect the probable intent of Congress. See
1986 Amendment note below.
Subsec. (c)(4). Pub. L. 101-508, 11211(a)(5)(C), added par. (4).
Former par. (4) redesignated (5).
Subsec. (c)(5). Pub. L. 101-508, 11211(e)(3), substituted ''2000''
for ''1993''.
Pub. L. 101-508, 11211(a)(5)(C), redesignated par. (4) as (5).
Subsec. (d)(1). Pub. L. 101-508, 11211(c)(3), substituted ''1995''
for ''1993''.
Subsec. (d)(2). Pub. L. 101-508, 11215(a), amended par. (2)
generally. Prior to amendment, par. (2) read as follows:
''(A) In general. -- The Leaking Underground Storage Tank Trust Fund
financing rate under subsection (a)(2) shall not apply after the earlier
of --
''(i) December 31, 1991, or
''(ii) the last day of the termination month.
''(B) Termination month. -- For purposes of subparagraph (A), the
termination month is the 1st month as of the close of which the
Secretary estimates that the net revenues are at least $500,000,000 from
taxes imposed by section 4041(d) and taxes attributable to Leaking
Underground Storage Tank Trust Fund financing rate imposed under this
section and sections 4042 and 4091.
''(C) Net revenues. -- For purposes of subparagraph (B), the term
'net revenues' means the excess of gross revenues over amounts payable
by reason of section 9508(c)(2) (relating to transfer from Leaking
Underground Storage Tank Trust Fund for certain repayments and
credits).''
Subsec. (d)(3). Pub. L. 101-508, 11211(a)(3), added par. (3).
Subsec. (e). Pub. L. 101-508, 11212(d)(1), added subsec. (e).
1988 -- Subsec. (a). Pub. L. 100-647, 1017(c)(1)(A), added pars.
(1) and (2), struck out former par. (1) which imposed a tax at the rate
specified in subsec. (d) on the earlier of the removal, or the sale of
gasoline by the refiner or importer thereof or the terminal operator,
and redesignated former par. (2) as (3).
Subsec. (b)(1). Pub. L. 100-647, 1017(c)(1)(B), substituted
''subsection (a)'' for ''subsection (d)''.
Subsec. (c)(1). Pub. L. 100-647, 6104(a), inserted after first
sentence ''Subject to such terms and conditions as the Secretary may
prescribe (including the application of section 4101), the treatment
under the preceding sentence also shall apply to use in producing
gasohol after the time of such removal or sale.''
Pub. L. 100-647, 2001(d)(5)(A), inserted ''and by substituting ' 1/9
cent' for '0.1 cent''' before ''in the case of the removal''.
Pub. L. 100-647, 1017(c)(14), substituted ''3 1/3 cents'' for ''3
cents''.
Pub. L. 100-647, 1017(c)(1)(B), substituted ''subsection (a)'' for
''subsection (d)''.
Subsec. (c)(2). Pub. L. 100-647, 2001(d)(5)(B), substituted
''reduced by the amount of tax imposed (and not credited or refunded) on
any prior removal or sale of such fuel'' for ''5 2/3 cents a gallon''.
Subsec. (d). Pub. L. 100-647, 1017(c)(1)(D), redesignated subsec.
(e) as (d) and struck out former subsec. (d) which related to the rate
of tax.
Subsec. (d)(1). Pub. L. 100-647, 1017(c)(1)(C)(i), substituted
''subsection (a)(2)'' for ''subsection (d)(2)(A)''.
Subsec. (d)(2)(A). Pub. L. 100-647, 1017(c)(1)(C)(ii), substituted
''subsection (a)(2)'' for ''subsection (d)(2)(B)''.
Subsec. (e). Pub. L. 100-647, 1017(c)(1)(D), redesignated subsec.
(e) as (d).
1987 -- Subsec. (c)(4). Pub. L. 100-17, 502(c)(2), substituted
''September 30, 1993'' for ''December 31, 1992''.
Subsec. (e)(1). Pub. L. 100-17, 502(a)(4), substituted ''1993'' for
''1988''.
Subsec. (e)(2)(B). Pub. L. 100-203 substituted ''net revenues are at
least $500,000,000 from taxes imposed by section 4041(d) and taxes
attributable to Leaking Underground Storage Tank Trust Fund financing
rate imposed under this section and sections 4042 and 4091.'' for ''net
revenues from the taxes imposed by this section (to the extent
attributable to the Leaking Underground Storage Tank Trust Fund
financing rate under subsection (d)(2)(B)), section 4041(d), and section
4042 (to the extent attributable to the Leaking Underground Storage Tank
Trust Fund financing rate under section 4042(b)) are at least
$500,000,000.''
1986 -- Pub. L. 99-514 amended section generally, substituting
provisions imposing a tax on the removal or sale of gasoline by the
refiner, importer, blender, or compounder thereof or the terminal
operator for provisions imposing a tax on gasoline sold by the producer
or importer thereof, or by any producer of gasoline.
Subsec. (a). Pub. L. 99-499, 521(a)(1)(B)(i), substituted ''at the
rate specified in subsection (d)'' for ''of 9 cents a gallon'' in par.
(1) as amended by Pub. L. 99-514.
Pub. L. 99-499, 521(a)(1)(A)(i), amended subsec. (a), as in effect
the day before Oct. 22, 1986, generally, substituting ''at the rate
specified in subsection (b)'' for ''of 9 cents a gallon''.
Subsec. (b). Pub. L. 99-499, 521(a)(1)(B)(i), substituted ''at the
rate specified in subsection (d)'' for ''of 9 cents a gallon'' in par.
(1) as amended by Pub. L. 99-514.
Pub. L. 99-499, 521(a)(1)(A)(i), amended subsec. (b), as in effect
the day before Oct. 22, 1986, generally. Prior to amendment, subsec.
(b), termination, read as follows: ''On and after October 1, 1988, the
taxes imposed by this section shall not apply.''
Subsec. (c)(1). Pub. L. 99-499, 521(a)(1)(B)(iii)(I), substituted
''subsection (d)'' for ''subsection (a)'' in par. (1) as amended by
Pub. L. 99-514.
Pub. L. 99-499, 521(a)(1)(A)(iii), substituted ''subsection (b)''
for ''subsection (a)'' in introductory provisions as in effect the day
before Oct. 22, 1986.
Subsec. (c)(2). Pub. L. 99-499, 521(a)(1)(B)(iii)(II), substituted
''a Highway Trust Fund financing rate'' for ''a rate'' in par. (2) as
amended by Pub. L. 99-514.
Pub. L. 99-499, 521(a)(1)(A)(iii)(II), substituted ''a Highway Trust
Fund financing rate'' for ''a rate'' in par. (2) as in effect the day
before Oct. 22, 1986.
Subsec. (d). Pub. L. 99-499, 521(a)(1)(B)(ii), added subsec. (d) to
this section as amended by Pub. L. 99-514, and struck out former
subsec. (d), termination, which read as follows: ''On and after
October 1, 1988, the taxes imposed by this section shall not apply.''
Pub. L. 99-499, 521(a)(1)(A)(i), in amending this section as in
effect the day before Oct. 22, 1986, added subsec. (d).
Subsec. (e). Pub. L. 99-499, 521(a)(1)(B)(ii), added subsec. (e) to
this section as amended by Pub. L. 99-514.
1984 -- Subsec. (c)(1). Pub. L. 98-369, 912(b)(A), (B), substituted
''3 cents'' for ''4 cents'' in subpar. (A), and ''3 1/3 cents'' for ''4
4/9 cents'' in subpar. (B).
Pub. L. 98-369, 732(a)(1), struck out ''by substituting '4 cents'
for '9 cents' in the case of the sale of any gasoline'' after ''shall be
applied'' in text preceding subpar. (A), substituted ''by substituting
'4 cents' for '9 cents' in the case of the sale of any gasohol (the
gasoline in which was not taxed under subparagraph (B)), and'' for ''in
a mixture with alcohol, if at least 10 percent of the mixture is
alcohol, or'' in subpar. (A), substituted ''by substituting '4 4/9
cents' for '9 cents' in the case of the sale of any gasoline for use in
producing gasohol'' for ''for use in producing a mixture at least 10
percent of which is alcohol'' in subpar. (B) and inserted definition of
''gasohol'' after subpar. (B).
Subsec. (c)(2). Pub. L. 98-369, 912(b)(A), (C), substituted ''3
cents'' for ''4 cents'' and ''5 2/3 cents'' for ''4 5/9 cents''.
Pub. L. 98-369, 732(a)(2), substituted ''at a rate equivalent to 4
cents a gallon'' for ''at a rate of 4 cents a gallon'', and ''4 5/9
cents a gallon'' for ''5 cents a gallon''.
Subsec. (c)(3). Pub. L. 98-369, 912(f), substituted ''coal
(including peat)'' for ''coal''.
1983 -- Subsec. (a). Pub. L. 97-424, 511(a)(1), increased tax from
4 to 9 cents a gallon.
Subsec. (b). Pub. L. 97-424, 516(a)(3), substituted provision that,
on and after Oct. 1, 1988, the taxes imposed by this section shall not
apply, for provision that, on and after Oct. 1, 1984, the tax imposed
by this section would be 1 1/2 cents a gallon.
Subsec. (c)(1). Pub. L. 97-424, 511(d)(1)(A), substituted
''subsection (a) shall be applied by substituting '4 cents' for '9
cents' in the case of the sale of any gasoline'' for ''no tax shall be
imposed by this section on the sale of any gasoline'' after
''Secretary,''.
Subsec. (c)(2). Pub. L. 97-424, 511(d)(1)(B), substituted ''tax was
imposed under subsection (a) at the rate of 4 cents a gallon by reason
of this subsection'' for ''tax was not imposed by reason of this
subsection'' after ''alcohol on which'', and inserted provision that the
amount of tax imposed on any sale of such gasoline by such person shall
be 5 cents a gallon.
1980 -- Subsec. (c)(2). Pub. L. 96-223, 232(d)(3), inserted ''(or
with respect to which a credit or payment was allowed or made by reason
of section 6427(f)(1))'' after ''this subsection''.
Subsec. (c)(3). Pub. L. 96-223, 232(b)(3)(A), inserted provision
that ''alcohol'' does not include alcohol with a proof of less than 190
(determined without regard to any added denaturants).
Subsec. (c)(4). Pub. L. 96-223, 232(a)(1), added par. (4).
1978 -- Subsec. (b). Pub. L. 95-599 substituted ''1984'' for
''1979''.
Subsec. (c). Pub. L. 95-618 added subsec. (c).
1976 -- Subsec. (b). Pub. L. 94-280 substituted ''1979'' for
''1977''.
1970 -- Subsec. (b). Pub. L. 91-605 substituted ''1977'' for
''1972''.
1961 -- Subsec. (a). Pub. L. 87-61, 201(b), increased tax from 3 to
4 cents a gallon.
Subsec. (b). Pub. L. 87-61, 201(c), substituted ''October 1, 1972''
for ''July 1, 1972.''
Subsec. (c). Pub. L. 87-61, 201(d), repealed subsec. (c) which
authorized a temporary increase in tax for the period October 1, 1959,
to July 1, 1961.
1959 -- Subsec. (c). Pub. L. 86-342 added subsec. (c).
1956 -- Act Mar. 29, 1956, substituted ''April 1, 1957'' for ''April
1, 1956''.
Subsec. (a). Act June 29, 1956, redesignated first sentence as
subsec. (a) and increased tax from 2 to 3 cents a gallon.
Subsec. (b). Act June 29, 1956, redesignated second sentence as
subsec. (b) and substituted ''July 1, 1972'' for ''April 1, 1956''.
1955 -- Act Mar. 30, 1955, substituted ''April 1, 1956'' for ''April
1, 1955''.
Section 1920(c) of Pub. L. 102-486 provided that: ''The amendments
made by this section (amending this section) shall apply to gasoline
removed (as defined in section 4082 of the Internal Revenue Code of
1986) or entered after December 31, 1992.''
Amendment by section 11211(a)(1)-(3), (5)(A)-(C) of Pub. L. 101-508
applicable, except as otherwise provided, to gasoline removed (as
defined in section 4082 of this title) after Nov. 30, 1990, see section
11211(a)(6) of Pub. L. 101-508, set out as a note under section 4041 of
this title.
Section 11212(f) of Pub. L. 101-508 provided that:
''(1) In general. -- Except as provided in paragraph (2), the
amendments made by this section (enacting section 4103 of this title and
amending this section and sections 4093, 4101, 4222, 6103, 6416, and
6724 of this title) shall take effect on July 1, 1991.
''(2) Registration, etc. -- The amendments made by subsections (b),
(c), and (e) (other than paragraph (2) thereof) (enacting section 4103
of this title and amending sections 4093, 4101, 4222, 6103, and 6724 of
this title) shall take effect on December 1, 1990.''
Section 11215(b) of Pub. L. 101-508 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect on
December 1, 1990.''
Amendment by section 1017(c)(1), (14) of Pub. L. 100-647 effective,
except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates,
see section 1019(a) of Pub. L. 100-647, set out as a note under section
1 of this title.
Amendment by section 2001(d)(5) of Pub. L. 100-647 effective, except
as otherwise provided, as if included in the provision of the Superfund
Revenue Act of 1986, Pub. L. 99-499, title V, to which it relates, see
section 2001(e) of Pub. L. 100-647, set out as a note under section 56
of this title.
Section 6104(b) of Pub. L. 100-647 provided that: ''The amendment
made by this section (amending this section) shall take effect on
October 1, 1989.''
Amendment by Pub. L. 100-203 applicable to sales after Mar. 31,
1988, see section 10502(e) of Pub. L. 100-203, set out as a note under
section 40 of this title.
Section 1703(h) of Pub. L. 99-514 provided that: ''The amendments
made by this section (amending this section and sections 34, 4082, 4083,
4101, 4221, 6421, 6427, 7210, 7603 to 7605, 7609, and 7610 of this title
and omitting section 4084 of this title) shall apply to gasoline removed
(as defined in section 4082 of the Internal Revenue Code of 1986, as
amended by this section) after December 31, 1987.''
Amendment by Pub. L. 99-499 effective Jan. 1, 1987, see section
521(e) of Pub. L. 99-499, set out as a note under section 4041 of this
title.
Amendment by section 732(a)(1), (2) of Pub. L. 98-369 effective,
except as otherwise provided, as if included in the provisions of the
Highway Revenue Act of 1982, title V of Pub. L. 97-424, to which such
amendment relates, see section 736 of Pub. L. 98-369, set out as a note
under section 4051 of this title.
Amendment by section 912(b), (f) of Pub. L. 98-369 effective Jan.
1, 1985, see section 912(g) of Pub. L. 98-369, set out as a note under
section 40 of this title.
Amendment by section 511(a)(1), (d)(1) of Pub. L. 97-424 effective
Apr. 1, 1983, see section 511(h)(1) of Pub. L. 97-424, set out as a
note under section 4041 of this title.
Amendment by section 232(b)(3)(A) of Pub. L. 96-223 applicable to
sales or uses after Sept. 30, 1980, in taxable years ending after such
date, see section 232(h)(1) of Pub. L. 96-223, set out as an Effective
Date note under section 40 of this title.
Section 221(a)(2) of Pub. L. 95-618, as amended by Pub. L. 96-223,
title II, 232(a)(3), Apr. 2, 1980, 94 Stat. 273, provided that:
''The amendment made by paragraph (1) (amending this section) shall
apply to sales after December 31, 1978.''
Amendment by Pub. L. 87-61 effective July 1, 1961, see section 208
of Pub. L. 87-61, set out as a note under section 4041 of this title.
Amendment by act June 29, 1956, effective July 1, 1956, see section
211 of act June 29, 1956, set out as a note under section 4041 of this
title.
Section 11211(j) of Pub. L. 101-508 provided that:
''(1) Imposition of tax. -- In the case of --
''(A) gasoline and diesel fuel on which tax was imposed under section
4081 or 4091 of such Code before December 1, 1990, and which is held on
such date by any person, or
''(B) diesel fuel on which no tax was imposed under section 4091 of
such Code at the Highway Trust Fund financing rate before December 1,
1990, and which is held on such date by any person for use as a fuel in
a train,
there is hereby imposed a floor stocks tax on such gasoline and
diesel fuel.
''(2) Rate of tax. -- The rate of the tax imposed by paragraph (1)
shall be --
''(A) 5 cents per gallon in the case of fuel described in paragraph
(1)(A), and
''(B) 2.5 cents per gallon in the case of fuel described in paragraph
(1)(B).
In the case of any fuel held for use in producing a mixture described
in section 4081(c)(1) or section 4091(c)(1)(A) of such Code,
subparagraph (A) shall be applied by substituting '6.22 cents' for '5
cents'. If no alcohol in such mixture is ethanol, the preceding
sentence shall be applied by substituting '5.56 cents' for '6.22 cents'.
''(3) Liability for tax and method of payment. --
''(A) Liability for tax. -- A person holding gasoline or diesel fuel
on December 1, 1990, to which the tax imposed by paragraph (1) applies
shall be liable for such tax.
''(B) Method of payment. -- The tax imposed by paragraph (1) shall be
paid in such manner as the Secretary shall prescribe.
''(C) Time for payment. -- The tax imposed by paragraph (1) shall be
paid on or before May 31, 1991.
''(4) Definitions. -- For purposes of this subsection --
''(A) Held by a person. -- Gasoline and diesel fuel shall be
considered as 'held by a person' if title thereto has passed to such
person (whether or not delivery to the person has been made).
''(B) Gasoline. -- The term 'gasoline' has the meaning given such
term by section 4082 of such Code.
''(C) Diesel fuel. -- The term 'diesel fuel' has the meaning given
such term by section 4092 of such Code.
''(D) Secretary. -- The term 'Secretary' means the Secretary of the
Treasury or his delegate.
''(5) Exception for exempt uses. -- The tax imposed by paragraph (1)
shall not apply to gasoline or diesel fuel held by any person
exclusively for any use to the extent a credit or refund of the tax
imposed by section 4081 or 4091 of such Code, as the case may be, is
allowable for such use.
''(6) Exception for fuel held in vehicle tank. -- No tax shall be
imposed by paragraph (1) on gasoline or diesel fuel held in the tank of
a motor vehicle or motorboat.
''(7) Exception for certain amounts of fuel. --
''(A) In general. -- No tax shall be imposed by paragraph (1) --
''(i) on gasoline held on December 1, 1990, by any person if the
aggregate amount of gasoline held by such person on such date does not
exceed 4,000 gallons, and
''(ii) on diesel fuel held on December 1, 1990, by any person if the
aggregate amount of diesel fuel held by such person on such date does
not exceed 2,000 gallons.
The preceding sentence shall apply only if such person submits to the
Secretary (at the time and in the manner required by the Secretary) such
information as the Secretary shall require for purposes of this
paragraph.
''(B) Exempt fuel. -- For purposes of subparagraph (A), there shall
not be taken into account fuel held by any person which is exempt from
the tax imposed by paragraph (1) by reason of paragraph (5) or (6).
''(C) Controlled groups. -- For purposes of this paragraph, rules
similar to the rules of paragraph (6) of section 11201(e) of this Act
(set out in a note under section 5001 of this title) shall apply.
''(8) Other laws applicable. -- All provisions of law, including
penalties, applicable with respect to the taxes imposed by section 4081
of such Code in the case of gasoline and section 4091 of such Code in
the case of diesel fuel shall, insofar as applicable and not
inconsistent with the provisions of this subsection, apply with respect
to the floor stock taxes imposed by paragraph (1) to the same extent as
if such taxes were imposed by such section 4081 or 4091.
''(9) Transfer of portion of floor stocks revenue to highway trust
fund. -- For purposes of determining the amount transferred to the
Highway Trust Fund, the tax imposed by paragraph (1) on fuel described
in subparagraph (A) thereof shall be treated as imposed at a Highway
Trust Fund financing rate to the extent of 2.5 cents per gallon.''
Section 1703(f) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, 1017(c)(13), title II, 2001(d)(4), Nov. 10, 1988, 102 Stat.
3577, 3595, provided that:
''(1) In general. -- On gasoline subject to tax under section 4081 of
the Internal Revenue Code of 1986 which, on January 1, 1988, is held by
a dealer for sale, and with respect to which no tax has been imposed
under such section, there is hereby imposed a floor stocks tax at the
rate of 9.1 cents a gallon.
''(2) Overpayment of floor stocks taxes. -- Section 6416 of such Code
shall apply in respect of the floor stocks taxes imposed by this
section, so as to entitle, subject to all provisions of such section,
any person paying such floor stocks taxes to a credit or refund thereof
for any reasons specified in such section. All other provisions of law,
including penalties, applicable with respect to the taxes imposed by
section 4081 of the Internal Revenue Code of 1986 shall apply to the
floor stocks taxes imposed by this section.
''(3) Due date of taxes. -- The taxes imposed by this subsection
shall be paid before February 16, 1988.
''(4) Transfer of floor stock tax revenues to trust funds. -- For
purposes of determining the amount transferred to any trust fund, the
tax imposed by this section shall be treated as imposed by section 4081
of the Internal Revenue Code of 1986 --
''(A) at the Highway Trust Fund financing rate under such section to
the extent of 9 cents per gallon, and
''(B) at the Leaking Underground Storage Tank Trust Fund financing
rate under such section to the extent of 0.1 cent per gallon.
''(5) Definitions and special rule. -- For purposes of this
subsection --
''(A) Dealer. -- The term 'dealer' includes a wholesaler, jobber,
distributor, or retailer.
''(B) Held by a dealer. -- Gasoline shall be considered as 'held by a
dealer' if title thereto has passed to such dealer (whether or not
delivery to him has been made) and if for purposes of consumption title
to such gasoline or possession thereof has not at any time been
transferred to any person other than a dealer.
''(C) Gasoline. -- The term 'gasoline' has the same meaning given to
such term by section 4082(a) of the Internal Revenue Code of 1986.''
Section 1703(g) of Pub. L. 99-514 provided that:
''(1) In general. -- The Secretary of the Treasury or his delegate
shall conduct a study of the incidence of the evasion of the gasoline
tax.
''(2) Report. -- The report of the study under paragraph (1) shall be
submitted, not later than December 31, 1986, to the Committee on Ways
and Means of the House of Representatives and the Committee on Finance
of the Senate.''
Section 518 of Pub. L. 97-424, as amended by Pub. L. 98-369, div.
A, title VII, 734(i), July 18, 1984, 98 Stat. 980; Pub. L. 99-514,
2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(a) 14-Day Extension. -- The Secretary shall prescribe regulations
which permit any qualified person whose liability for tax under section
4081 of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) is
payable with respect to semi-monthly periods to pay such tax on or
before the day which is 14 days after the close of such semi-monthly
period if such payment is made by wire transfer to, except as provided
in regulations prescribed by the Secretary of the Treasury or his
delegate, any Federal Reserve Bank.
''(b) Qualified Person Defined. -- For purposes of this section --
''(1) In general. -- The term 'qualified person' means --
''(A) any person other than any person whose average daily production
of crude oil for the preceding calendar quarter exceeds 1,000 barrels,
and
''(B) any independent refiner (within the meaning of section
4995(b)(4) of such Code).
''(2) Aggregation rules. -- For purposes of paragraph (1), in
determining whether any person's production exceeds 1,000 barrels per
day, rules similar to the rules of section 4992(e) of the Internal
Revenue Code of 1986 shall apply.
''(c) Special Rule Where 14th Day Falls on Saturday, Sunday, or
Holiday. -- If, but for this subsection, the due date under subsection
(a) would fall on a Saturday, Sunday, or a holiday in the District of
Columbia, such due date shall be deemed to be the immediately preceding
day which is not a Saturday, Sunday, or such a holiday.''
Study respecting portion of taxes imposed by this section is
attributable to fuel used in recreational motorboats and report to
Congress no later than 2 years after Oct. 14, 1980, see Pub. L.
96-451, title II, 204, Oct. 14, 1980, 94 Stat. 1988, set out as a
note under section 4041 of this title.
Section 221(d) of Pub. L. 95-618, which required Secretary of the
Treasury expedite applications submitted by persons with respect to the
production of ethanol for use in producing gasoline and that the
Secretary develop expeditious procedures for processing such
applications, was repealed by Pub. L. 96-223, 232(e)(2)(E), Apr. 2,
1980, 94 Stat. 280.
Floor stocks refunds, see section 6412 of this title.
26 USC 4082. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Gasoline
For purposes of this subpart, the term ''gasoline'' includes, to the
extent prescribed in regulations --
(1) gasoline blend stocks, and
(2) products commonly used as additives in gasoline.
For purposes of paragraph (1), the term ''gasoline blend stocks''
means any petroleum product component of gasoline.
(b) Certain uses defined as removal
If a refiner, importer, terminal operator, blender, or compounder
uses (other than in the production of gasoline or special fuels referred
to in section 4041) gasoline refined, imported, blended, or compounded
by him, such use shall for the purposes of this chapter be considered a
removal.
(Aug. 16, 1954, ch. 736, 68A Stat. 483; Sept. 21, 1959, Pub. L.
86-342, title II, 201(e)(1), (2), 73 Stat. 615; June 21, 1965, Pub.
L. 89-44, title VIII, 802(a)(1), (b)(1), 79 Stat. 159; May 21, 1970,
Pub. L. 91-258, title II, 205(c)(6), 84 Stat. 242; July 18, 1984, Pub.
L. 98-369, div. A, title VII, 733(a), 734(c)(1), 98 Stat. 977, 979;
Oct. 22, 1986, Pub. L. 99-514, title XVII, 1703(a), 100 Stat. 2775.)
1986 -- Subsec. (a). Pub. L. 99-514 amended subsec. (a) generally,
substituting definitions of ''gasoline'' and ''gasoline blended stocks''
for definition of ''producer''.
Subsec. (b). Pub. L. 99-514 amended subsec. (b) generally,
substituting provisions that certain use of gasoline be considered
removal for provisions defining ''gasoline''.
Subsecs. (c) to (e). Pub. L. 99-514, in amending section generally,
struck out subsecs. (c) to (e) which defined ''sales'', ''wholesale
distributor'', and ''producer'', respectively.
1984 -- Subsec. (d). Pub. L. 98-369, 733(a), in amending subsec.
(d) generally, redesignated existing provisions of par. (1) as subpar.
(A) and added subpar. (B), and in par. (2) inserted ''but only if such
person'' before ''elects''.
Subsec. (e). Pub. L. 98-369, 734(c)(1), added subpar. (e).
1970 -- Subsec. (c). Pub. L. 91-258 substituted ''special fuels
referred to in section 4041'' for ''special motor fuels referred to in
section 4041(b)''.
1965 -- Subsec. (b). Pub. L. 89-44, 802(a)(1), substituted
''gasoline which are suitable for use as a motor fuel'' for ''gasoline
(including casinghead and natural gasoline''.
Subsec. (d)(2). Pub. L. 89-44, 802(b)(1), struck out ''and give a
bond'' after ''elects to register''.
1959 -- Subsec. (a). Pub. L. 86-342, 201(e)(1), inserted reference
to wholesale distributor.
Subsec. (d). Pub. L. 86-342, 201(e)(2), added subsec. (d).
Amendment by Pub. L. 99-514 applicable to gasoline removed (as
defined in section 4082 of this title as amended by section 1703 of Pub.
L. 99-514) after Dec. 31, 1987, see section 1703(h) of Pub. L.
99-514, set out as a note under section 4081 of this title.
Section 733(b) of Pub. L. 98-369 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect on the
first day of the first calendar quarter beginning after the date of the
enactment of this Act (July 18, 1984).''
Section 734(c)(3) of Pub. L. 98-369 provided that: ''The amendments
made by this subsection (amending sections 4082 and 6427 of this title)
shall take effect on the first day of the first calendar quarter
beginning after the date of the enactment of this Act (July 18, 1984).''
Amendment by Pub. L. 91-258 effective July 1, 1970, see section
211(a) of Pub. L. 91-258, set out as a note under section 4041 of this
title.
Section 802(d)(1) of Pub. L. 89-44 provided that: ''The amendments
made by subsections (a)(1), (b), and (c) (amending sections 4082, 4101,
4222, 7103, and 7232 of this title) shall apply with respect to articles
sold on or after July 1, 1965.''
Section 201(e)(3) of Pub. L. 86-342 provided that: ''The amendments
made by paragraphs (1) and (2) (amending this section) shall take effect
on January 1, 1960.''
26 USC 4083. Cross references
TITLE 26 -- INTERNAL REVENUE CODE
(1) For provisions to relieve farmers from excise tax in the case of
gasoline used on the farm for farming purposes, see section 6420.
(2) For provisions to relieve purchasers of gasoline from excise tax
in the case of gasoline used for certain nonhighway purposes, used by
local transit systems, or sold for certain exempt purposes, see section
6421.
(3) For provisions to relieve purchasers of gasoline from excise tax
in the case of gasoline not used for taxable purposes, see section 6427.
(Aug. 16, 1954, ch. 736, 68A Stat. 483; Oct. 4, 1976, Pub. L.
94-455, title XIX, 1906(b)(13)(A), 90 Stat. 1834; Oct. 22, 1986, Pub.
L. 99-514, title XVII, 1703(a), 100 Stat. 2776.)
A prior section 4084, added Apr. 2, 1956, ch. 160, 4(a)(1), 70
Stat. 90; amended June 29, 1956, ch. 462, title II, 208(e)(1), 70
Stat. 396, contained cross references, prior to the general amendment
of this subpart by Pub. L. 99-514, 1703(a).
1986 -- Pub. L. 99-514 amended section generally. Prior to
amendment, section 4083 ''Exemption of sales to producer'', read as
follows: ''Under regulations prescribed by the Secretary the tax
imposed by section 4081 shall not apply in the case of sales of gasoline
to a producer of gasoline.''
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Amendment by Pub. L. 99-514 applicable to gasoline removed (as
defined in section 4082 of this title as amended by section 1703 of Pub.
L. 99-514) after Dec. 31, 1987, see section 1703(h) of Pub. L. 99-514
set out as a note under section 4081 of this title.
26 USC Subpart B -- Diesel Fuel and Aviation Fuel
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4091. Imposition of tax.
4092. Definitions.
4093. Exemptions; special rule.
26 USC 4091. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
There is hereby imposed a tax on the sale of any taxable fuel by the
producer or the importer thereof or by any producer of a taxable fuel.
(b) Rate of tax
(1) In general
The rate of the tax imposed by subsection (a) shall be the sum of --
(A)(i) the Highway Trust Fund financing rate and the diesel fuel
deficit reduction rate in the case of diesel fuel, and
(ii) the Airport and Airway Trust Fund financing rate in the case of
aviation fuel, and
(B) the Leaking Underground Storage Tank Trust Fund financing rate in
the case of any taxable fuel.
(2) Highway Trust Fund financing rate
For purposes of paragraph (1), except as provided in subsection (c),
the Highway Trust Fund financing rate is 17.5 cents per gallon.
(3) Airport and Airway Trust Fund financing rate
For purposes of paragraph (1), except as provided in subsection (d),
the Airport and Airway Trust Fund financing rate is 17.5 cents per
gallon.
(4) Diesel fuel deficit reduction rate
For purposes of paragraph (1), except as provided in subsection (c),
the diesel fuel deficit reduction rate is 2.5 cents per gallon.
(5) Leaking Underground Storage Tank Trust Fund financing rate
For purposes of paragraph (1), except as provided in subsection (c),
the Leaking Underground Storage Tank Trust Fund financing rate is 0.1
cent per gallon.
(6) Termination of rates
(A) The Highway Trust Fund financing rate shall not apply on and
after October 1, 1999.
(B) The Airport and Airway Trust Fund financing rate shall not apply
on and after January 1, 1996.
(C) The Leaking Underground Storage Tank Trust Fund financing rate
shall not apply during any period during which the Leaking Underground
Storage Tank Trust Fund financing rate under section 4081 does not
apply.
(D) The diesel fuel deficit reduction rate shall not apply on and
after October 1, 1995.
(c) Reduced rate of tax for diesel fuel in alcohol mixture, etc.
Under regulations prescribed by the Secretary --
(1) In general
The Highway Trust Fund financing rate shall be --
(A) 12.1 cents per gallon in the case of the sale of any mixture of
diesel fuel if --
(i) at least 10 percent of such mixture consists of alcohol (as
defined in section 4081(c)(3)), and
(ii) the diesel fuel in such mixture was not taxed under subparagraph
(B), and
(B) 13.44 cents per gallon in the case of the sale of diesel fuel for
use (at the time of such sale) in producing a mixture described in
subparagraph (A).
In the case of a sale described in subparagraph (B), the Leaking
Underground Storage Tank Trust Fund financing rate and the diesel fuel
deficit reduction rate shall be 10/9th of the otherwise applicable such
rates.
(2) Later separation
If any person separates the diesel fuel from a mixture of the diesel
fuel and alcohol on which tax was imposed under subsection (a) at a
Highway Trust Fund financing rate equivalent to 12.1 cents a gallon by
reason of this subsection (or with respect to which a credit or payment
was allowed or made by reason of section 6427(f)(1)), such person shall
be treated as the producer of such diesel fuel. The amount of tax
imposed on any sale of such diesel fuel by such person shall be reduced
by the amount of tax imposed (and not credited or refunded) on any prior
sale of such fuel.
(3) Termination
Paragraph (1) shall not apply to any sale after September 30, 2000.
(d) Reduced rate of tax for aviation fuel in alcohol mixture, etc.
(1) In general
The Airport and Airway Trust Fund financing rate shall be --
(A) 4.1 cents per gallon in the case of the sale of any mixture of
aviation fuel if --
(i) at least 10 percent of such mixture consists of alcohol (as
defined in section 4081(c)(3)), and
(ii) the aviation fuel in such mixture was not taxed under
subparagraph (B), and
(B) 4.56 cents per gallon in the case of the sale of aviation fuel
for use (at the time of such sale) in producing a mixture described in
subparagraph (A).
In the case of a sale described in subparagraph (B), the Leaking
Underground Storage Tank Trust Fund financing rate shall be 1/9 cent per
gallon.
(2) Later separation
If any person separates the aviation fuel from a mixture of the
aviation fuel and alcohol on which tax was imposed under subsection (a)
at the Airport and Airway Trust Fund financing rate equivalent to 4.1
cents per gallon by reason of this subsection (or with respect to which
a credit or payment was allowed or made by reason of section
6427(f)(1)), such person shall be treated as the producer of such
aviation fuel. The amount of tax imposed on any sale of such aviation
fuel by such person shall be reduced by the amount of tax imposed (and
not credited or refunded) on any prior sale of such fuel.
(3) Termination
Paragraph (1) shall not apply to any sale after September 30, 2000.
(e) Lower rates of tax on alcohol mixtures not made from ethanol
In the case of a mixture described in subsection (c)(1)(A)(i) or
(d)(1)(A)(i) none of the alcohol in which is ethanol --
(1) subsections (c)(1)(A) and (c)(2), and subsections (d)(1)(A) and
(d)(2), shall each be applied by substituting rates which are 0.6 cents
less than the rates contained therein, and
(2) subsections (c)(1)(B) and (d)(1)(B) shall be applied by
substituting rates which are 10/9 of the rates determined under
paragraph (1).
(Added Pub. L. 100-203, title X, 10502(a), Dec. 22, 1987, 101 Stat.
1330-438; amended Pub. L. 100-203, title X, 10502(g), Dec. 22, 1987,
101 Stat. 1330-446; Pub. L. 100-647, title II, 2001(d)(6)(A)-(C), Nov.
10, 1988, 102 Stat. 3596; Pub. L. 101-508, title XI, 11211(b)(1),
(2), (6)(A), (B), (c)(4), (e)(4), 11213(b)(1), (2)(C), (D), (d)(2)(A),
11704(a)(38), Nov. 5, 1990, 104 Stat. 1388-424 to 1388-427, 1388-432,
1388-433, 1388-435, 1388-520; Pub. L. Pub. L. 102-240, title VIII,
8002(a)(4), Dec. 18, 1991, 105 Stat. 2203.)
A prior section 4091, acts Aug. 16, 1954, ch. 736, 68A Stat. 483;
Aug. 11, 1955, ch. 793, 1(a), 69 Stat. 676; June 21, 1965, Pub. L.
89-44, title II, 202(a), 79 Stat. 137, which imposed a tax of 6 cents
a gallon on lubricating oil (other than cutting oils) sold in the United
States by the manufacturer or producer to be paid by the manufacturer or
producer, was repealed by Pub. L. 97-424, title V, 515(a), (c), Jan.
6, 1983, 96 Stat. 2181, applicable with respect to articles sold after
Jan. 6, 1983.
1991 -- Subsec. (b)(6)(A). Pub. L. 102-240 substituted ''1999'' for
''1995''.
1990 -- Subsec. (b)(1)(A)(i). Pub. L. 101-508, 11211(b)(1)(A),
inserted ''and the diesel fuel deficit reduction rate'' after
''financing rate''.
Subsec. (b)(2). Pub. L. 101-508, 11211(b)(2), substituted ''17.5
cents'' for ''15 cents''.
Subsec. (b)(3). Pub. L. 101-508, 11213(b)(1), substituted ''17.5
cents'' for ''14 cents'' and inserted ''except as provided in subsection
(d),'' after ''paragraph (1),''.
Subsec. (b)(4) to (6). Pub. L. 101-508, 11211(b)(1)(B), added par.
(4) and redesignated former pars. (4) and (5) as (5) and (6),
respectively.
Subsec. (b)(6)(A). Pub. L. 101-508, 11211(c)(4), substituted
''1995'' for ''1993''.
Subsec. (b)(6)(B). Pub. L. 101-508, 11213(d)(2)(A), substituted
''January 1, 1996'' for ''January 1, 1991''.
Subsec. (b)(6)(D). Pub. L. 101-508, 11211(b)(1)(C), added subpar.
(D).
Subsec. (c)(1). Pub. L. 101-508, 11211(b)(6)(A), substituted ''12.1
cents'' for ''9 cents'' in subpar. (A), ''13.44 cents'' for ''10
cents'' in subpar. (B), and ''and the diesel fuel deficit reduction
rate shall be 10/9th of the otherwise applicable such rates'' for
''shall be 1/9 cent per gallon'' in last sentence.
Subsec. (c)(2). Pub. L. 101-508, 11704(a)(38), amended Pub. L.
100-647, 2001(d)(6)(C). See 1988 Amendment note below.
Pub. L. 101-508, 11211(b)(6)(B), substituted ''12.1 cents'' for ''9
cents''.
Subsec. (c)(3). Pub. L. 101-508, 11211(e)(4), substituted ''2000''
for ''1993''.
Subsec. (d). Pub. L. 101-508, 11213(b)(2)(C)(ii), substituted
''Reduced rate of'' for ''Exemption from'' in heading.
Subsec. (d)(1). Pub. L. 101-508, 11213(b)(2)(C)(i), amended par.
(1) generally. Prior to amendment, par. (1) read as follows: ''The
Airport and Airway Trust Fund financing rate shall not apply to the sale
of --
''(A) any mixture of aviation fuel at least 10 percent of which
consists of alcohol (as defined in section 4081(c)(3)), or
''(B) any aviation fuel for use (at the time of such sale) in
producing a mixture described in subparagraph (A).''
Subsec. (d)(2). Pub. L. 101-508, 11213(b)(2)(C)(i), amended par.
(2) generally. Prior to amendment, par. (2) read as follows: ''If any
person separates the aviation fuel from a mixture of the aviation fuel
and alcohol on which the Airport and Airway Trust Fund financing rate
did not apply by reason of this subsection (or with respect to which a
credit or payment was allowed or made by reason of section 6427(f)(2)),
such person shall be treated as the producer of such aviation fuel.''
Subsec. (d)(3). Pub. L. 101-508, 11211(e)(4), substituted ''2000''
for ''1993''.
Subsec. (e). Pub. L. 101-508, 11213(b)(2)(D), added subsec. (e).
1988 -- Subsec. (b)(4). Pub. L. 100-647, 2001(d)(6)(B), inserted
''except as provided in subsection (c),'' after ''paragraph (1),''.
Subsec. (c)(1). Pub. L. 100-647, 2001(d)(6)(A), inserted sentence at
end providing that Leaking Underground Storage Tank Trust Fund financing
rate shall be 1/9 cent per gallon in the case of a sale described in
subparagraph (B).
Subsec. (c)(2). Pub. L. 100-647, 2001(d)(6)(C), as amended by Pub.
L. 101-508, 11704(a)(38), substituted ''reduced by the amount of tax
imposed (and not credited or refunded) on any prior sale of such fuel''
for ''5 cents per gallon''.
1987 -- Subsec. (b)(5)(B). Pub. L. 100-203, 10502(g), substituted
''1991'' for ''1988''.
Amendment by section 11211(b)(1), (2), (6)(A), (B) of Pub. L.
101-508 effective Dec. 1, 1990, see section 11211(b)(7) of Pub. L.
101-508, set out as a note under section 4041 of this title.
Amendment by section 11213(b)(1), (2)(C), (D) of Pub. L. 101-508
effective Dec. 1, 1990, see section 11213(b)(4) of Pub. L. 101-508,
set out as a note under section 4041 of this title.
Section 2001(d)(6)(D) of Pub. L. 100-647 provided that: ''The
amendments made by this paragraph (amending this section) shall take
effect as if included in the amendments made by section 10502 of the
Revenue Act of 1987 (Pub. L. 100-203).''
Section 10502(g) of Pub. L. 100-203 provided that: ''If the Airport
and Airway Safety and Capacity Expansion Act of 1987 is enacted (enacted
as Pub. L. 100-223), effective on December 31, 1987, sections
4091(b)(5)(B) and 9502(b)(3) of such Code (this title) (as added by this
section) are each amended by striking out 'January 1, 1988' and
inserting in lieu thereof 'January 1, 1991'.''
Subpart applicable to sales after Mar. 31, 1988, see section
10502(e) of Pub. L. 100-203, set out as an Effective Date of 1987
Amendment note under section 40 of this title.
Imposition of tax on gasoline and diesel fuel, rate of tax, liability
for tax and method of payment, definitions, exception for exempt uses,
exception for fuel held in vehicle tank, exception for certain amounts
of fuel, other laws applicable, and transfer of portion of floor stocks
revenue to Highway Trust Fund, see section 11211(j) of Pub. L. 101-508,
set out as a note under section 4081 of this title.
Imposition of tax on aviation fuel, rate of tax, liability for tax
and method of payment, definitions, exception for exempt uses, and other
laws applicable, see section 11213(b)(5) of Pub. L. 101-508, set out as
a note under section 4041 of this title.
Section 10502(f) of Pub. L. 100-203 provided that:
''(1) Imposition of tax. -- On any taxable fuel which on April 1,
1988, is held by a taxable person, there is hereby imposed a floor
stocks tax at the rate of tax which would be imposed if such fuel were
sold on such date in a sale subject to tax under section 4091 of the
Internal Revenue Code of 1986 (as added by this section).
''(2) Overpayment of floor stocks taxes, etc. -- Sections 6416 and
6427 of such Code shall apply in respect of the floor stocks taxes
imposed by this subsection so as to entitle, subject to all provisions
of such sections, any person paying such floor stocks taxes to a credit
or refund thereof for any reason specified in such sections. All
provisions of law, including penalties, applicable with respect to the
taxes imposed by section 4091 of such Code (as so added) shall apply to
the floor stocks taxes imposed by this subsection.
''(3) Due date of tax. -- The taxes imposed by this subsection shall
be paid before June 16, 1988.
''(4) Definitions. -- For purposes of this subsection --
''(A) Taxable fuel. --
''(i) In general. -- The term 'taxable fuel' means any taxable fuel
(as defined in section 4092 of such Code, as added by this section) on
which no tax has been imposed under section 4041 of such Code.
''(ii) Exception for fuel held for nontaxable uses. -- The term
'taxable fuel' shall not include fuel held exclusively for any use which
is a nontaxable use (as defined in section 6427(l) of such Code, as
added by this section).
''(B) Taxable person. -- The term 'taxable person' means any person
other than a producer (as defined in section 4092 of such Code, as so
added) or importer of taxable fuel.
''(C) Held by a taxable person. -- An article shall be treated as
held by a person if title thereto has passed to such person (whether or
not delivery to such person has been made).
''(5) Special rule for fuel held for use in trains and commercial
aircraft. -- Only the Leaking Underground Storage Tank Trust Fund
financing rate under section 4091 of such Code shall apply for purposes
of this subsection with respect to --
''(A) diesel fuel held exclusively for use as a fuel in a
diesel-powered train, and
''(B) aviation fuel held exclusively for use as a fuel in an aircraft
not in noncommercial aviation (as defined in section 4041(c)(4) of such
Code).
''(6) Transfer of floor stock revenues to trust funds. -- For
purposes of determining the amount transferred to any trust fund, the
tax imposed by this subsection shall be treated as imposed by section
4091 of such Code (as so added).''
26 USC 4092. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Taxable fuel
For purposes of this subpart --
(1) In general
The term ''taxable fuel'' means --
(A) diesel fuel, and
(B) aviation fuel.
(2) Diesel fuel
The term ''diesel fuel'' means any liquid (other than any product
taxable under section 4081) which is suitable for use as a fuel in a
diesel-powered highway vehicle or a diesel-powered train.
(3) Aviation fuel
The term ''aviation fuel'' means any liquid (other than any product
taxable under section 4081) which is suitable for use as a fuel in an
aircraft.
(b) Producer
For purposes of this subpart --
(1) Certain persons treated as producers
(A) In general
The term ''producer'' includes any person described in subparagraph
(B) who elects to register under section 4101 with respect to the tax
imposed by section 4091.
(B) Persons described
A person is described in this subparagraph if such person is --
(i) a refiner, compounder, blender, or wholesale distributor of a
taxable fuel, or
(ii) a dealer selling any taxable fuel exclusively to producers of
such taxable fuel, or
(iii) a retailer selling diesel fuel exclusively to purchasers as
supplies for commercial and noncommercial vessels.
To the extent provided in regulations, a retailer shall not be
treated as not described in clause (iii) by reason of selling de minimis
amounts of diesel fuel other than as supplies for commercial and
noncommercial vessels.
(C) Tax-free purchasers treated as producers
Any person to whom any taxable fuel is sold tax-free under this
subpart shall be treated as the producer of such fuel.
(2) Wholesale distributor
For purposes of paragraph (1), the term ''wholesale distributor''
includes any person who sells a taxable fuel to producers, retailers, or
to users who purchase in bulk quantities and deliver into bulk storage
tanks. Such term does not include any person who (excluding the term
''wholesale distributor'' from paragraph (1)) is a producer or importer.
(Added Pub. L. 100-203, title X, 10502(a), Dec. 22, 1987, 101 Stat.
1330-440; amended Pub. L. 100-647, title III, 3003(a), Nov. 10, 1988,
102 Stat. 3616.)
A prior section 4092, acts Aug. 16, 1954, ch. 736, 68A Stat. 484;
Aug. 11, 1955, ch. 793, 1(b), 69 Stat. 676; Nov. 9, 1978, Pub. L.
95-618, title IV, 404(b), 92 Stat. 3205, which provided for certain
vendees to be considered as manufacturers and defined ''cutting oils'',
was repealed by Pub. L. 97-424, title V, 515(a), (c), Jan. 6, 1983,
96 Stat. 2181, applicable with respect to articles sold after Jan. 6,
1983.
1988 -- Subsec. (b)(1)(B). Pub. L. 100-647 added cl. (iii) and
sentence at end providing that a retailer shall not be treated as not
described in cl. (iii) by reason of selling de minimis amounts of
diesel fuel other than as supplies for commercial and noncommercial
vessels.
Section 3003(b) of Pub. L. 100-647 provided that: ''The amendments
made by this section (amending this section) shall apply to sales after
December 31, 1988.''
26 USC 4093. Exemptions; special rule
TITLE 26 -- INTERNAL REVENUE CODE
(a) Heating oil
The tax imposed by section 4091 shall not apply in the case of sales
of any taxable fuel which the Secretary determines is destined for use
as heating oil.
(b) Sales to producer
Under regulations prescribed by the Secretary, the tax imposed by
section 4091 shall not apply in the case of sales of a taxable fuel to a
producer of such fuel.
(c) Exemption for nontaxable uses and bus uses
(1) In general
No tax shall be imposed by section 4091 on fuel sold by a producer or
importer for use by the purchaser in a nontaxable use (as defined in
section 6427(l)(2)) or a use described in section 6427(b)(1).
(2) Exceptions
(A) Certain Leaking Underground Storage Tank Trust Fund taxes
In the case of fuel sold for use in --
(i) a diesel-powered train, and
(ii) an aircraft,
paragraph (1) shall not apply to so much of the tax imposed by
section 4091 as is attributable to the Leaking Underground Storage Tank
Trust Fund financing rate imposed by such section.
(B) Deficit reduction tax on fuel used in trains
In the case of fuel sold for use in a diesel-powered train, paragraph
(1) also shall not apply to so much of the tax imposed by section 4091
as is attributable to the diesel fuel deficit reduction rate imposed by
such section.
(C) Certain bus uses
Paragraph (1) shall not apply to so much of the tax imposed by
section 4091 as is not refundable by reason of the application of
section 6427(b)(2)(A).
(3) Registration required
Except to the extent provided by the Secretary, paragraph (1) shall
not apply to any sale unless --
(A) both the seller and the purchaser are registered under section
4101, and
(B) the purchaser's name, address, and registration number under such
section are provided to the seller.
(4) Information reporting
(A) Returns by producers and importers
Each producer or importer who makes a reduced-tax sale during the
calendar year shall make a return (at such time and in such form as the
Secretary may by regulations prescribe) showing with respect to each
such sale --
(i) the name, address, and registration number under section 4101 of
the purchaser,
(ii) the amount of fuel sold, and
(iii) such other information as the Secretary may require.
(B) Statements to purchasers
Every person required to make a return under subparagraph (A) shall
furnish to each purchaser whose name is required to be set forth on such
return a written statement showing the name and address of the person
required to make such return, the registration number under section 4101
of such person, and the information required to be shown on the return
with respect to such purchaser. The written statement required under
the preceding sentence shall be furnished to the purchaser on or before
January 31 of the year following the calendar year for which the return
under subparagraph (A) is required to be made.
(C) Returns by purchasers
Each person who uses during the calendar year fuel purchased in a
reduced-tax sale shall make a return (at such time and in such form as
the Secretary may by regulations prescribe) showing --
(i) whether such use was a nontaxable use (as defined in section
6427(l)(2)) or a use described in section 6427(b)(1) and the amount of
fuel so used,
(ii) the date of the sale of the fuel so used,
(iii) the name, address, and registration number under section 4101
of the seller, and
(iv) such other information as the Secretary may require.
(D) Reduced-tax sale
For purposes of this paragraph, the term ''reduced-tax sale'' means
any sale of taxable fuel on which the amount of tax otherwise required
to be paid under section 4091 is reduced by reason of paragraph (1)
(other than sales described in subsections (a) and (b) of this section).
(d) Certain aviation fuel sales
Under regulations prescribed by the Secretary, the Leaking
Underground Storage Tank Trust Fund financing rate under section 4091
shall not apply to aviation fuel sold for use or used as supplies for
vessels or aircraft (within the meaning of section 4221(d)(3)).
(e) Cross references
(1) For imposition of tax where certain uses of diesel fuel or
aviation fuel occur before imposition of tax by section 4091, see
subsections (a)(1) and (c)(1) of section 4041.
(2) For provisions allowing a credit or refund for fuel not used for
certain taxable purposes, see section 6427.
(Added Pub. L. 100-203, title X, 10502(a), Dec. 22, 1987, 101 Stat.
1330-440; amended Pub. L. 100-647, title II, 2004(s)(1), title III,
3001(a), Nov. 10, 1988, 102 Stat. 3609, 3613; Pub. L. 101-508, title
XI, 11211(b)(4)(A), 11212(b)(4), 11704(a)(20), Nov. 5, 1990, 104 Stat.
1388-425, 1388-431, 1388-519.)
A prior section 4093, acts Aug. 16, 1954, ch. 736, 68A Stat. 484;
Oct. 4, 1976, Pub. L. 94-455, title XIX, 1906(b)(13)(A), 90 Stat.
1834; Nov. 9, 1978, Pub. L. 95-618, title IV, 404(a), 92 Stat. 3204,
which exempted from tax imposed by former section 4091 of this title
lubricating oils sold to a manufacturer or producer of lubricating oils
for resale, or for certain uses of lubricating oil in producing
rerefined oil, was repealed by Pub. L. 97-424, title V, 515(a), (c),
Jan. 6, 1983, 96 Stat. 2181, applicable with respect to articles sold
after Jan. 6, 1983.
A prior section 4094, added Pub. L. 89-44, title II, 202(c)(1)(A),
June 21, 1965, 79 Stat. 139, which provided cross reference to sections
39 and 6424 of this title for provisions to relieve purchasers of
lubricating oil from excise tax in the case of lubricating oil used
otherwise than in a highway motor vehicle, was repealed by Pub. L.
97-424, title V, 515(a), (c), Jan. 6, 1983, 96 Stat. 2181, applicable
with respect to articles sold after Jan. 6, 1983.
1990 -- Subsec. (c)(2)(B), (C). Pub. L. 101-508, 11211(b)(4)(A),
added subpar. (B) and redesignated former subpar. (B) as (C).
Subsec. (c)(4)(D). Pub. L. 101-508, 11704(a)(20), substituted
''reduced-tax sale'' for ''reduced tax sale''.
Subsecs. (e), (f). Pub. L. 101-508, 11212(b)(4), redesignated
subsec. (f) as (e) and struck out former subsec. (e) which read as
follows: ''The Secretary may require --
''(1) information reporting by each remitter of the tax imposed by
section 4091, and
''(2) information reporting by, and registration of, such other
persons as the Secretary deems necessary to carry out this subpart.''
1988 -- Subsec. (c). Pub. L. 100-647, 3001(a), substituted present
heading for ''Authority to exempt certain other uses'' and amended text
generally. Prior to amendment, text read as follows: ''Subject to such
terms and conditions as the Secretary may provide (including the
application of section 4101), the Secretary may by regulation provide
that --
''(1) the Highway Trust Fund financing rate under section 4091 shall
not apply to diesel fuel sold for use by any purchaser as a fuel in a
diesel-powered train,
''(2) the Airport and Airway Trust Fund financing rate under section
4091 shall not apply to aviation fuel sold for use by any purchaser as a
fuel in an aircraft not in noncommercial aviation (as defined in section
4041(c)(4)),
''(3) the tax imposed by section 4091 shall not apply to taxable fuel
sold for use by any purchaser other than as a motor fuel, and
''(4) the tax imposed by section 4091 shall not apply to taxable fuel
sold for the exclusive use of any State, any political subdivision of a
State, or the District of Columbia.''
Subsecs. (d) to (f). Pub. L. 100-647, 2004(s)(1), added subsec.
(d) and redesignated former subsecs. (d) and (e) as (e) and (f),
respectively.
Amendment by section 11211(b)(4)(A) of Pub. L. 101-508 effective
Dec. 1, 1990, see section 11211(b)(7) of Pub. L. 101-508, set out as a
note under section 4041 of this title.
Amendment by section 11212(b)(4) of Pub. L. 101-508 effective Dec.
1, 1990, see section 11212(f)(2) of Pub. L. 101-508, set out as a note
under section 4081 of this title.
Amendment by section 2004(s)(1) of Pub. L. 100-647 effective, except
as otherwise provided, as if included in the provisions of the Revenue
Act of 1987, Pub. L. 100-203, title X, to which such amendment relates,
see section 2004(u) of Pub. L. 100-647, set out as a note under section
56 of this title.
Section 3001(c) of Pub. L. 100-647 provided that:
''(1) In general. -- The amendments made by this section (amending
this section and sections 6724 and 7232 of this title) shall take effect
on January 1, 1989.
''(2) Refunds with interest for pre-effective date purchases. --
''(A) In general. -- In the case of fuel --
''(i) which is purchased from a producer or importer during the
period beginning on April 1, 1988, and ending on December 31, 1988,
''(ii) which is used (before the claim under this subparagraph is
filed) by any person in a nontaxable use (as defined in section
6427(l)(2) of the 1986 Code), and
''(iii) with respect to which a claim is not permitted to be filed
for any quarter under section 6427(i) of the 1986 Code,
the Secretary of the Treasury or the Secretary's delegate shall pay
(with interest) to such person the amount of tax imposed on such fuel
under section 4091 of the 1986 Code (to the extent not attributable to
amounts described in section 6427(l)(3) of the 1986 Code) if claim
therefor is filed not later than June 30, 1989. Not more than 1 claim
may be filed under the preceding sentence and such claim shall not be
taken into account under section 6427(i) of the 1986 Code. Any claim
for refund filed under this paragraph shall be considered a claim for
refund under section 6427(l) of the 1986 Code.
''(B) Interest. -- The amount of interest payable under subparagraph
(A) shall be determined under section 6611 of the 1986 Code except that
the date of the overpayment with respect to fuel purchased during any
month shall be treated as being the 1st day of the succeeding month. No
interest shall be paid under this paragraph with respect to fuel used by
any agency of the United States.
''(C) Registration procedures required to be specified. -- Not later
than the 30th day after the date of the enactment of this Act (Nov. 10,
1988), the Secretary of the Treasury or the Secretary's delegate shall
prescribe the procedures for complying with the requirements of section
4093(c)(3) of the 1986 Code (as added by this section).''
26 USC Subpart C -- Special Provisions Applicable to Petroleum Products
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4101. Registration and bond.
4102. Inspection of records by local officers.
4103. Certain additional persons liable for tax where willful
failure to pay.
1990 -- Pub. L. 101-508, title XI, 11212(e)(3), Nov. 5, 1990, 104
Stat. 1388-432, added item 4103.
1986 -- Pub. L. 99-514, title XVII, 1703(b)(2), Oct. 22, 1986, 100
Stat. 2776, substituted ''Registration and bond'' for ''Registration''
in item 4101.
1976 -- Pub. L. 94-455, title XII, 1202(c)(2), Oct. 4, 1976, 90
Stat. 1686, substituted ''Inspection of records by local officers'' for
''Inspection of records, returns, etc., by local officers'' in item
4102.
1965 -- Pub. L. 89-44, title VIII, 802(b)(5), June 21, 1965, 79
Stat. 159, struck out ''and bond'' after ''Registration'' in item 4101.
26 USC 4101. Registration and bond
TITLE 26 -- INTERNAL REVENUE CODE
(a) Registration
Every person required by the Secretary to register under this section
with respect to the tax imposed by section 4081 or 4091 shall register
with the Secretary at such time, in such form and manner, and subject to
such terms and conditions, as the Secretary may by regulations
prescribe. A registration under this section may be used only in
accordance with regulations prescribed under this section.
(b) Bonds and liens
(1) In general
Under regulations prescribed by the Secretary, the Secretary may
require, as a condition of permitting any person to be registered under
subsection (a), that such person --
(A) give a bond in such sum as the Secretary determines appropriate,
and
(B) agree to the imposition of a lien --
(i) on such property (or rights to property) of such person used in
the trade or business for which the registration is sought, or
(ii) with the consent of such person, on any other property (or
rights to property) of such person as the Secretary determines
appropriate.
Rules similar to the rules of section 6323 shall apply to the lien
imposed pursuant to this paragraph.
(2) Release or discharge of lien
If a lien is imposed pursuant to paragraph (1), the Secretary shall
issue a certificate of discharge or a release of such lien in connection
with a transfer of the property if there is furnished to the Secretary
(and accepted by him) a bond in such sum as the Secretary determines
appropriate or the transferor agrees to the imposition of a substitute
lien under paragraph (1)(B) in such sum as the Secretary determines
appropriate. The Secretary shall respond to any request to discharge or
release a lien imposed pursuant to paragraph (1) in connection with a
transfer of property not later than 90 days after the date the request
for such a discharge or release is made.
(c) Denial, revocation, or suspension of registration
Rules similar to the rules of section 4222(c) shall apply to
registration under this section.
(d) Information reporting
The Secretary may require --
(1) information reporting by any person registered under this
section, and
(2) information reporting by such other persons as the Secretary
deems necessary to carry out this part.
(Aug. 16, 1954, ch. 736, 68A Stat. 484; June 21, 1965, Pub. L.
89-44, title VIII, 802(b)(2), 79 Stat. 159; Oct. 4, 1976, Pub. L.
94-455, title XIX, 1906(b)(13)(A), 90 Stat. 1834; Jan. 6, 1983, Pub.
L. 97-424, title V, 515(b)(8), 96 Stat. 2182; Oct. 22, 1986, Pub. L.
99-514, title XVII, 1703(b)(1), 100 Stat. 2776; Dec. 22, 1987, Pub.
L. 100-203, title X, 10502(d)(3), 101 Stat. 1330-444; Nov. 5, 1990,
Pub. L. 101-508, title XI, 11212(b)(1), 104 Stat. 1388-430.)
1990 -- Pub. L. 101-508 amended section generally. Prior to
amendment, section read as follows:
''(a) Registration. -- Every person subject to tax under section 4081
or 4091 shall, before incurring any liability for tax under such
section, register with the Secretary.
''(b) Bond. -- Under regulations prescribed by the Secretary, every
person who registers under subsection (a) may be required to give a bond
in such sum as the Secretary determines.''
1987 -- Subsec. (a). Pub. L. 100-203 inserted ''or 4091'' after
''section 4081''.
1986 -- Pub. L. 99-514 amended section generally, substituting
''Registration and bond'' for ''Registration'' in section catchline,
designating existing provisions as subsec. (a), inserting subsec. (a)
heading, and adding subsec. (b).
1983 -- Pub. L. 97-424 struck out ''or section 4091'' after
''4081''.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
1965 -- Pub. L. 89-44 struck out all references to a bond to be
given and its terms and requirements.
Amendment by Pub. L. 101-508 effective Dec. 1, 1990, see section
11212(f)(2) of Pub. L. 101-508, set out as a note under section 4081 of
this title.
Amendment by Pub. L. 100-203 applicable to sales after Mar. 31,
1988, see section 10502(e) of Pub. L. 100-203, set out as a note under
section 40 of this title.
Amendment by Pub. L. 99-514 applicable to gasoline removed (as
defined in section 4082 of this title as amended by section 1703 of Pub.
L. 99-514) after Dec. 31, 1987, see section 1703(h) of Pub. L.
99-514, set out as a note under section 4081 of this title.
Amendment by Pub. L. 97-424 applicable to articles sold after Jan.
6, 1983, see section 515(c) of Pub. L. 97-424, set out as a note under
section 34 of this title.
Amendment by Pub. L. 89-44 applicable with respect to articles sold
on or after July 1, 1965, see section 802(d)(1) of Pub. L. 89-44, set
out as a note under section 4082 of this title.
26 USC 4102. Inspection of records by local officers
TITLE 26 -- INTERNAL REVENUE CODE
Under regulations prescribed by the Secretary, records required to be
kept with respect to taxes under this part shall be open to inspection
by such officers of a State, or a political subdivision of any such
State, as shall be charged with the enforcement or collection of any tax
on gasoline.
(Aug. 16, 1954, ch. 736, 68A Stat. 484; Oct. 4, 1976, Pub. L.
94-455, title XII, 1202(c)(1), 90 Stat. 1686; Jan. 6, 1983, Pub. L.
97-424, title V, 515(b)(9), 96 Stat. 2182.)
Prior sections 4111 to 4113, 4121, and 4131 of this title constituted
a former subchapter B of this chapter, see Prior Provisions note set out
preceding section 4121 of this title.
1983 -- Pub. L. 97-424 struck out ''or lubricating oils'' after
''gasoline''.
1976 -- Pub. L. 94-455 struck out ''returns, etc.'' after
''Inspection of records'', ''or his delegate'' after ''Secretary'',
''and returns, reports, and statements with respect to such taxes filed
with the Secretary or his delegate'' after ''under this part'',
substituted ''or a political subdivision of any such State'' for ''or,
Territory or political subdivision thereof or the District of Columbia''
after ''of any State'', and struck out provision relating to
availability and fee for certified copies of statements, returns, or
reports filed in Secretary's office.
Amendment by Pub. L. 97-424 applicable to articles sold after Jan.
6, 1983, see section 515(c) of Pub. L. 97-424, set out as a note under
section 34 of this title.
Amendment by Pub. L. 94-455 effective Jan. 1, 1977, see section
1202(i) of Pub. L. 94-455, set out as a note under section 6103 of this
title.
26 USC 4103. Certain additional persons liable for tax where willful
failure to pay
TITLE 26 -- INTERNAL REVENUE CODE
In any case in which there is a willful failure to pay the tax
imposed by section 4081 or 4091, each person --
(1) who is an officer, employee, or agent of the taxpayer who is
under a duty to assure the payment of such tax and who willfully fails
to perform such duty, or
(2) who willfully causes the taxpayer to fail to pay such tax,
shall be jointly and severally liable with the taxpayer for the tax
to which such failure relates.
(Added Pub. L. 101-508, title XI, 11212(c), Nov. 5, 1990, 104 Stat.
1388-431.)
Section effective Dec. 1, 1990, see section 11212(f)(2) of Pub. L.
101-508, set out as an Effective Date of 1990 Amendment note under
section 4081 of this title.
26 USC Subchapter B -- Coal
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4121. Imposition of tax.
A prior subchapter B consisted of sections 4111 to 4113, 4121, and
4131 of this title.
Section 4111, acts Aug. 16, 1954, ch. 736, 68A Stat. 485; Sept.
2, 1958, Pub. L. 85-859, title I, 111(a), 72 Stat. 1277, which
imposed a manufacturers excise tax of 5 percent on household type
refrigerators, quick freeze or frozen storage units, or combinations,
and a tax of 10 percent on self-contained air-conditioning units, was
repealed by Pub. L. 89-44, title II, 203, June 21, 1965, 79 Stat.
139, applicable with respect to articles sold on or after June 22, 1956.
Section 4112, acts Aug. 16, 1954, ch. 736, 68A Stat. 485; Aug.
11, 1955, ch. 805, 1(e), 69 Stat. 689, which defined refrigerator
components, was repealed by Pub. L. 85-859, title I, 111(b)(1), Sept.
2, 1958, 72 Stat. 1277, effective the first day of the first calendar
quarter beginning more than 60 days after Sept. 2, 1958.
Section 4113, act Aug. 16, 1954, ch. 736, 68A Stat. 485, which
related to exemptions for manufacturers of refrigerator components, was
repealed by act Aug. 11, 1955, ch. 805, 1(d), 69 Stat. 689,
effective on the first day of the first month beginning more than 10
days after Aug. 11, 1955.
Section 4121, acts Aug. 16, 1954, ch. 736, 68A Stat. 486; Sept.
2, 1958, Pub. L. 85-859, title I, 112, 72 Stat. 1277, which imposed a
5 percent tax on electric, gas, and oil household appliances and their
accessories, was repealed by Pub. L. 89-44, title II, 203, June 21,
1965, 79 Stat. 139, applicable with respect to articles sold on or
after June 22, 1965.
Section 4131, act Aug. 16, 1954, ch. 736, 68A Stat. 486, which
imposed a 10 percent tax on electric light bulbs and tubes, was repealed
by Pub. L. 89-44, title II, 203, June 21, 1965, 79 Stat. 139,
applicable with respect to articles sold on or after Jan. 1, 1965.
26 USC 4121. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax imposed
(1) In general
There is hereby imposed on coal from mines located in the United
States sold by the producer, a tax equal to the rate per ton determined
under subsection (b).
(2) Limitation on tax
The amount of the tax imposed by paragraph (1) with respect to a ton
of coal shall not exceed the applicable percentage (determined under
subsection (b)) of the price at which such ton of coal is sold by the
producer.
(b) Determination of rates and limitation on tax
For purposes of subsection (a) --
(1) the rate of tax on coal from underground mines shall be $1.10,
(2) the rate of tax on coal from surface mines shall be $.55, and
(3) the applicable percentage shall be 4.4 percent.
(c) Tax not to apply to lignite
The tax imposed by subsection (a) shall not apply in the case of
lignite.
(d) Definitions
For purposes of this subchapter --
(1) Coal from surface mines
Coal shall be treated as produced from a surface mine if all of the
geological matter above the coal being mined is removed before the coal
is extracted from the earth. Coal extracted by auger shall be treated
as coal from a surface mine.
(2) Coal from underground mines
Coal shall be treated as produced from an underground mine if it is
not produced from a surface mine.
(3) United States
The term ''United States'' has the meaning given to it by paragraph
(1) of section 638.
(4) Ton
The term ''ton'' means 2,000 pounds.
(e) Reduction in amount of tax
(1) In general
Effective with respect to sales after the temporary increase
termination date, subsection (b) shall be applied --
(A) by substituting ''$.50'' for ''$1.10'',
(B) by substituting ''$.25'' for ''$.55'', and
(C) by substituting ''2 percent'' for ''4.4 percent''.
(2) Temporary increase termination date
For purposes of paragraph (1), the temporary increase termination
date is the earlier of --
(A) January 1, 2014, or
(B) the first January 1 after 1981 as of which there is --
(i) no balance of repayable advances made to the Black Lung
Disability Trust Fund, and
(ii) no unpaid interest on such advances.
(Added Pub. L. 95-227, 2(a), Feb. 10, 1978, 92 Stat. 11; amended
Pub. L. 97-119, title I, 102(a), Dec. 29, 1981, 95 Stat. 1635; Pub.
L. 99-272, title XIII, 13203(a), (c), Apr. 7, 1986, 100 Stat. 312, 313;
Pub. L. 99-514, title XVIII, 1897(a), Oct. 22, 1986, 100 Stat. 2941;
Pub. L. 100-203, title X, 10503, Dec. 22, 1987, 101 Stat. 1330-446.)
For prior section 4121, see Prior Provisions note set out preceding
this section.
1987 -- Subsec. (e)(2)(A). Pub. L. 100-203 substituted ''2014'' for
''1996''.
1986 -- Subsec. (a). Pub. L. 99-272, 13203(a), amended subsec. (a)
generally. Prior to amendment subsec. (a) read as follows: ''There is
hereby imposed on coal sold by the producer a tax at the rates of --
''(1) 50 cents per ton in the case of coal from underground mines
located in the United States, and
''(2) 25 cents per ton in the case of coal from surface mines located
in the United States.''
Subsec. (b). Pub. L. 99-514 struck out '', in the case of sales
during any calendar year beginning after December 31, 1985'' after
''subsection (a)''.
Pub. L. 99-272, 13203(a), amended subsec. (b) generally. Prior to
amendment subsec. (b), limitation on tax, read as follows: ''The
amount of the tax imposed by subsection (a) with respect to a ton of
coal shall not exceed 2 percent of the price at which such ton of coal
is sold by the producer.''
Subsec. (e). Pub. L. 99-272, 13203(c), substituted ''Reduction in
amount of tax'' for ''Temporary increase in amount of tax'' in heading
and amended par. (1) generally. Prior to amendment par. (1) read as
follows: ''Effective with respect to sales after December 31, 1981, and
before the temporary increase termination date --
''(A) subsection (a) shall be applied --
''(i) by substituting '$1' for '50 cents', and
''(ii) by substituting '50 cents' for '25 cents', and
''(B) subsection (b) shall be applied by substituting '4 percent' for
'2 percent'.''
1981 -- Subsec. (e). Pub. L. 97-119 added subsec. (e).
Section 1897(b) of Pub. L. 99-514 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect as if
included in the amendment made by section 13203 of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (section 13203 of Pub. L.
99-272, see note below).''
Section 13203(d) of Pub. L. 99-272 provided that: ''The amendments
made by this section (amending this section) shall apply to sales after
March 31, 1986.''
Section 102(b) of Pub. L. 97-119 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to sales
after December 31, 1981.''
Section 2(d) of Pub. L. 95-227 provided that: ''The amendments made
by this section (enacting this section and amending sections 4218, 4221,
4293, and 6416 of this title) shall apply with respect to sales after
March 31, 1978.''
Section 5 of Pub. L. 95-227 provided that: ''Notwithstanding any
other provision of this Act (see Short Title of 1978 Amendment note set
out under section 1 of this title) to the contrary, no provision of this
Act (including any amendment made by any such provision) shall take
effect or apply unless an Act, enacted after the date of enactment of
this Act (Feb. 10, 1978), contains a provision, explicitly in
satisfaction of the requirements of this section, which states that it
is the intent of the Congress that the provisions of this Act shall take
effect.''
(Pub. L. 95-239, 20(c), Mar. 1, 1978, 92 Stat. 106, provided that:
''In accordance with the requirements of section 5 of the Black Lung
Benefits Revenue Act of 1977 (Pub. L. 95-227, set out above), it is
hereby provided that such Act shall take effect in accordance with the
provisions of such Act. The provisions of this subsection are hereby
deemed to be in explicit satisfaction of the requirements of section 5
of such Act.'')
For short title of Pub. L. 95-227, Feb. 10, 1978, 92 Stat. 11, as
the ''Black Lung Benefits Revenue Act of 1977'', see Short Title of 1978
Amendments note set out under section 1 of this title.
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
26 USC Subchapter C -- Certain Vaccines
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4131. Imposition of tax.
4132. Definitions and special rules.
A prior subchapter C consisted of sections 4141 to 4143, 4151, and
4152 of this title.
Section 4141, acts Aug. 16, 1954, ch. 736, 68A Stat. 487; Aug.
11, 1955, ch. 805, 2(a), 69 Stat. 690; Sept. 2, 1958, Pub. L.
85-859, title I, 113(a), 72 Stat. 1278, which imposed a tax equivalent
to 10 percent of selling price on radio and television receiving sets,
phonographs, radio, television, and phonograph combinations, components,
and phonograph records, was repealed by Pub. L. 89-44, title II, 204,
June 21, 1965, 79 Stat. 140, applicable with respect to articles sold
on or after June 22, 1965.
Section 4142, acts Aug. 16, 1954, ch. 736, 68A Stat. 487; Sept.
2, 1958, Pub. L. 85-859, title I, 113(a), 72 Stat. 1278; Oct. 13,
1964, Pub. L. 88-653, 6(a), 78 Stat. 1086, which defined ''radio and
television components'' and provided formula to determine selling price
of rebuilt television picture tubes, was repealed by Pub. L. 89-44,
title II, 204, June 21, 1965, 79 Stat. 140, applicable with respect to
articles sold on or after June 22, 1965.
Section 4143, Pub. L. 85-859, title I, 113(a), Sept. 2, 1958, 72
Stat. 1278, which granted an exemption for certain types of
communication, detection, and navigation equipment and components, was
repealed by Pub. L. 89-44, title II, 204, June 21, 1965, 79 Stat.
140, applicable with respect to articles sold on or after June 22, 1965.
Section 4151, act Aug. 16, 1954, ch. 736, 68A Stat. 488, which
imposed a tax equivalent to 10 percent of selling price upon the sale of
musical instruments, was repealed by Pub. L. 89-44, title II, 204,
June 21, 1965, 79 Stat. 140, applicable with respect to articles sold
on or after June 22, 1965.
Section 4152, act Aug. 16, 1954, ch. 736, 68A Stat. 488, which
related to exemption of musical instruments sold for religious or
educational use, was repealed by Pub. L. 85-859, title I, 119(b)(2),
Sept. 2, 1958, 72 Stat. 1286, effective on the first day of the first
calendar quarter which began more than 60 days after Sept. 2, 1958.
26 USC 4131. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
There is hereby imposed a tax on any taxable vaccine sold by the
manufacturer, producer, or importer thereof.
(b) Amount of tax
(1) In general
The amount of the tax imposed by subsection (a) shall be determined
in accordance with the following table:
The tax per If the taxable vaccine is: dose is:
DPT vaccine $4.56
DT vaccine 0.06
MMR vaccine 4.44
Polio vaccine 0.29.
(2) Combinations of vaccines
If any taxable vaccine is included in more than 1 category of
vaccines in the table contained in paragraph (1), the amount of the tax
imposed by subsection (a) on such vaccine shall be the sum of the
amounts determined under such table for each category in which such
vaccine is so included.
(c) Termination of tax if amounts collected exceed projected fund
liability
(1) In general
If the Secretary estimates under paragraph (3) that the Vaccine
Injury Compensation Trust Fund would not have a negative projected
balance were the tax imposed by this section to terminate as of the
close of any applicable date, no tax shall be imposed by this section
after such date.
(2) Applicable date
For purposes of paragraph (1), the term ''applicable date'' means --
(A) the close of any calendar quarter ending on or after December 31,
1992, and
(B) the 1st date on which petitions may not be filed under section
2111 and 2111(a) of the Public Health Service Act by reason of section
2134 of such Act and each date thereafter.
(3) Estimates by Secretary
(A) In general
The Secretary shall estimate the projected balance of the Vaccine
Injury Compensation Trust Fund as of --
(i) the close of each calendar quarter ending on or after December
31, 1992, and
(ii) such other times as are appropriate in the case of applicable
dates described in paragraph (2)(B).
(B) Determination of projected balance
In determining the projected balance of the Fund as of any date, the
Secretary shall assume that --
(i) the tax imposed by this section will not apply after such date,
and
(ii) there shall be paid from such Trust Fund all claims made or to
be made against such Trust Fund --
(I) with respect to vaccines administered before October 1, 1992, in
the case of an applicable date described in paragraph (2)(A), or
(II) with respect to petitions filed under section 2111 or section
2111(a) of the Public Health Service Act, in the case of an applicable
date described in paragraph (2)(B).
(Added Pub. L. 100-203, title IX, 9201(a), Dec. 22, 1987, 101 Stat.
1330-327.)
Sections 2111, 2111(a), and 2134 of the Public Health Service Act,
referred to in subsec. (c)(2)(B), (3)(B)(ii)(II), are classified to
sections 300aa-11, 300aa-11(a), and 300aa-34 of Title 42, The Public
Health and Welfare.
Section 9201(d) of Pub. L. 100-203 provided that: ''The amendments
made by this section (enacting this section and section 4132 of this
title and amending sections 4221 and 6416 of this title) shall take
effect on January 1, 1988.''
26 USC 4132. Definitions and special rules
TITLE 26 -- INTERNAL REVENUE CODE
(a) Definitions relating to taxable vaccines
For purposes of this subchapter --
(1) Taxable vaccine
The term ''taxable vaccine'' means any vaccine --
(A) which is listed in the table contained in section 4131(b)(1), and
(B) which is manufactured or produced in the United States or entered
into the United States for consumption, use, or warehousing.
(2) DPT vaccine
The term ''DPT vaccine'' means any vaccine containing pertussis
bacteria, extracted or partial cell bacteria, or specific pertussis
antigens.
(3) DT vaccine
The term ''DT vaccine'' means any vaccine (other than a DPT vaccine)
containing diphtheria toxoid or tetanus toxoid.
(4) MMR vaccine
The term ''MMR vaccine'' means any vaccine against measles, mumps, or
rubella. Not more than 1 tax shall be imposed by section 4131 on any
MMR vaccine by reason of being a vaccine against more than 1 of measles,
mumps, or rubella.
(5) Polio vaccine
The term ''polio vaccine'' means any vaccine containing polio virus.
(6) Vaccine
The term ''vaccine'' means any substance designed to be administered
to a human being for the prevention of 1 or more diseases.
(7) United States
The term ''United States'' has the meaning given such term by section
4612(a)(4).
(8) Importer
The term ''importer'' means the person entering the vaccine for
consumption, use, or warehousing.
(b) Credit or refund where vaccine returned to manufacturer, etc., or
destroyed
(1) In general
Under regulations prescribed by the Secretary, whenever any vaccine
on which tax was imposed by section 4131 is --
(A) returned (other than for resale) to the person who paid such tax,
or
(B) destroyed,
the Secretary shall abate such tax or allow a credit, or pay a refund
(without interest), to such person equal to the tax paid under section
4131 with respect to such vaccine.
(2) Claim must be filed within 6 months
Paragraph (1) shall apply to any returned or destroyed vaccine only
with respect to claims filed within 6 months after the date the vaccine
is returned or destroyed.
(3) Condition of allowance of credit or refund
No credit or refund shall be allowed or made under paragraph (1) with
respect to any vaccine unless the person who paid the tax establishes
that he --
(A) has repaid or agreed to repay the amount of the tax to the
ultimate purchaser of the vaccine, or
(B) has obtained the written consent of such purchaser to the
allowance of the credit or the making of the refund.
(4) Tax imposed only once
No tax shall be imposed by section 4131 on the sale of any vaccine if
tax was imposed by section 4131 on any prior sale of such vaccine and
such tax is not abated, credited, or refunded.
(c) Other special rules
(1) Certain uses treated as sales
Any manufacturer, producer, or importer of a vaccine which uses such
vaccine before it is sold shall be liable for the tax imposed by section
4131 in the same manner as if such vaccine were sold by such
manufacturer, producer, or importer.
(2) Treatment of vaccines shipped to United States possessions
Section 4221(a)(2) shall not apply to any vaccine shipped to a
possession of the United States.
(3) Fractional part of a dose
In the case of a fraction of a dose, the tax imposed by section 4131
shall be the same fraction of the amount of such tax imposed by a whole
dose.
(4) Disposition of revenues from Puerto Rico and the Virgin Islands
The provisions of subsections (a)(3) and (b)(3) of section 7652 shall
not apply to any tax imposed by section 4131.
(Added Pub. L. 100-203, title IX, 9201(a), Dec. 22, 1987, 101 Stat.
1330-329; amended Pub. L. 100-647, title II, 2006(a), Nov. 10, 1988,
102 Stat. 3612.)
1988 -- Subsec. (c). Pub. L. 100-647 added pars. (1) and (2) and
redesignated former pars. (1) and (2) as (3) and (4), respectively.
Section 2006(c) of Pub. L. 100-647 provided that: ''The amendments
made by this section (amending this section and section 9510 of this
title) shall take effect as if included in the amendments made by
section 9201 of the Omnibus Budget Reconciliation Act of 1987 (Pub. L.
100-203).''
26 USC Subchapter D -- Recreational Equipment
TITLE 26 -- INTERNAL REVENUE CODE
Part
I. Sporting goods.
(II. Repealed.)
III. Firearms.
1965 -- Pub. L. 89-44, title II, 205(b), June 21, 1965, 79 Stat.
140, struck out item relating to part II.
26 USC PART I -- SPORTING GOODS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4161. Imposition of tax.
4162. Definitions; treatment of certain resales.
1984 -- Pub. L. 98-369, div. A, title X, 1015(d), July 18, 1984,
98 Stat. 1019, added item 4162.
26 USC 4161. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Sport fishing equipment
(1) Imposition of tax
There is hereby imposed on the sale of any article of sport fishing
equipment by the manufacturer, producer, or importer a tax equal to 10
percent of the price for which so sold.
(2) 3 percent rate of tax for electric outboard motors and sonar
devices suitable for finding fish
(A) In general
In the case of an electric outboard motor or a sonar device suitable
for finding fish, paragraph (1) shall be applied by substituting ''3
percent'' for ''10 percent''.
(B) $30 limitation on tax imposed on sonar devices suitable for
finding fish
The tax imposed by paragraph (1) on any sonar device suitable for
finding fish shall not exceed $30.
(3) Parts or accessories sold in connection with taxable sale
In the case of any sale by the manufacturer, producer, or importer of
any article of sport fishing equipment, such article shall be treated as
including any parts or accessories of such article sold on or in
connection therewith or with the sale thereof.
(b) Bows and arrows, etc.
(1) Bows and arrows
There is hereby imposed on the sale by the manufacturer, producer, or
importer --
(A) of any bow which has a draw weight of 10 pounds or more, and
(B) of any arrow which --
(i) measures 18 inches overall or more in length, or
(ii) measures less than 18 inches overall in length but is suitable
for use with a bow described in subparagraph (A),
a tax equal to 11 percent of the price for which so sold.
(2) Parts and accessories
There is hereby imposed upon the sale by the manufacturer, producer,
or importer --
(A) of any part or accessory suitable for inclusion in or attachment
to a bow or arrow described in paragraph (1), and
(B) of any quiver suitable for use with arrows described in paragraph
(1),
a tax equivalent to 11 percent of the price for which so sold.
(3) Coordination with subsection (a)
No tax shall be imposed under this subsection with respect to any
article taxable under subsection (a).
(Aug. 16, 1954, ch. 736, 68A Stat. 489; June 21, 1965, Pub. L.
89-44, title II, 205(a), 79 Stat. 140; Oct. 25, 1972, Pub. L. 92-558,
title II, 201(a), 86 Stat. 1173; July 18, 1984, Pub. L. 98-369, div.
A, title X, 1015(a), 1017(a), (b), 98 Stat. 1017, 1021; Oct. 22,
1986, Pub. L. 99-514, title XVIII, 1899A(48), 100 Stat. 2961.)
1986 -- Subsec. (b)(1)(B)(ii). Pub. L. 99-514 substituted a comma
for the period at end.
1984 -- Subsec. (a). Pub. L. 98-369, 1015(a), in amending subsec.
(a) generally, designated existing provisions as par. (1), substituted
''any article of sport fishing equipment by the manufacturer, producer,
or importer'' for ''fishing rods, creels, reels, and artificial lures,
baits, and flies (including parts or accessories of such articles sold
on or in connection therewith, or with the sale thereof) by the
manufacturer, producer, or importer'', and added pars. (2) and (3).
Subsec. (b)(1)(B). Pub. L. 98-369, 1017(a), designated existing
provisions as cl. (i) and added cl. (ii).
Subsec. (b)(2)(A). Pub. L. 98-369, 1017(b)(2), struck out ''(other
than a fishing reel)'' after ''part or accessory''.
Subsec. (b)(3). Pub. L. 98-369, 1017(b)(1), added par. (3).
1972 -- Subsec. (a). Pub. L. 92-558, 201(a)(1), designated existing
provisions as subsec. (a) and inserted catchline.
Subsec. (b). Pub. L. 92-558, 201(a)(2), added subsec. (b).
1965 -- Pub. L. 89-44 removed 10 percent tax on equipment for
billiards, pool, bowling, trap shooting, cricket, croquet, badminton,
curling, deck tennis, golf, lacrosse, polo, skiing, squash, table
tennis, and tennis, and retained tax only for fishing equipment.
Amendment by section 1015(a) of Pub. L. 98-369 applicable with
respect to articles sold by the manufacturer, producer, or importer
after Sept. 30, 1984, see section 1015(e) of Pub. L. 98-369, set out
as an Effective Date note under section 4162 of this title.
Section 1017(c) of Pub. L. 98-369 provided that: ''The amendments
made by this section (amending this section) shall apply with respect to
articles sold by the manufacturer, producer, or importer after September
30, 1984.''
Section 201(b) of Pub. L. 92-558, as amended by Pub. L. 93-313,
June 8, 1974, 88 Stat. 238, provided that: ''The amendments made by
subsection (a) of this section (amending this section) shall apply with
respect to articles sold by the manufacturer, producer, or importer
thereof on or after January 1, 1975.''
Section 701(a) of Pub. L. 89-44 provided that:
''(1) In general. -- Except as otherwise provided in this subsection,
the amendments made by titles I and II of this Act (enacting sections
4094 and 6424 of this title, amending this section and sections 4055,
4057, 4061, 4091, 4216, 4218, 4221, 4222, 4227, 6011, 6206, 6412, 6416,
6675, 7210, 7603, 7604, and 7605 of this title, repealing sections 4001
to 4003, 4011 to 4013, 4021, 4022, 4031, 4051 to 4053, 4111, 4121, 4131,
4141 to 4143, 4151, 4171 to 4173, 4191, 4192, 4201, 4211, and 4224 of
this title, and amending provisions set out as a note under section 120
of Title 23, Highways) shall apply with respect to articles sold on or
after the day after the date of the enactment of this Act (June 21,
1965).
''(2) Special rules. -- The amendments made by sections 201(b)(2)
(amending section 4061 of this title) (relating to automobile parts and
accessories) and 202(a) (amending section 4091 of this title) (relating
to lubricating oil) shall apply with respect to articles sold on or
after January 1, 1966. The amendments made by section 202(b) (enacting
section 6424 of this title) and (c) (enacting section 4094 and amending
sections 6206, 6675, 7210, 7603, 7604, and 7605 of this title) (relating
to payments with respect to lubricating oil) shall take effect January
1, 1966. The amendments made by section 203 (repealing sections 4111,
4121, and 4131 of this title), insofar as they relate to the tax imposed
by section 4131 (relating to electric light bulbs) of the Code, and the
amendments made by section 208 (amending sections 4216, 4218, 4221,
4222, and 4227), insofar as they relate to the tax imposed by section
4061(b) (relating to automotive parts and accessories), section 4091
(relating to lubricating oil), or section 4131 (relating to electric
light bulbs) of the Code, shall apply with respect to articles sold on
or after January 1, 1966. The amendments made by section 207 (amending
sections 4216 and 6416 of this title) (relating to partial payments;
sales of installment accounts) and 209(a) (amending section 6412 of this
title) (relating to floor stocks refunds on passenger automobiles, etc.)
shall take effect on the day after the date of the enactment of this Act
(June 21, 1965). The amendments made by section 210 (amending
provisions set out as a note under section 120 of Title 23, Highways)
(relating to Highway Trust Fund) shall take effect January 1, 1966.
''(3) Installment sales, etc. -- For purposes of paragraphs (1) and
(2), an article shall not be considered sold before the day after the
date of the enactment of this Act (June 21, 1965) or before January 1,
1966, as the case may be, unless possession or right to possession
passes to the purchaser before such day or such date. In the case of --
''(A) a lease,
''(B) a contract for the sale of an article where it is provided that
the price shall be paid by installments and title to the article sold
does not pass until a future date notwithstanding partial payment by
installments,
''(C) a conditional sale, or
''(D) a chattel mortgage arrangement wherein it is provided that the
sale price shall be paid in installments,
entered into before such day or such date, payments made on or after
such day or such date with respect to the article leased or sold shall,
for purposes of this subsection, be considered as payments made with
respect to an article sold on or after such day or such date, if the
lessor or vendor establishes that the amount of payments payable on or
after such day or such date with respect to such article has been
reduced by an amount equal to the tax reduction applicable with respect
to the lease or sale of such article.
''(4) Electric light bulbs used in manufacture of articles upon which
tax is repealed. -- For purposes of applying section 4218(a) of the Code
with respect to the use of an electric light bulb or tube by the
manufacturer, producer, or importer thereof, and for purposes of
applying section 4221(d)(6)(A) of the Code with respect to the sale of
an electric light bulb or tube for use in further manufacture, an
article which was taxable under chapter 32 of the Code on the date of
the enactment of this Act (June 21, 1965) shall, during the period
beginning with the day after the date of the enactment of this Act
through December 31, 1965, be treated as an article taxable under such
chapter.''
26 USC 4162. Definitions; treatment of certain resales
TITLE 26 -- INTERNAL REVENUE CODE
(a) Sport fishing equipment defined
For purposes of this part, the term ''sport fishing equipment'' means
--
(1) fishing rods and poles (and component parts therefor),
(2) fishing reels,
(3) fly fishing lines, and other fishing lines not over 130 pounds
test,
(4) fishing spears, spear guns, and spear tips,
(5) items of terminal tackle, including --
(A) leaders,
(B) artificial lures,
(C) artificial baits,
(D) artificial flies,
(E) fishing hooks,
(F) bobbers,
(G) sinkers,
(H) snaps,
(I) drayles, and
(J) swivels,
but not including natural bait or any item of terminal tackle
designed for use and ordinarily used on fishing lines not described in
paragraph (3), and
(6) the following items of fishing supplies and accessories --
(A) fish stringers,
(B) creels,
(C) tackle boxes,
(D) bags, baskets, and other containers designed to hold fish,
(E) portable bait containers,
(F) fishing vests,
(G) landing nets,
(H) gaff hooks,
(I) fishing hook disgorgers, and
(J) dressing for fishing lines and artificial flies,
(7) fishing tip-ups and tilts,
(8) fishing rod belts, fishing rodholders, fishing harnesses, fish
fighting chairs, fishing outriggers, and fishing downriggers,
(9) electric outboard boat motors, and
(10) sonar devices suitable for finding fish.
(b) Sonar device suitable for finding fish
For purposes of this part, the term ''sonar device suitable for
finding fish'' shall not include any sonar device which is --
(1) a graph recorder,
(2) a digital type,
(3) a meter readout, or
(4) a combination graph recorder or combination meter readout.
(c) Treatment of certain resales
(1) In general
If --
(A) the manufacturer, producer, or importer sells any article taxable
under section 4161(a) to any person,
(B) the constructive sale price rules of section 4216(b) do not apply
to such sale, and
(C) such person (or any other person) sells such article to a related
person with respect to the manufacturer, producer, or importer,
then such related person shall be liable for tax under section 4161
in the same manner as if such related person were the manufacturer of
the article.
(2) Credit for tax previously paid
If --
(A) tax is imposed on the sale of any article by reason of paragraph
(1), and
(B) the related person establishes the amount of the tax which was
paid on the sale described in paragraph (1)(A),
the amount of the tax so paid shall be allowed as a credit against
the tax imposed by reason of paragraph (1).
(3) Related person
For purposes of this subsection, the term ''related person'' has the
meaning given such term by section 465(b)(3)(C).
(4) Regulations
Except to the extent provided in regulations, rules similar to the
rules of this subsection shall also apply in cases (not described in
paragraph (1)) in which intermediaries or other devices are used for
purposes of reducing the amount of the tax imposed by section 4161(a).
(Added Pub. L. 98-369, div. A, title X, 1015(b), July 18, 1984, 98
Stat. 1017; amended Pub. L. 99-514, title II, 201(d)(7)(C), (12),
title XVIII, 1878(b), Oct. 22, 1986, 100 Stat. 2141, 2142, 2903.)
1986 -- Subsec. (a)(6)(I). Pub. L. 99-514, 1878(b), amended subpar.
(I) generally, substituting ''hook'' for ''hood''.
Subsec. (c)(3). Pub. L. 99-514, 201(d)(7)(C), (12), made identical
amendments, substituting ''section 465(b)(3)(C)'' for ''section
168(e)(4)(D)''.
Amendment by section 201(d)(7)(C), (12) of Pub. L. 99-514 applicable
to property placed in service after Dec. 31, 1986, in taxable years
ending after such date, with exceptions, see sections 203 and 204 of
Pub. L. 99-514, set out as a note under section 168 of this title.
Amendment by section 201(d)(7)(C), (12) of Pub. L. 99-514 not
applicable to any property placed in service before Jan. 1, 1994, if
such property placed in service as part of specified rehabilitations,
and not applicable to certain additional rehabilitations, see section
251(d)(2), (3) of Pub. L. 99-514, set out as a note under section 46 of
this title.
Amendment by section 1878(b) of Pub. L. 99-514 effective, except as
otherwise provided, as if included in the provisions of the Tax Reform
Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates,
see section 1881 of Pub. L. 99-514, set out as a note under section 48
of this title.
Section 1015(e) of Pub. L. 98-369, as amended by Pub. L. 99-514,
2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) In general. -- Except as provided in paragraph (2), the
amendments made by this section (enacting this section and amending
sections 4161 and 6302 of this title) shall apply with respect to
articles sold by the manufacturer, producer, or importer after September
30, 1984.
''(2) Treatment of certain resales. -- Subsection (c) of section 4162
of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (relating to
treatment of certain resales), as added by this section, shall apply to
sales by related persons (as defined in such subsection) after the date
of the enactment of this Act (July 18, 1984).''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
26 USC (PART II -- REPEALED)
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 4171 to 4173. Repealed. Pub. L. 89-44, title II, 205(b),
June 21, 1965, 79 Stat. 140)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4171, act Aug. 16, 1954, ch. 736, 68A Stat. 489, imposed a
10 percent tax on cameras, camera lenses, and unexposed photographic
film on rolls and a 5 percent tax on electric motion or still picture
projectors of the household type.
Section 4172, act Aug. 16, 1954, ch. 736, 68A Stat. 490, defined
certain vendees of unexposed films as manufacturers for purposes of
payment of the tax imposed by section 4171.
Section 4173, act Aug. 16, 1954, ch. 736, 68A Stat. 490, granted
exemptions for specified types of cameras, lenses of specified focal
lengths, and certain types of film.
Repeal applicable with respect to articles sold on or after June 22,
1965, see section 701(a) of Pub. L. 84-44, set out as an Effective Date
of 1965 Amendment note under section 4161 of this title.
26 USC PART III -- FIREARMS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4181. Imposition of tax.
4182. Exemptions.
26 USC 4181. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
There is hereby imposed upon the sale by the manufacturer, producer,
or importer of the following articles a tax equivalent to the specified
percent of the price for which so sold:
Articles taxable at 10 percent --
Pistols.
Revolvers.
Articles taxable at 11 percent --
Firearms (other than pistols and revolvers).
Shells, and cartridges.
(Aug. 16, 1954, ch. 736, 68A Stat. 490.)
669b.
26 USC 4182. Exemptions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Machine guns and short barrelled firearms
The tax imposed by section 4181 shall not apply to any firearm on
which the tax provided by section 5811 has been paid.
(b) Sales to defense department
No firearms, pistols, revolvers, shells, and cartridges purchased
with funds appropriated for the military department shall be subject to
any tax imposed on the sale or transfer of such articles.
(c) Records
Notwithstanding the provisions of sections 922(b)(5) and 923(g) of
title 18, United States Code, no person holding a Federal license under
chapter 44 of title 18, United States Code, shall be required to record
the name, address, or other information about the purchaser of shotgun
ammunition, ammunition suitable for use only in rifles generally
available in commerce, or component parts for the aforesaid types of
ammunition.
(Aug. 16, 1954, ch. 736, 68A Stat. 490; Nov. 26, 1969, Pub. L.
91-128, 5, 83 Stat. 269.)
1969 -- Subsec. (c). Pub. L. 91-128 added subsec. (c).
Section 1(a) of Pub. L. 91-128 provided that: ''This Act (amending
this section and sections 4911, 4912, 4914, 4915, 4919, 4920, 6011, and
6680 of this title and enacting provisions set out as notes under
section 6680 of this title) may be cited as the 'Interest Equalization
Tax Extension Act of 1969'.''
Machine guns and certain other firearms, see section 5801 et seq. of
this title.
26 USC (Subchapter E -- Repealed)
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 4191, 4192. Repealed. Pub. L. 89-44, title II, 206, June 21,
1965, 79 Stat. 140)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4191, act Aug. 16, 1954, ch. 736, 68A Stat. 491, imposed a
tax equivalent to 10 percent of the selling price upon over fifty
specified office and business machines including adding machines,
bookkeeping machines, cash registers, punch card and computing machines,
typewriters, and tabulating machines.
Section 4192, acts Aug. 16, 1954, ch. 736, 68A Stat. 491; Sept.
2, 1958, Pub. L. 85-859, title I, 114(a), 72 Stat. 1278, granted an
exemption for cash registers used in registering over-the-counter retail
sales and for stencil cutting machines.
Repeal applicable with respect to articles sold on or after June 22,
1965, see section 701(a) of Pub. L. 89-44, set out as an Effective Date
of 1965 Amendment note under section 4161 of this title.
26 USC ( 4201. Repealed. Pub. L. 89-44, title II, 206, June 21, 1965,
79 Stat. 140)
TITLE 26 -- INTERNAL REVENUE CODE
Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 492; Sept. 14,
1960, Pub. L. 86-779, 9(a), 74 Stat. 1003, imposed a tax equivalent
to 10 percent of the selling price on mechanical pencils, fountain pens,
and ball point pens and 10 cents on mechanical cigarette lighters.
Repeal applicable with respect to articles sold on or after June 22,
1965, see section 701(a) of Pub. L. 89-44, set out as an Effective Date
of 1965 Amendment note under section 4161 of this title.
26 USC ( 4211. Repealed. Pub. L. 89-44, title II, 206, June 21, 1965,
79 Stat. 140)
TITLE 26 -- INTERNAL REVENUE CODE
Section, act Aug. 16, 1954, ch. 736, 68A Stat. 492, imposed a tax
of 2 cents per 1,000 for matches, except fancy wooden matches, and a tax
of 5 1/2 cents per 1,000 on fancy wooden matches.
Repeal applicable with respect to articles sold on or after June 22,
1965, see section 701(a) of Pub. L. 89-44, set out as an Effective Date
of 1965 Amendment note under section 4161 of this title.
26 USC Subchapter F -- Special Provisions Applicable to Manufacturers
Tax
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4216. Definition of price.
4217. Leases.
4218. Use by manufacturer or importer considered sale.
4219. Application of tax in case of sales by other than manufacturer
or importer.
(4220 to 4225. Repealed.)
1958 -- Pub. L. 85-859, title I, 117(d), 119(b)(3), Sept. 2,
1958, 72 Stat. 1281, 1286, substituted ''Leases'' for ''Lease
considered sale'' in item 4217, and struck out items 4220 to 4225.
1956 -- Act June 29, 1956, ch. 462, title II, 207(b), 70 Stat.
392, added item 4226 and redesignated former item 4226 as 4227.
26 USC 4216. Definition of price
TITLE 26 -- INTERNAL REVENUE CODE
(a) Containers, packing and transportation charges.
In determining, for the purposes of this chapter, the price for which
an article is sold, there shall be included any charge for coverings and
containers of whatever nature, and any charge incident to placing the
article in condition packed ready for shipment, but there shall be
excluded the amount of tax imposed by this chapter, whether or not
stated as a separate charge. A transportation, delivery, insurance,
installation, or other charge (not required by the foregoing sentence to
be included) shall be excluded from the price only if the amount thereof
is established to the satisfaction of the Secretary in accordance with
the regulations.
(b) Constructive sale price
(1) In general
If an article is --
(A) sold at retail,
(B) sold on consignment, or
(C) sold (otherwise than through an arm's length transaction) at less
than the fair market price,
the tax under this chapter shall (if based on the price for which the
article is sold) be computed on the price for which such articles are
sold, in the ordinary course of trade, by manufacturers or producers
thereof, as determined by the Secretary. In the case of an article sold
at retail, the computation under the preceding sentence shall be on
whichever of the following prices is the lower: (i) the price for which
such article is sold, or (ii) the highest price for which such articles
are sold to wholesale distributors, in the ordinary course of trade, by
manufacturers or producers thereof, as determined by the Secretary.
This paragraph shall not apply if paragraph (2) applies.
(2) Special rule
If an article is sold at retail or to a retailer, and if --
(A) the manufacturer, producer, or importer of such article regularly
sells such articles at retail or to retailers, as the case may be,
(B) the manufacturer, producer, or importer of such article regularly
sells such articles to one or more wholesale distributors in arm's
length transactions and he establishes that his prices in such cases are
determined without regard to any tax benefit under this paragraph, and
(C) the transaction is an arm's length transaction,
the tax under this chapter shall (if based on the price for which the
article is sold) be computed on whichever of the following prices is the
lower: (i) the price for which such article is sold, or (ii) the
highest price for which such articles are sold by such manufacturer,
producer, or importer to wholesale distributors (other than special
dealers).
(3) Constructive sale price in case of certain articles
Except as provided in paragraph (4), for purposes of paragraph (1),
if --
(A) the manufacturer, producer, or importer of an article regularly
sells such article to a distributor which is a member of the same
affiliated group of corporations (as defined in section 1504(a)) as the
manufacturer, producer, or importer, and
(B) such distributor regularly sells such article to one or more
independent retailers, but does not regularly sell to wholesale
distributors,
the constructive sale price of such article shall be 90 percent of
the lowest price for which such distributor regularly sells such article
in arm's-length transactions to such independent retailers. The price
determined under this paragraph shall not be adjusted for any exclusion
(except for the tax imposed on such article) or readjustments under
subsections (a) and (e) and under section 6416(b)(1). If both this
paragraph and paragraph (4) apply with respect to an article, the
constructive sale price for such article shall be the lower of the
constructive sale price determined under this paragraph or paragraph
(4).
(4) Constructive sale price in case of certain other articles
For purposes of paragraph (1), if --
(A) the manufacturer, producer, or importer of an article regularly
sells (except for tax-free sales) only to a distributor which is a
member of the same affiliated group of corporations (as defined in
section 1504(a)) as the manufacturer, producer, or importer,
(B) the distributor regularly sells (except for tax-free sales) such
article only to retailers, and
(C) the normal method of sales for such articles within the industry
by manufacturers, producers, or importers is to sell such articles in
arm's-length transactions to distributors,
the constructive sale price for such article shall be the price at
which such article is sold to retailers by the distributor, reduced by a
percentage of such price equal to the percentage which (i) the
difference between the price for which comparable articles are sold to
wholesale distributors, in the ordinary course of trade, by
manufacturers or producers thereof, and the price at which such
wholesale distributors in arm's-length transactions sell such comparable
articles to retailers, is of (ii) the price at which such wholesale
distributors in arm's-length transactions sell such comparable articles
to retailers. The price determined under this paragraph shall not be
adjusted for any exclusion (except for the tax imposed on such article)
or readjustment under subsections (a) and (e) and under section
6416(b)(1).
(5) Definition of lowest price
For purposes of paragraphs (1) and (3), the lowest price shall be
determined --
(A) without requiring that any given percentage of sales be made at
that price, and
(B) without including any fixed amount to which the purchaser has a
right as a result of contractual arrangements existing at the time of
the sale.
(c) Partial payments
In the case of --
(1) a lease (other than a lease to which section 4217(b) applies),
(2) a contract for the sale of an article wherein it is provided that
the price shall be paid by installments and title to the article sold
does not pass until a future date notwithstanding partial payment by
installments,
(3) a conditional sale, or
(4) a chattel mortgage arrangement wherein it is provided that the
sales price shall be paid in installments,
there shall be paid upon each payment with respect to the article a
percentage of such payment equal to the rate of tax in effect on the
date such payment is due.
(d) Sales of installment accounts
If installment accounts, with respect to payments on which tax is
being computed as provided in subsection (c), are sold or otherwise
disposed of, then subsection (c) shall not apply with respect to any
subsequent payments on such accounts (other than subsequent payments on
returned accounts with respect to which credit or refund is allowable by
reason of section 6416(b)(5)), but instead --
(1) there shall be paid an amount equal to the difference between (A)
the tax previously paid on the payments on such installment accounts,
and (B) the total tax which would be payable if such installment
accounts had not been sold or otherwise disposed of (computed as
provided in subsection (c)); except that
(2) if any such sale is pursuant to the order of, or subject to the
approval of, a court of competent jurisdiction in a bankruptcy or
insolvency proceeding, the amount computed under paragraph (1) shall not
exceed the sum of the amounts computed by multiplying (A) the
proportionate share of the amount for which such accounts are sold which
is allocable to each unpaid installment payment by (B) the rate of tax
under this chapter in effect on the date such unpaid installment payment
is or was due.
The sum of the amounts payable under this subsection and subsection
(c) in respect of the sale of any article shall not exceed the total
tax.
(e) Exclusion of local advertising charge from sale price
(1) Exclusion
In determining, for purposes of this chapter, the price for which an
article is sold, there shall be excluded a charge for local advertising
(as defined in paragraph (4)) to the extent that such charge --
(A) does not exceed 5 percent of the price for which the article is
sold (as determined under this section by excluding any charge for local
advertising),
(B) is a separate charge made when the article is sold, and
(C) is intended to be refunded to the purchaser or any subsequent
vendee in reimbursement of costs incurred for local advertising.
In the case of any such charge (or portion thereof) which is not so
refunded before the first day of the fifth calendar month following the
calendar year during which the article was sold, the exclusion provided
by the preceding sentence shall cease to apply as of such first day.
(2) Aggregate amount which may be excluded
In the case of articles upon the sale of which tax was imposed under
the same section of this chapter --
(A) The sum of (i) the aggregate of the charges for local advertising
excluded under paragraph (1), plus (ii) the aggregate of the
readjustments for local advertising under section 6416(b)(1) (relating
to credits or refunds for price readjustments), shall not exceed
(B) 5 percent of the aggregate of the prices (determined under this
section by excluding all charges for local advertising) at which such
articles were sold in sales on which tax was imposed by such section of
this chapter.
The preceding sentence shall be applied to each manufacturer,
producer, and importer as of the close of each calendar quarter, taking
into account the items specified in subparagraphs (A) and (B) for such
calendar quarter and preceding calendar quarters in the same calendar
year.
(3) No adjustment for other advertising charges
Except to the extent provided by paragraphs (1) and (2), no charge or
expenditure for advertising shall serve, for purposes of this section or
section 6416(b)(1), as the basis for an exclusion from, or as a
readjustment of, the price of any article.
(4) Local advertising defined
For purposes of this section and section 6416(b)(1), the term ''local
advertising'' means only advertising which --
(A) is initiated or obtained by the purchaser or any subsequent
vendee,
(B) names the article for which the price is determinable under this
section and states the location at which such article may be purchased
at retail, and
(C) is broadcast over a radio station or television station, appears
in a newspaper or magazine, or is displayed by means of an outdoor
advertising sign or poster.
(Aug. 16, 1954, ch. 736, 68A Stat. 493; Aug. 9, 1955, ch. 677, 1,
2, 69 Stat. 613; Sept. 2, 1958, Pub. L. 85-859, title I, 115, 116,
117(b), 72 Stat. 1279-1281; Sept. 14, 1960, Pub. L. 86-781, 1, 74
Stat. 1017; Oct. 9, 1962, Pub. L. 87-770, 2(a), 76 Stat. 768; Oct.
23, 1962, Pub. L. 87-858, 1(a), 76 Stat. 1134; June 21, 1965, Pub. L.
89-44, title II, 207(a), (b), 208(a), (b), title VIII, 801(b), 79
Stat. 140, 141, 158; Dec. 30, 1969, Pub. L. 91-172, title IX, 932(a),
83 Stat. 725; Dec. 31, 1970, Pub. L. 91-614, title III, 301(a), (b),
84 Stat. 1844; Dec. 10, 1971, Pub. L. 92-178, title IV, 401(g)(4), 85
Stat. 533; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1904(a)(2),
1906(b)(13)(A), 90 Stat. 1811, 1834; Oct. 14, 1978, Pub. L. 95-458,
1(a), (b), 92 Stat. 1255; July 18, 1984, Pub. L. 98-369, div. A, title
VII, 735(c)(6), 98 Stat. 982.)
1984 -- Subsec. (b)(1). Pub. L. 98-369, 735(c)(6)(A), in provisions
following subpar. (C) struck out ''(other than an article the sale of
which is taxable under section 4061(a))'' in second sentence, before
''the computation under the preceding sentence'', and struck out
provision that in the case of an article the sale of which is taxable
under section 4061(a) and which is sold at retail, the computation under
the first sentence of this paragraph shall be a percentage (not greater
than 100 percent) of the actual selling price based on the highest price
for which such articles are sold by manufacturers and producers in the
ordinary course of trade (determined without regard to any individual
manufacturer's or producer's cost).
Subsec. (b)(2)(B) to (D). Pub. L. 98-369, 735(c)(6)(B), inserted
''and'' at end of subpar. (B), redesignated subpar. (D) as (C), and
struck out former subpar. (C) which related to articles upon which tax
is imposed under section 4061(a) of this title.
Subsec. (b)(3). Pub. L. 98-369, 735(c)(6)(D), substituted
''paragraph (4)'' for ''paragraphs (4) and (5)''.
Subsec. (b)(5), (6). Pub. L. 98-369, 735(c)(6)(C), (E),
redesignated par. (6) as par. (5), substituted ''(1) and (3)'' for
''(1), (3) and (5)'', and struck out former par. (5) which related to
constructive sale price in the case of automobiles, trucks, etc.
Subsec. (f). Pub. L. 98-369, 735(c)(6)(F), struck out subsec. (f)
which related to certain trucks incorporating used components.
1978 -- Subsec. (b)(1). Pub. L. 95-458 substituted ''article sold at
retail (other than an article the sale of which is taxable under section
4061(a)), the computation'' for ''article sold at retail, the
computation'' and inserted provision requiring the computation of tax on
articles taxable under section 4061(a) which are sold at retail to be a
percentage, but not greater than 100% of the actual selling price based
on the highest price for which the articles are sold by manufacturers
and producers in the ordinary course of trade, determined without regard
to individual manufacturer's or producer's cost.
1976 -- Subsec. (a). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (b). Pub. L. 94-455, 1904(a)(2)(B), 1906(b)(13)(A), struck
out ''or his delegate'' after ''Secretary'' in two places in par. (1),
and substituted ''subsections (a) and (e)'' for ''subsections (a) and
(f)'' in pars. (3), (4), and (5), after ''or readjustments under''.
Subsecs. (d) to (g). Pub. L. 94-455, 1904(a)(2)(A), redesignated
subsecs. (e) to (g) as (d) to (f), respectively.
1971 -- Subsec. (b)(2)(C), (5). Pub. L. 92-178, 401(g)(4)(A),
substituted ''(relating to trucks, buses, tractor, etc.)'' for
''(relating to automobiles, trucks, etc.)''.
Subsec. (g). Pub. L. 92-178, 401(g)(4)(B), inserted reference to
''tractors,'' after ''buses,''.
1970 -- Subsec. (b)(3). Pub. L. 91-614, 301(b), substituted
''Constructive sale price'' for ''Fair market price'' in heading,
''constructive sale price'' for ''fair market price'' three places in
text, substituted ''paragraphs (4) and (5)'' for ''paragraph (4)'' and
''paragraph (1)'' for ''paragraph (1)(C)''.
Subsec. (b)(4). Pub. L. 91-614, 301(b)(2), substituted
''Constructive sale price'' for ''Fair market price'' in heading,
''constructive sale price'' for ''fair market price'' in text, and
''paragraph (1)'' for ''paragraph (1)(C)''.
Subsec. (b)(5), (6). Pub. L. 91-614, 301(a), added pars. (5) and
(6).
1969 -- Subsec. (b)(3), (4). Pub. L. 91-172 added pars. (3) and
(4).
1965 -- Subsec. (b)(2). Pub. L. 89-44, 208(a), struck out reference
to special dealers and to articles upon which tax is imposed under
section 4191 or 4211 of this title.
Subsec. (b)(3). Pub. L. 89-44, 208(b), struck out par. (3) which
related to special dealers.
Subsec. (c). Pub. L. 89-44, 207(a), struck out ''that portion of the
total tax which is proportionate to the portion of the total amount to
be paid represented by such payment'' in text following par. (4) and
inserted in lieu thereof ''a percentage of such payment equal to the
rate of tax in effect on the date such payment is due''.
Subsec. (e)(1). Pub. L. 89-44, 207(b)(1), substituted ''total tax
which would be payable if such installment accounts had not been sold or
otherwise disposed of (computed as provided in subsection (c)) for
''total tax''.
Subsec. (e)(2). Pub. L. 89-44, 207(b)(2), substituted, as factor (A)
in the formula for computing the maximum amount, the proportionate share
of the amount for which such accounts are sold which is allocable to
each unpaid installment payment for the amount for which such accounts
are sold, and, as factor (B) in the formula, the rate of tax on the date
that such unpaid installment payment is or was due for the rate of tax
which applied on the day on which the transaction giving rise to such
installment accounts took place.
Subsec. (g). Pub. L. 89-44, 801(b), added subsec. (g).
1962 -- Subsec. (b)(2)(C). Pub. L. 87-858 inserted ''in the case of
articles upon which tax is imposed under section 4061(a) (relating to
automobiles, trucks, etc.), 4191 (relating to business machines), or
4211 (relating to matches),'' before ''the normal method''.
Subsec. (f)(4)(C). Pub. L. 87-770 substituted '', appears in a
newspaper or magazine, or is displayed by means of an outdoor
advertising sign or poster'' for ''or appears in a newspaper''.
1960 -- Subsec. (f). Pub. L. 86-781 added subsec. (f).
1958 -- Subsec. (b). Pub. L. 85-859, 115, inserted provisions in
par. (1) requiring, in the case of an article sold at retail, the
computation to be on either the price for which the article is sold, or
the highest price for which the articles are sold to wholesale
distributors, in the ordinary course of trade, by manufacturers or
producers thereof, whichever is lower, and added pars. (2) and (3).
Subsec. (c). Pub. L. 85-859, 117(b), substituted ''section 4217(b)''
for ''subsection (d)''.
Subsec. (d). Pub. L. 85-859, 117(b), repealed subsec. (d) which
related to tax on leases of certain trailers.
Subsec. (e). Pub. L. 85-859, 116, added subsec. (e).
1955 -- Subsec. (c)(1). Act Aug. 9, 1955, 1, inserted ''(other
than a lease to which subsection (d) applies)''.
Subsec. (d). Act Aug. 9, 1955, 2, added subsec. (d).
Amendment by Pub. L. 98-369 effective, except as otherwise provided,
as if included in the provisions of the Highway Revenue Act of 1982,
title V of Pub. L. 97-424, to which such amendment relates, see section
736 of Pub. L. 98-369, set out as a note under section 4051 of this
title.
Section 1(c) of Pub. L. 95-458 provided that: ''The amendments made
by this section (amending this section) shall apply to articles sold by
the manufacturer or producer on or after the first day of the first
calendar quarter beginning 30 days or more after the date of enactment
of this Act (Oct. 14, 1978).''
Amendment by section 1904(a)(2) of Pub. L. 94-455 effective on first
day of first month which begins more than 90 days after Oct. 4, 1976,
see section 1904(d) of Pub. L. 94-455, set out as a note under section
4041 of this title.
Amendment by Pub. L. 92-178 applicable with respect to articles sold
on or after the day after Dec. 10, 1971, see section 401(h)(1) of Pub.
L. 92-178, set out as a note under section 4061 of this title.
Section 301(c) of Pub. L. 91-614, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that: ''The amendments made
by this section (amending this section) shall apply with respect to
articles sold after December 31, 1970; except that section 4216(b)(6)
of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as added by
subsection (a)) shall also apply to (1) the application of paragraph (1)
of such section 4216(b) to articles sold after June 30, 1962, and before
January 1, 1971, and (2) the application of paragraph (3) of such
section 4216(b) to articles sold after December 31, 1969, and before
January 1, 1971.''
Section 932(b) of Pub. L. 91-172 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply with respect
to articles sold after December 31, 1969.''
Amendment by section 207(a), (b) of Pub. L. 89-44 effective June 22,
1965, and amendment by section 208 of Pub. L. 89-44 applicable with
respect to articles sold on or after June 22, 1965, except insofar as
such amendments related to the taxes imposed by sections 4061(b), 4091,
or 4131 and, as to such taxes, applicable with respect to articles sold
on or after January 1, 1966, see section 701(a) of Pub. L. 89-44, set
out as a note under section 4161 of this title.
Section 801(e) of Pub. L. 89-44 provided that: ''The amendments
made by subsections (a), (b), and (d) (amending this section and
sections 4063, 4221, and 6416 of this title) shall apply with respect to
articles sold on or after the day after the date of the enactment of
this Act (June 21, 1965). The amendment made by subsection (c)
(amending section 4221 of this title) shall apply with respect to
articles sold on or after January 1, 1965.''
Section 1(b) of Pub. L. 87-858 provided that: ''The amendment made
by subsection (a) (amending this section) shall apply with respect to
articles sold by the manufacturer, producer, or importer on or after
October 1, 1962.''
Section 2(b) of Pub. L. 87-770 provided that: ''The amendment made
by subsection (a) (amending this section) shall apply with respect to
articles sold on or after the first day of the first calendar quarter
beginning more than 20 days after the date of the enactment of this Act
(Oct. 9, 1962).''
Section 3 of Pub. L. 86-781 provided that: ''The amendments made by
this Act (amending this section and section 6416 of this title) shall
apply with respect to articles sold on or after the first day of the
first calendar quarter beginning more than twenty days after the date of
the enactment of this Act (Sept. 14, 1960).''
Amendment by Pub. L. 85-859 effective on first day of first calendar
quarter which begins more than 60 days after Sept. 2, 1958, see section
1(c) of Pub. L. 85-859.
Section 4 of act Aug. 9, 1955, as amended by act Oct. 22, 1986,
Pub. L. 99-514, 2, 100 Stat. 2095, provided that: ''The amendments
made by subsection (a) (probably should refer to amendments made by
sections 1 to 3 of act Aug. 9, 1955, amending this section and section
4217 of this title) shall take effect on the first day of the first
month which begins more than 10 days after the date of the enactment of
this act (Aug. 9, 1955). In the application of section 4216(d) of the
Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as added by this
Act) to any article which has been leased before the effective date
specified in the preceding sentence, under regulations prescribed by the
Secretary of the Treasury or his delegate --
''(1) the fair market value of such article shall be the fair market
value determined as of such effective date;
''(2) only payments under a lease received on or after such effective
date shall be considered in determining when the total tax (as defined
in such section 4216(d)) has been paid;
''(3) any lease existing on such effective date, or if there is none,
the first lease entered into after such effective date, shall be
considered an initial lease (except that fair market value shall be
determined as provided in paragraph (1) of this sentence); and
''(4) any lease existing on such effective date shall be considered
as having been entered into on such date.''
26 USC 4217. Leases
TITLE 26 -- INTERNAL REVENUE CODE
(a) Lease considered as sale
For purposes of this chapter, the lease of an article (including any
renewal or any extension of a lease or any subsequent lease of such
article) by the manufacturer, producer, or importer shall be considered
a sale of such article.
(b) Limitation on tax
In the case of any lease described in subsection (a) of an article
taxable under this chapter, if the tax under this chapter is based on
the price for which such articles are sold, there shall be paid on each
lease payment with respect to such article a percentage of such payment
equal to the rate of tax in effect on the date of such payment, until
the total of the tax payments under such lease and any prior lease to
which this subsection applies equals the total tax.
(c) Definition of total tax
For purposes of this section, the term ''total tax'' means --
(1) except as provided in paragraph (2), the tax computed on the
constructive sale price for such article which would be determined under
section 4216(b) if such article were sold at retail on the date of the
first lease to which subsection (b) applies; or
(2) if the first lease to which subsection (b) applies is not the
first lease of the article, the tax computed on the fair market value of
such article on the date of the first lease to which subsection (b)
applies.
Any such computation of tax shall be made at the applicable rate
specified in this chapter in effect on the date of the first lease to
which subsection (b) applies.
(d) Special rules
(1) Lessor must also be engaged in selling
Subsection (b) shall not apply to any lease of an article unless at
the time of making the lease, or any prior lease of such article to
which subsection (b) applies, the person making the lease or prior lease
was also engaged in the business of selling in arm's length transactions
the same type and model of article.
(2) Sale before total tax becomes payable
If the taxpayer sells an article before the total tax has become
payable, then the tax payable on such sale shall be whichever of the
following is the smaller:
(A) the difference between (i) the tax imposed on lease payments
under leases of such article to which subsection (b) applies, and (ii)
the total tax, or
(B) a tax computed, at the rate in effect on the date of the sale, on
the price for which the article is sold.
For purposes of subparagraph (B), if the sale is at arm's length,
section 4216(b) shall not apply.
(3) Sale after total tax has become payable
If the taxpayer sells an article after the total tax has become
payable, no tax shall be imposed under this chapter on such sale.
(e) Leases of automobiles subject to gas guzzler tax
(1) In general
In the case of the lease of an automobile the sale of which by the
manufacturer would be taxable under section 4064, the foregoing
provisions of this section shall not apply, but, for purposes of this
chapter --
(A) the first lease of such automobile by the manufacturer shall be
considered to be a sale, and
(B) any lease of such automobile by the manufacturer after the first
lease of such automobile shall not be considered to be a sale.
(2) Payment of tax
In the case of a lease described in paragraph (1)(A) --
(A) there shall be paid by the manufacturer on each lease payment
that portion of the total gas guzzler tax which bears the same ratio to
such total gas guzzler tax as such payment bears to the total amount to
be paid under such lease,
(B) if such lease is canceled, or the automobile is sold or otherwise
disposed of, before the total gas guzzler tax is payable, there shall be
paid by the manufacturer on such cancellation, sale, or disposition the
difference between the tax imposed under subparagraph (A) on the lease
payments and the total gas guzzler tax, and
(C) if the automobile is sold or otherwise disposed of after the
total gas guzzler tax is payable, no tax shall be imposed under section
4064 on such sale or disposition.
(3) Definitions
For purposes of this subsection --
(A) Manufacturer
The term ''manufacturer'' includes a producer or importer.
(B) Total gas guzzler tax
The term ''total gas guzzler tax'' means the tax imposed by section
4064, computed at the rate in effect on the date of the first lease.
(Aug. 16, 1954, ch. 736, 68A Stat. 494; Aug. 9, 1955, ch. 677, 3,
69 Stat. 614; Sept. 2, 1958, Pub. L. 85-859, title I, 117(a), 72 Stat.
1280; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1904 (a)(3), 90 Stat.
1811; Nov. 9, 1978, Pub. L. 95-618, title II, 201(d), 92 Stat. 3184.)
1978 -- Subsec. (e). Pub. L. 95-618 added subsec. (e).
1976 -- Subsec. (d)(4). Pub. L. 94-455 struck out par. (4) relating
to special transitional rules applicable to leases.
1958 -- Pub. L. 85-859 substituted ''Leases'' for ''Lease considered
as sale'' in section catchline.
Subsec. (a). Pub. L. 85-859 redesignated existing provisions as
subsec. (a) and struck out provisions which made subsection
inapplicable to the lease of an article upon which the tax has been paid
in the manner provided in section 4216(d)(1) or the total tax has been
paid in the manner provided in section 4216(d)(2) of this title.
Subsecs. (b) to (d). Pub. L. 85-859 added subsecs. (b) to (d).
1955 -- Act Aug. 9, 1955, exempted lease of an article upon which
tax has been paid under section 4216(d)(1) or section 4216(d)(2) of this
title.
Amendment by Pub. L. 95-618 applicable with respect to 1980 and
later model year automobiles, see section 201(g) of Pub. L. 95-618, set
out as an Effective Date note under section 4064 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1904(d)
of Pub. L. 94-455, set out as a note under section 4041 of this title.
Amendment by Pub. L. 85-859 effective on first day of first calendar
quarter which begins more than 60 days after Sept. 2, 1958, see section
1(c) of Pub. L. 85-859.
Section effective on first day of first month which begins more than
ten days after Aug. 9, 1955, see section 4 of act Aug. 9, 1955, set
out as a note under section 4216 of this title.
Section 117(c) of Pub. L. 85-859, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that: ''The amendments made
by subsections (a) and (b) (amending this section and section 4216 of
this title) shall not apply to any lease of an article if section
4216(d) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954,
prior subsec. (d) of section 4216 of this title) applied to any lease of
such article before the effective date specified in section 1(c) of this
Act.''
26 USC 4218. Use by manufacturer or importer considered sale
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
If any person manufactures, produces, or imports an article (other
than a tire taxable under section 4071) and uses it (otherwise than as
material in the manufacture or production of, or as a component part of,
another article taxable under this chapter to be manufactured or
produced by him), then he shall be liable for tax under this chapter in
the same manner as if such article were sold by him. This subsection
shall not apply in the case of gasoline used by any person, for nonfuel
purposes, as a material in the manufacture or production of another
article to be manufactured or produced by him. For the purpose of
applying the first sentence of this subsection to coal taxable under
section 4121, the words ''(otherwise than as material in the manufacture
or production of, or as a component part of, another article taxable
under this chapter to be manufactured or produced by him)'' shall be
disregarded.
(b) Tires
If any person manufactures, produces, or imports a tire taxable under
section 4071, and sells it on or in connection with the sale of any
article, or uses it, then he shall be liable for tax under this chapter
in the same manner as if such article were sold by him.
(c) Computation of tax
Except as provided in section 4223(b), in any case in which a person
is made liable for tax by the preceding provisions of this section, the
tax (if based on the price for which the article is sold) shall be
computed on the price at which such or similar articles are sold, in the
ordinary course of trade, by manufacturers, producers, or importers,
thereof, as determined by the Secretary.
(Aug. 16, 1954, ch. 736, 68A Stat. 494; Aug. 11, 1955, ch. 805,
1(a), (b), 69 Stat. 689; Sept. 2, 1958, Pub. L. 85-859, title I, 118,
72 Stat. 1281; Apr. 8, 1960, Pub. L. 86-418, 2(a), 74 Stat. 38; June
29, 1961, Pub. L. 87-61, title II, 205(b), 75 Stat. 126; June 21,
1965, Pub. L. 89-44, title II, 208(c), 79 Stat. 141; Oct. 4, 1976,
Pub. L. 94-455, title XIX, 1906(b)(13)(A), 90 Stat. 1834; Feb. 10,
1978, Pub. L. 95-227, 2(b)(1), 92 Stat. 11; July 18, 1984, Pub. L.
98-369, div. A, title VII, 735(c)(7), 98 Stat. 983.)
1984 -- Subsec. (a). Pub. L. 98-369, 735(c)(7)(D), substituted
''(other than a tire taxable under section 4071)'' for ''(other than an
article specified in subsection (b), (c), or (d))''.
Subsec. (b). Pub. L. 98-369, 735(c)(7)(A), (B), struck out ''and
tubes'' after ''Tires'' in heading, and in text substituted ''If'' for
''Except as provided in subsection (d), if'', and struck out ''or inner
tube'' before ''taxable under section 4071''.
Subsec. (c). Pub. L. 98-369, 735(c)(7)(C), redesignated subsec. (e)
as (c). Former subsec. (c), which related to automotive parts and
accessories, was struck out.
Subsec. (d). Pub. L. 98-369, 735(c)(7)(C), struck out subsec. (d)
which related to bicycle tires and tubes.
Subsec. (e). Pub. L. 98-369, 735(c)(7)(C), redesignated subsec. (e)
as (c).
1978 -- Subsec. (a). Pub. L. 95-227 inserted provisions relating to
applying first sentence of this subsection to coal taxable under section
4121 of this title.
1976 -- Subsec. (e). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
1965 -- Subsec. (b). Pub. L. 89-44, 208(c)(1), (2), struck out
references to automobile receiving sets from heading, and ''or an
automobile radio or television receiving set taxable under section
4141,'' before ''and sells it''.
Subsec. (c). Pub. L. 89-44, 208(c)(3), (4), struck out reference to
radio components and camera lenses from heading, and ''a radio or
television component taxable under section 4141, or a camera lens
taxable under section 4171,'' before ''and uses it''.
1961 -- Subsec. (a). Pub. L. 87-61 inserted sentence making
subsection inapplicable in the case of gasoline used by any person, for
nonfuel purposes, as a material in the manufacture or production of
another article to be manufactured or produced by him.
1960 -- Subsec. (a). Pub. L. 86-418, 2(a)(1), substituted
''subsection (b), (c), or (d)'' for ''subsection (b) or (c)''.
Subsec. (b). Pub. L. 86-418, 2(a)(2), substituted ''Except as
provided in subsection (d), if any'' for ''If any.''
Subsecs. (d), (e). Pub. L. 86-418, 2(a)(3), added subsec. (d) and
redesignated former subsec. (d) as (e).
1958 -- Pub. L. 85-859 amended section generally, striking out
provisions which related to refrigerator components and to sales free of
tax by virtue of section 4220 or 4224 of this title, and substituting
provisions making manufacturers, producers and importers of parts or
accessories taxable under section 4061(b), radio or television
components taxable under section 4141, or camera lenses taxable under
section 4171 liable for the tax if they use the parts or accessories
otherwise than as material in the manufacture or production of, or as
component parts of, any other article to be manufactured or produced by
them, for provisions which made section inapplicable with respect to
such parts if they were used by them as material in the manufacture or
production of, or as a component part of, any article.
1955 -- Subsec. (a)(1). Act Aug. 11, 1955, 1(a), inserted as tax
exempt articles under this chapter, automobile parts or accessories,
refrigerator, radio, or television components, or camera lenses taxable
under section 4061(b), 4111, or 4171, respectively, of this title.
Subsec. (b). Act Aug. 11, 1955, 1(b), excepted from application of
section automobile parts or accessories, refrigerator, radio, or
television components, and camera lenses, taxable under sections
4061(b), 4111, 4141, and 4171, respectively, of this title, when for use
by the purchaser in the manufacture or production of, or as a component
part of, any article.
Amendment by Pub. L. 98-369 effective, except as otherwise provided,
as if included in the provisions of the Highway Revenue Act of 1982,
title V of Pub. L. 97-424, to which such amendment relates, see section
736 of Pub. L. 98-369, set out as a note under section 4051 of this
title.
Amendment by Pub. L. 95-227 applicable with respect to sales after
Mar. 31, 1978, see section 2(d) of Pub. L. 95-227, set out as an
Effective Date note under section 4121 of this title.
Amendment by Pub. L. 89-44 applicable with respect to articles sold
on or after June 22, 1965, except insofar as such amendments related to
the taxes imposed by sections 4061(b), 4091, and 4131 and, as to such
taxes, applicable with respect to articles sold on or after January 1,
1966, see section 701(a) of Pub. L. 89-44, set out as a note under
section 4161 of this title.
Amendment by Pub. L. 87-61 applicable only in the case of gasoline
used on or after October 1, 1961, see section 208 of Pub. L. 87-61,
set out as a note under section 4041 of this title.
Amendment by Pub. L. 86-418 applicable only with respect to bicycle
tires and tubes sold by the manufacturer, producer, or importer thereof
on or after the first day of the first month which begins more than 10
days after April 8, 1960, see section 4 of Pub. L. 86-418, set out as a
note under section 4221 of this title.
Amendment by Pub. L. 85-859 effective on first day of first calendar
quarter which begins more than 60 days after Sept. 2, 1958, see section
1 (c) of Pub. L. 85-859.
Amendment by act Aug. 11, 1955, effective on first day of first
month which begins more than ten days after Aug. 11, 1955, see section
3 of act Aug. 11, 1955, set out as a note under section 6416 of this
title.
26 USC 4219. Application of tax in case of sales by other than
manufacturer or importer
TITLE 26 -- INTERNAL REVENUE CODE
In case any person acquires from the manufacturer, producer, or
importer of an article, by operation of law or as a result of any
transaction not taxable under this chapter, the right to sell such
article, the sale of such article by such person shall be taxable under
this chapter as if made by the manufacturer, producer, or importer, and
such person shall be liable for the tax.
(Aug. 16, 1954, ch. 736, 68A Stat. 494.)
26 USC ( 4220 to 4225. Repealed. Pub. L. 85-859, title I, 119(a),
Sept. 2, 1958, 72 Stat. 1282)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4220, acts Aug. 16, 1954, ch. 736, 68A Stat. 494; Aug.
11, 1955, ch. 805, 1(c), 69 Stat. 689, related to exemption for sales
or resales to manufacturers. See section 4221 et seq. of this title.
For sections 4221 to 4225, see Prior Provisions notes set out under
sections 4221 to 4225 of this title.
Repeal effective on first day of first calendar quarter which begins
more than 60 days after Sept. 2, 1958, see section 1(c) of Pub. L.
85-859.
26 USC Subchapter G -- Exemptions, Registration, Etc.
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4221. Certain tax-free sales.
4222. Registration.
4223. Special rules relating to further manufacture.
(4224. Repealed.)
4225. Exemption of articles manufactured or produced by Indians.
(4226. Repealed.)
4227. Cross reference.
1986 -- Pub. L. 99-514, title XVIII, 1899A(74), Oct. 22, 1986, 100
Stat. 2963, substituted ''reference'' for ''references'' in item 4227.
1983 -- Pub. L. 97-473, title II, 202(b)(9), Jan. 14, 1983, 96
Stat. 2610, purported to substitute ''Cross references'' for ''Cross
reference'' in item 4227. No change in text was required because item
4227 as originally enacted by section 119(a) of Pub. L. 85-859 already
read ''Cross references''.
1976 -- Pub. L. 94-455, title XIX, 1904(b)(3), Oct. 4, 1976, 90
Stat. 1815, struck out item 4226 ''Floor stocks taxes''.
1965 -- Pub. L. 89-44, title I, 101(b)(5), June 21, 1965, 79 Stat.
136, struck out item 4224 ''Exemption for articles taxable as jewelry.''
1958 -- Pub. L. 85-859, title I, 119(a), Sept. 2, 1958, 72 Stat.
1282, added subchapter heading and section analysis.
26 USC 4221. Certain tax-free sales
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
Under regulations prescribed by the Secretary, no tax shall be
imposed under this chapter (other than under section 4121, 4081, or
4091) on the sale by the manufacturer (or under subchapter A or C of
chapter 31 on the first retail sale) of an article --
(1) for use by the purchaser for further manufacture, or for resale
by the purchaser to a second purchaser for use by such second purchaser
in further manufacture,
(2) for export, or for resale by the purchaser to a second purchaser
for export,
(3) for use by the purchaser as supplies for vessels or aircraft,
(4) to a State or local government for the exclusive use of a State
or local government, or
(5) to a nonprofit educational organization for its exclusive use,
but only if such exportation or use is to occur before any other use.
Paragraphs (4) and (5) shall not apply to the tax imposed by section
4064. In the case of taxes imposed by section 4051, /1/ or 4071,
paragraphs (4) and (5) shall not apply on and after October 1, 1999. In
the case of the tax imposed by section 4131, paragraphs (3), (4), and
(5) shall not apply and paragraph (2) shall apply only if the use of the
exported vaccine meets such requirements as the Secretary may by
regulations prescribe. In the case of taxes imposed by subchapter A of
chapter 31, paragraphs (1), (3), (4), and (5) shall not apply.
(b) Proof of resale for further manufacture; proof of export
Where an article has been sold free of tax under subsection (a) --
(1) for resale by the purchaser to a second purchaser for use by such
second purchaser in further manufacture, or
(2) for export, or for resale by the purchaser to a second purchaser
for export,
subsection (a) shall cease to apply in respect of such sale of such
article unless, within the 6-month period which begins on the date of
the sale by the manufacturer (or, if earlier, on the date of shipment by
the manufacturer), the manufacturer receives proof that the article has
been exported or resold for use in further manufacture.
(c) Manufacturer relieved from liability in certain cases
In the case of any article sold free of tax under this section (other
than a sale to which subsection (b) applies), and in the case of any
article sold free of tax under section 4001(c), 4002(b), 4003(c),
4004(a), or 4053(a)(6), if the manufacturer in good faith accepts a
certification by the purchaser that the article will be used in
accordance with the applicable provisions of law, no tax shall
thereafter be imposed under this chapter in respect of such sale by such
manufacturer.
(d) Definitions
For purposes of this section --
(1) Manufacturer
The term ''manufacturer'' includes a producer or importer of an
article, and, in the case of taxes imposed by subchapter A or C of
chapter 31, includes the retailer with respect to the first retail sale.
(2) Export
The term ''export'' includes shipment to a possession of the United
States; and the term ''exported'' includes shipped to a possession of
the United States.
(3) Supplies for vessels or aircraft
The term ''supplies for vessels or aircraft'' means fuel supplies,
ships' stores, sea stores, or legitimate equipment on vessels of war of
the United States or of any foreign nation, vessels employed in the
fisheries or in the whaling business, or vessels actually engaged in
foreign trade or trade between the Atlantic and Pacific ports of the
United States or between the United States and any of its possessions.
For purposes of the preceding sentence, the term ''vessels'' includes
civil aircraft employed in foreign trade or trade between the United
States and any of its possessions, and the term ''vessels of war of the
United States or of any foreign nation'' includes aircraft owned by the
United States or by any foreign nation and constituting a part of the
armed forces thereof.
(4) State or local government
The term ''State or local government'' means any State, any political
subdivision thereof, or the District of Columbia.
(5) Nonprofit educational organization
The term ''nonprofit educational organization'' means an educational
organization described in section 170(b)(1)(A)(ii) which is exempt from
income tax under section 501(a). The term also includes a school
operated as an activity of an organization described in section
501(c)(3) which is exempt from income tax under section 501(a), if such
school normally maintains a regular faculty and curriculum and normally
has a regularly enrolled body of pupils or students in attendance at the
place where its educational activities are regularly carried on.
(6) Use in further manufacture
An article shall be treated as sold for use in further manufacture if
--
(A) such article is sold for use by the purchaser as material in the
manufacture or production of, or as a component part of, another article
taxable under this chapter to be manufactured or produced by him; or
(B) in the case of gasoline taxable under section 4081, such gasoline
is sold for use by the purchaser, for nonfuel purposes, as a material in
the manufacture or production of another article to be manufactured or
produced by him.
(7) Qualified bus
(A) In general
The term ''qualified bus'' means --
(i) an intercity or local bus, and
(ii) a school bus.
(B) Intercity or local bus
The term ''intercity or local bus'' means any automobile bus which is
used predominantly in furnishing (for compensation) passenger land
transportation available to the general public if --
(i) such transportation is scheduled and along regular routes, or
(ii) the seating capacity of such bus is at least 20 adults (not
including the driver).
(C) School bus
The term ''school bus'' means any automobile bus substantially all
the use of which is in transporting students and employees of schools.
For purposes of the preceding sentence, the term ''school'' means an
educational organization which normally maintains a regular faculty and
curriculum and normally has a regularly enrolled body of pupils or
students in attendance at the place where its educational activities are
carried on.
(e) Special rules
(1) Reciprocity required in case of civil aircraft
In the case of articles sold for use as supplies for aircraft, the
privileges granted under subsection (a)(3) in respect of civil aircraft
employed in foreign trade or trade between the United States and any of
its possessions, in respect of aircraft registered in a foreign country,
shall be allowed only if the Secretary of the Treasury has been advised
by the Secretary of Commerce that he has found that such foreign country
allows, or will allow, substantially reciprocal privileges in respect of
aircraft registered in the United States. If the Secretary of the
Treasury is advised by the Secretary of Commerce that he has found that
a foreign country has discontinued or will discontinue the allowance of
such privileges, the privileges granted under subsection (a)(3) shall
not apply thereafter in respect of civil aircraft registered in that
foreign country and employed in foreign trade or trade between the
United States and any of its possessions.
(2) Tires
(A) Tax-free sales
Under regulations prescribed by the Secretary, no tax shall be
imposed under section 4071 on the sale by the manufacturer of a tire if
--
(i) such tire is sold for use by the purchaser for sale on or in
connection with the sale of another article manufactured or produced by
such purchaser; and
(ii) such other article is to be sold by such purchaser in a sale
which either will satisfy the requirements of paragraph (2), (3), (4),
or (5) of subsection (a) for a tax-free sale, or would satisfy such
requirements but for the fact that such other article is not subject to
tax under this chapter.
(B) Proof
Where a tire has been sold free of tax under this paragraph, this
paragraph shall cease to apply unless, within the 6-moth period which
begins on the date of the sale by him (or, if earlier on the date of the
shipment by him), the manufacturer of such tire receives proof that the
other article referred to in clause (ii) of subparagraph (A) has been
sold in a manner which satisfies the requirements of such clause (ii)
(including in the case of a sale for export, proof of export of such
other article).
(C) Subsection (a)(1) does not apply
Paragraph (1) of subsection (a) shall not apply with respect to the
tax imposed under section 4071 on the sale of a tire.
(3) Tires used on intercity, local, and school buses
Under regulations prescribed by the Secretary, the tax imposed by
section 4071 shall not apply in the case of tires sold for use by the
purchaser on or in connection with a qualified bus.
(Added Pub. L. 85-859, title I, 119(a), Sept. 2, 1958, 72 Stat.
1282; amended Pub. L. 86-70, 22(a), June 25, 1959, 73 Stat. 146; Pub.
L. 86-344, 2(b), Sept. 21, 1959, 73 Stat. 617; Pub. L. 86-418, 1,
Apr. 8, 1960, 74 Stat. 38; Pub. L. 86-624, 18(e), July 12, 1960, 74
Stat. 416; Pub. L. 87-61, title II, 205(a), June 29, 1961, 75 Stat.
126; Pub. L. 89-44, title II, 208(d), title VIII, 801(c), (d)(1),
June 21, 1965, 79 Stat. 141, 158; Pub. L. 91-172, title I, 101(j)(26),
Dec. 30, 1969, 83 Stat. 529; Pub. L. 92-178, title IV, 401(a)(3)(A),
Dec. 10, 1971, 85 Stat. 531; Pub. L. 94-455, title XIX,
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95-227, 2(b)(2),
Feb. 10, 1978, 92 Stat. 12; Pub. L. 95-600, title VII, 701(ff)(2)(A),
Nov. 6, 1978, 92 Stat. 2924; Pub. L. 95-618, title II, 201(c)(1),
232(a), 233(c)(1), (2), Nov. 9, 1978, 92 Stat. 3183, 3189, 3191, 3192;
Pub. L. 96-222, title I, 108(c)(5), Apr. 1, 1980, 94 Stat. 227; Pub.
L. 97-424, title V, 515(b)(1), 516(b)(2), Jan. 6, 1983, 96 Stat.
2181, 2183; Pub. L. 98-369, div. A, title VII, 735(c)(8), July 18,
1984, 98 Stat. 983; Pub. L. 99-499, title V, 521(d)(4), Oct. 17, 1986,
100 Stat. 1779; Pub. L. 99-514, title XVII, 1703(c)(2)(C), Oct. 22,
1986, 100 Stat. 2776; Pub. L. 100-17, title V, 502(b)(4), Apr. 2,
1987, 101 Stat. 257; Pub. L. 100-203, title IX, 9201(b)(1), title X,
10502(d)(4), Dec. 22, 1987, 101 Stat. 1330-330, 1330-444; Pub. L.
101-239, title VII, 7841(d)(17), Dec. 19, 1989, 103 Stat. 2429; Pub.
L. 101-508, title XI, 11211(d)(3), 11221(b), (d)(1), (2), Nov. 5,
1990, 104 Stat. 1388-427, 1388-444; Pub. L. 102-240, title VIII,
8002(b)(3), Dec. 18, 1991, 105 Stat. 2203.)
A prior section 4221, act Aug. 16, 1954, ch. 736, 68A Stat. 495,
which related to exemption for articles taxable as jewelry, was repealed
by Pub. L. 85-859, title I, 119(a), Sept. 2, 1958, 72 Stat. 1282.
1991 -- Subsec. (a). Pub. L. 102-240 substituted ''1999'' for
''1995'' in concluding provisions.
1990 -- Subsec. (a). Pub. L. 101-508, 11221(b), substituted
''subchapter A or C of chapter 31'' for ''section 4051'' in introductory
provisions and inserted at end ''In the case of taxes imposed by
subchapter A of chapter 31, paragraphs (1), (3), (4), and (5) shall not
apply.''
Pub. L. 101-508, 11211(d)(3), substituted ''1995'' for ''1993'' in
concluding provisions.
Subsec. (c). Pub. L. 101-508, 11221(d)(1), substituted ''section
4001(c), 4002(b), 4003(c), 4004(a), or 4053(a)(6)'' for ''section
4053(a)(6)''.
Subsec. (d)(1). Pub. L. 101-508, 11221(d)(2), substituted ''taxes
imposed by subchapter A or C of chapter 31'' for ''the tax imposed by
section 4051''.
1989 -- Subsec. (c). Pub. L. 101-239 struck out ''or 4083'' after
''4053(a)(6)''.
1987 -- Subsec. (a). Pub. L. 100-203, 10502(d)(4), substituted
''(other than under section 4121, 4081, or 4091) on the sale by the
manufacturer'' for ''(other than under section 4121 or section 4081 (at
the Highway Trust Fund financing rate)) on the sale by the
manufacturer'' in introductory text.
Pub. L. 100-203, 9201(b)(1), inserted at end ''In the case of the
tax imposed by section 4131, paragraphs (3), (4), and (5) shall not
apply and paragraph (2) shall apply only if the use of the exported
vaccine meets such requirements as the Secretary may by regulations
prescribe.''
Pub. L. 100-17 substituted ''1993'' for ''1988''.
1986 -- Subsec. (a). Pub. L. 99-514, as amended by Pub. L. 99-499,
521(d)(4)(B), in introductory text, inserted ''or section 4081 (at the
Highway Trust Fund financing rate)'' after ''section 4121'' as the
probable intent of Congress, notwithstanding directory language that the
insertion be made before ''section 4121'', and substituted ''or 4071''
for ''4071, or 4081 (at the Highway Trust Fund financing rate)'' in last
sentence.
Pub. L. 99-499, 521(d)(4)(A), inserted ''(at the Highway Trust Fund
financing rate)'' after ''4081'' in last sentence.
1984 -- Subsec. (a). Pub. L. 98-369, 735(c)(8)(A), inserted ''(or
under section 4051 on the first retail sale)''.
Subsec. (c). Pub. L. 98-369, 735(c)(8)(B), substituted ''section
4053(a)(6)'' for ''section 4063(a)(6) or (7), 4063(b), 4063(e),''.
Subsec. (d)(1). Pub. L. 98-369, 735(c)(8)(C), inserted '', and, in
the case of the tax imposed by section 4051, includes the retailer with
respect to the first retail sale''.
Subsec. (d)(6). Pub. L. 98-369, 735(c)(8)(D)(i), struck out
provision at end that for purposes of subparagraph (B), the rebuilding
of a part or accessory which is exempt from tax under section 4063(c)
shall not constitute the manufacture or production of such part or
accessory.
Subsec. (d)(6)(A). Pub. L. 98-369, 735(c)(8)(D)(ii), (iv), struck
out ''(other than an article referred to in subparagraph (B))'' after
''such article'', and inserted ''or'' at end.
Subsec. (d)(6)(B), (C). Pub. L. 98-369, 735(c)(8)(D)(i), (iii),
redesignated subpar. (C) as (B) and struck out former subpar. (B)
which related to parts or accessories taxable under former section
4061(b) of this title.
Subsec. (e)(2). Pub. L. 98-369, 735(c)(8)(E), (F), struck out ''and
tubes'' from heading, and in text struck out ''or inner tube'' and ''or
tube'', as the case may be, after ''tire'' wherever appearing.
Subsec. (e)(3) to (6). Pub. L. 98-369, 735(c)(8)(G), added par.
(3), struck out par. (4) which related to bicycle tires or tubes sold
to bicycle manufacturers in general, the definition of a bicycle tire,
and proof, struck out par. (5) which related to tires, tubes and tread
rubber used on intercity, local, and school buses, and struck out par.
(6) which related to bus parts and accessories.
1983 -- Subsec. (a). Pub. L. 97-424, 516(b)(2), inserted provision
that, in the case of taxes imposed by section 4051, 4071, or 4081, pars.
(4) and (5) shall not apply on and after Oct. 1, 1988.
Subsec. (c). Pub. L. 97-424, 515(b)(1), substituted ''or 4083'' for
''4083, or 4093'' after ''4063(e),''.
1980 -- Subsec. (e)(6). Pub. L. 96-222 inserted provisions
respecting selling by a purchaser or a second purchaser.
1978 -- Subsec. (a). Pub. L. 95-618, 201(c)(1), inserted provision
that paragraphs (4) and (5) not apply to the tax imposed by section
4064.
Pub. L. 95-227 inserted ''(other than under section 4121)'' after
''this chapter''.
Subsec. (c). Pub. L. 95-600 substituted ''4063(b), 4063(e),'' for
''4063(b),''.
Subsec. (d)(7). Pub. L. 95-618, 233(c)(2), added par. (7).
Subsec. (e)(5). Pub. L. 95-618, 233(c)(1), substituted provisions
relating to the applicability of the taxes imposed by section 4071(a)(1)
and (3) in the case of tires or inner tubes for tires sold for use by
the purchaser on or in connection with a qualified bus and the tax
imposed by section 4071(a)(4) in the case of tread rubber sold for use
by the purchaser in the recapping or retreading of any tire to be used
by the purchaser on or in connection with a qualified bus for provisions
relating to the applicability of the tax imposed by section 4061(a) to a
bus sold to any person for use exclusively in transporting students and
employees of schools operated by State or local governments or by
nonprofit educational organizations.
Subsec. (e)(6). Pub. L. 95-618, 232(a), added par. (6).
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1971 -- Subsec. (c). Pub. L. 92-178 inserted reference to section
4063(a)(6) or (7).
1969 -- Subsec. (d)(5). Pub. L. 91-172 substituted ''section
170(b)(1)(A)(ii)'' for ''section 503(b)(2)''.
1965 -- Subsec. (d)(6)(B). Pub. L. 89-44, 208(d)(1), struck out ''a
radio or television component taxable under section 4141, or a camera
lens taxable under section 4171,''.
Subsec. (d)(6). Pub. L. 89-44, 801(c), inserted sentence providing
that for purpose of subpar. (B), the rebuilding of a part or accessory
which is exempt from tax under section 4063(c) shall not constitute the
manufacture or production of such part or accessory.
Subsec. (e)(2). Pub. L. 89-44, 208(d)(2)-(5), struck out reference
to automobile receiving sets from catchline and wherever appearing in
subpars. (A) to (C), and reference to tax imposed under section 4141 of
this title from subpars. (A) and (C).
Subsec. (e)(3). Pub. L. 89-44, 208(d)(6), struck out par. (3) which
related to musical instruments sold for religious use.
Subsec. (e)(5). Pub. L. 89-44, 801(d)(1), added par. (5).
Subsec. (f). Pub. L. 89-44, 208(d)(7), struck out subsec. (f) which
related to sales of mechanical pencils and pens for export.
1961 -- Subsec. (d)(6)(C). Pub. L. 87-61 added subpar. (C).
1960 -- Subsec. (d)(4). Pub. L. 86-624 substituted ''any State, any
political subdivision thereof, or the District of Columbia'' for ''any
State, Hawaii, the District of Columbia, or any political subdivision of
any of the foregoing''.
Subsec. (e)(4). Pub. L. 86-418 added par. (4).
1959 -- Subsec. (d)(4). Pub. L. 86-70 struck out ''Alaska,'' before
''Hawaii''.
Subsec. (d)(5). Pub. L. 86-344 included in definition of ''nonprofit
educational organization'' a school operated as an activity of certain
organizations exempt from the income tax and having a regular situs,
faculty, curriculum and student body.
Amendment by section 11221(b), (d)(1), (2) of Pub. L. 101-508
effective Jan. 1, 1991, with exception for contracts binding on Sept.
30, 1990, and at all times thereafter, see section 11221(f) of Pub. L.
101-508, set out as an Effective Date note under section 4001 of this
title.
Pub. L. 100-647, title I, 1017(c)(5), Nov. 10, 1988, 102 Stat.
3576, provided that: ''The amendment made by section 10502(d)(4) of the
Revenue Act of 1987 (Pub. L. 100-203, amending this section) shall be
treated as if included in the amendments made by section 1703 of the
Reform Act (Pub. L. 99-514) except that the reference to section 4091 of
the Internal Revenue Code of 1986 shall not apply to sales before April
1, 1988.''
Amendment by section 9201(b)(1) of Pub. L. 100-203 effective Jan.
1, 1988, see section 9201(d) of Pub. L. 100-203, set out as an
Effective Date note under section 4131 of this title.
Amendment by section 10502(d)(4) of Pub. L. 100-203 applicable to
sales after Mar. 31, 1988, see section 10502(e) of Pub. L. 100-203,
set out as a note under section 40 of this title.
Amendment by Pub. L. 99-514 applicable to gasoline removed (as
defined in section 4082 of this title as amended by section 1703 of Pub.
L. 99-514) after Dec. 31, 1987, see section 1703(h) of Pub. L.
99-514, set out as a note under section 4081 of this title.
Amendment by Pub. L. 99-499 effective Jan. 1, 1987, see section
521(e) of Pub. L. 99-499, set out as a note under section 4041 of this
title.
Amendment by Pub. L. 98-369 effective, except as otherwise provided,
as if included in the provisions of the Highway Revenue Act of 1982,
title V of Pub. L. 97-424, to which such amendment relates, see section
736 of Pub. L. 98-369, set out as a note under section 4051 of this
title.
Amendment by section 515(b)(1) of Pub. L. 97-424 applicable to
articles sold after Jan. 6, 1983, see section 515(c) of Pub. L.
97-424, set out as a note under section 34 of this title.
Amendment by Pub. L. 96-222 effective as if included in the
provision of the Energy Tax Act of 1978, Pub. L. 95-618, to which such
amendment relates, see section 108(c)(7) of Pub. L. 96-222, set out as
a note under section 48 of this title.
Amendment by section 201(c)(1) of Pub. L. 95-618 applicable with
respect to 1980 and later model year automobiles, see section 201(g) of
Pub. L. 95-618, set out as an Effective Date note under section 4064 of
this title.
Section 232(c) of Pub. L. 95-618 provided that: ''The amendments
made by this section (amending this section and section 6416 of this
title) shall apply to sales on or after the first day of the first
calendar month beginning more than 10 days after the date of the
enactment of this Act (Nov. 9, 1978).''
Amendment by section 233(c)(1), (2) of Pub. L. 95-618 effective on
first day of first calendar month which begins more than 10 days after
Nov. 9, 1978, see section 233(d) of Pub. L. 95-618, set out as a note
under section 34 of this title.
Section 701(ff)(3) of Pub. L. 95-600 provided that: ''The
amendments made by this subsection (amending this section and sections
4061 and 4222 of this title) shall take effect on the first day of the
first calendar month beginning more than 20 days after the date of the
enactment of this Act (Nov. 6, 1978).''
Amendment by Pub. L. 95-227 applicable with respect to sales after
Mar. 31, 1978, see section 2(d) of Pub. L. 95-227, set out as an
Effective Date note section 4121 of this title.
Amendment by Pub. L. 92-178 applicable with respect to articles sold
on or after the day after Dec. 10, 1971, see section 401(h)(1) of Pub.
L. 92-178, set out as a note under section 4071 of this title.
Amendment by Pub. L. 91-172 effective on Jan. 1, 1970, see section
101(k)(1) of Pub. L. 91-172, set out as an Effective Date note under
section 4940 of this title.
Amendment by section 208(d) of Pub. L. 89-44 applicable with respect
to articles sold on or after June 22, 1965, except insofar as such
amendments related to the taxes imposed by sections 4061(b), 4091, and
4131 and, as to such taxes, applicable with respect to articles sold on
or after January 1, 1966, see section 701(a) of Pub. L. 89-44, set out
as a note under section 4161 of this title.
Amendment by section 801(c), (d)(1) of Pub. L. 89-44 applicable with
respect to articles sold on or after June 22, 1965, see section 801(e)
of Pub. L. 89-44, set out as a note under section 4261 of this title.
Amendment by Pub. L. 87-61 applicable only in the case of gasoline
sold on or after Oct. 1, 1961, see section 208 of Pub. L. 87-61, set
out as a note under section 4041 of this title.
Amendment by Pub. L. 86-624 effective on Aug. 21, 1959, see section
18(k) of Pub. L. 86-624, set out as a note under section 3121 of this
title.
Section 4 of Pub. L. 86-418 provided that: ''The amendments made by
this Act (amending this section and sections 4218, 4223, and 6416 of
this title) shall apply only with respect to bicycle tires and tubes
sold by the manufacturer, producer, or importer thereof on or after the
first day of the first month which begins more than 10 days after the
date of the enactment of this Act (Apr. 8, 1960).''
Amendment by Pub. L. 86-344 effective Jan. 1, 1959, see section
2(e) of Pub. L. 86-344.
Amendment by Pub. L. 86-70 effective Jan. 3, 1959, see section
22(i) of Pub. L. 86-70, set out as a note under section 3121 of this
title.
Section effective on first day of first calendar quarter which begins
more than 60 days after Sept. 2, 1958, see section 1(c) of Pub. L.
85-859.
/1/ So in original. The comma probably should not appear.
26 USC 4222. Registration
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
Except as provided in subsection (b), section 4221 shall not apply
with respect to the sale of any article unless the manufacturer, the
first purchaser, and the second purchaser (if any) are all registered
under this section. Registration under this section shall be made at
such time, in such manner and form, and subject to such terms and
conditions, as the Secretary may by regulations prescribe. A
registration under this section may be used only in accordance with
regulations prescribed under this section.
(b) Exceptions
(1) Purchases by State and local governments
Subsection (a) shall not apply to any State or local government in
connection with the purchase by it of any article if such State or local
government complies with such regulations relating to the use of
exemption certificates in lieu of registration as the Secretary shall
prescribe to carry out the purpose of this paragraph.
(2) Export
Subject to such regulations as the Secretary may prescribe for the
purpose of this paragraph, in the case of any sale or resale for export,
the Secretary may relieve the purchaser or the second purchaser, or
both, from the requirement of registering under this section.
(3) Certain purchases and sales by the United States
Subsection (a) shall apply to purchases and sales by the United
States only to the extent provided by regulations prescribed by the
Secretary.
((4) Repealed. Pub. L. 89-44, title II, 208(e), June 21, 1965, 79
Stat. 141)
(5) Supplies for vessels or aircraft
Subsection (a) shall not apply to a sale of an article for use by the
purchaser as supplies for any vessel or aircraft if such purchaser
complies with such regulations relating to the use of exemption
certificates in lieu of registration as the Secretary shall prescribe to
carry out the purpose of this paragraph.
(c) Denial, revocation, or suspension of registration
Under regulations prescribed by the Secretary, the registration of
any person under this section may be denied, revoked, or suspended if
the Secretary determines --
(1) that such person has used such registration to avoid the payment
of any tax imposed by this chapter, or to postpone or in any manner to
interfere with the collection of any such tax, or
(2) that such denial, revocation, or suspension is necessary to
protect the revenue.
The denial, revocation, or suspension under this subsection shall be
in addition to any penalty provided by law for any act or failure to
act.
(d) Registration in the case of certain other exemptions
The provisions of this section may be extended to, and made
applicable with respect to, the exemptions provided by sections 4001(c),
4002(b), 4003(c), 4004(a), 4053(a)(6), 4064(b)(1)(C), 4101, and 4182(b),
and the exemptions authorized under section 4293 in respect of the taxes
imposed by this chapter, to the extent provided by regulations
prescribed by the Secretary.
(e) Definitions
Terms used in this section which are defined in section 4221(d) shall
have the meaning given to them by section 4221(d).
(Added Pub. L. 85-859, title I, 119(a), Sept. 2, 1958, 72 Stat.
1284; amended June 21, 1965, Pub. L. 89-44, title II, 208(e), title
VIII, 802(c), 79 Stat. 141, 159; Pub. L. 92-178, title IV,
401(a)(3)(B), Dec. 10, 1971, 85 Stat. 531; Pub. L. 94-455, title XIX,
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95-600, title VII,
701(ff)(2)(B), Nov. 6, 1978, 92 Stat. 2925; Pub. L. 95-618, title II,
201(e), 231(f)(2), Nov. 9, 1978, 92 Stat. 3184, 3189; Pub. L. 97-424,
title V, 515(b)(2), Jan. 6, 1983, 96 Stat. 2181; Pub. L. 98-369, div.
A, title VII, 735(c)(9), July 18, 1984, 98 Stat. 983; Pub. L. 100-647,
title I, 1017(c)(16), Nov. 10, 1988, 102 Stat. 3577; Pub. L. 101-508,
title XI, 11212(b)(2), 11221(d)(3), Nov. 5, 1990, 104 Stat. 1388-431,
1388-444.)
A prior section 4222, act Aug. 16, 1954, ch. 736, 68 Stat. 495,
which related to exemption from tax of certain supplies for vessels and
airplanes, was repealed by Pub. L. 85-859, title I, 119(a), Sept. 2,
1958, 72 Stat. 1282. See section 4221 of this title.
1990 -- Subsec. (c). Pub. L. 101-508, 11212(b)(2), substituted
''Denial, revocation, or suspension'' for ''Revocation or suspension''
in heading, ''denied, revoked, or suspended'' for ''revoked or
suspended'' in introductory provisions, and ''denial, revocation, or
suspension'' for ''revocation or suspension'' in par. (2) and
concluding provisions.
Subsec. (d). Pub. L. 101-508, 11221(d)(3), substituted ''sections
4001(c), 4002(b), 4003(c), 4004(a), 4053(a)(6)'' for ''sections
4053(a)(6)''.
1988 -- Subsec. (d). Pub. L. 100-647 substituted ''4101'' for
''4083''.
1984 -- Subsec. (d). Pub. L. 98-369 substituted ''4053(a)(6)'' for
''4063(a)(7), 4063(b), 4063(e)''.
1983 -- Subsec. (d). Pub. L. 97-424 struck out ''4093,'' after
''4083,''.
1978 -- Subsec. (d). Pub. L. 95-618 substituted ''4063(a)(7),
4063(b), 4064(b)(1)(C),'' for ''4063(a)(6) and (7), 4063(b),''.
Pub. L. 95-600 substituted ''4063(b), 4063(e),'' for ''4063(b),''.
1976 -- Subsecs. (a) to (d). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
1971 -- Subsec. (d). Pub. L. 92-178 inserted reference to section
4063(a)(6) and (7).
1965 -- Subsec. (b)(4). Pub. L. 89-44, 208(e), struck out par. (4)
which related to mechanical pencils, fountain pens, and ball point pens.
Subsec. (b)(5). Pub. L. 89-44, 802(c), added par. (5).
Amendment by section 11212(b)(2) of Pub. L. 101-508 effective Dec.
1, 1990, see section 11212(f)(2) of Pub. L. 101-508, set out as a note
under section 4081 of this title.
Amendment by section 11221(d)(3) of Pub. L. 101-508 effective Jan.
1, 1991, with exception for contract binding on Sept. 30, 1990, and at
all times thereafter, see section 11221(f) of Pub. L. 101-508, set out
as an Effective Date note under section 4001 of this title.
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Amendment by Pub. L. 98-369 effective, except as otherwise provided,
as if included in the provisions of the Highway Revenue Act of 1982,
title V of Pub. L. 97-424, to which such amendment relates, see section
736 of Pub. L. 98-369, set out as a note under section 4051 of this
title.
Amendment by Pub. L. 97-424 applicable to articles sold after Jan.
6, 1983, see section 515(c) of Pub. L. 97-424, set out as a note under
section 34 of this title.
Amendment by section 201(e) of Pub. L. 95-618 applicable with
respect to 1980 and later model year automobiles, see section 201(g) of
Pub. L. 95-618, set out as an Effective Date note under section 4064 of
this title.
Section 231(g) of Pub. L. 95-618 provided that:
''(1) The amendments made by subsections (a) and (f) (amending this
section and sections 4063 and 6412 of this title) shall apply with
respect to articles sold after the date of the enactment of this Act
(Nov. 9, 1978).
''(2) For purposes of paragraph (1), an article shall not be
considered sold on or before the date of the enactment of this Act (Nov.
9, 1978) unless possession or right to possession passes to the
purchaser on or before such date.
''(3) In the case of --
''(A) a lease,
''(B) a contract for the sale of an article providing that the price
shall be paid by installments and title to the article sold does not
pass until a future date notwithstanding partial payment by
installments,
''(C) a conditional sale, or
''(D) a chattel mortgage arrangement providing that the sale price
shall be paid in installments,
entered into on or before the date of the enactment of this Act (Nov.
9, 1978), payments made after such date with respect to the article
leased or sold shall, for purposes of this subsection, be considered as
payments made with respect to an article sold after such date, if the
lessor or vendor establishes that the amount of payments payable after
such date with respect to such article has been reduced by an amount
equal to that portion of the tax applicable with respect to the lease or
sale of such article which is due and payable after such date. If the
lessor or vendor does not establish that the payments have been so
reduced, they shall be treated as payments made in respect of an article
sold on or before the date of the enactment of this Act.''
Amendment by Pub. L. 95-600 effective on first day of first calendar
month beginning more than 20 days after Nov. 6, 1978, see section
701(ff)(3) of Pub. L. 95-600, set out as a note under section 4221 of
this title.
Amendment by Pub. L. 92-178 applicable with respect to articles sold
on or after the day after Dec. 10, 1971, see section 401(h)(1) of Pub.
L. 92-178, set out as a note under section 4071 of this title.
Amendment by section 208(e) of Pub. L. 89-44 applicable with respect
to articles sold on or after June 22, 1965, except insofar as such
amendments related to the taxes imposed by sections 4061(b), 4091, and
4131 and, as to such taxes, applicable with respect to articles sold on
or after January 1, 1966, see section 701(a) of Pub. L. 89-44, set out
as a note under section 4161 of this title.
Amendment by section 802(c) of Pub. L. 89-44 applicable with respect
to articles sold on or after July 1, 1965, see section 802(d)(1) of Pub.
L. 89-44, set out as a note under section 4082 of this title.
26 USC 4223. Special rules relating to further manufacture
TITLE 26 -- INTERNAL REVENUE CODE
(a) Purchasing manufacturer to be treated as the manufacturer
For purposes of this chapter, a manufacturer or producer to whom an
article is sold or resold free of tax under section 4221(a)(1) for use
by him in further manufacture shall be treated as the manufacturer or
producer of such article.
(b) Computation of tax
If the manufacturer or producer referred to in subsection (a) incurs
liability for tax under this chapter on his sale or use of an article
referred to in subsection (a) and the tax is based on the price for
which the article is sold, the article shall be treated as having been
sold by him --
(1) at the price for which the article was sold by him (or, where the
tax is on his use of the article, at the price referred to in section
4218(c)); or
(2) if he so elects and establishes such price to the satisfaction of
the Secretary --
(A) at the price for which the article was sold to him; or
(B) at the price for which the article was sold by the person who
(without regard to subsection (a)) is the manufacturer, producer, or
importer of such article.
For purposes of this subsection, the price for which the article was
sold shall be determined as provided in section 4216. For purposes of
paragraph (2) no adjustment or readjustment shall be made in such price
by reason of any discount, rebate, allowance, return or repossession of
a container or covering, or otherwise. An election under paragraph (2)
shall be made in the return reporting the tax applicable to the sale or
use of the article, and may not be revoked.
(Added Pub. L. 85-859, title I, 119(a), Sept. 2, 1958, 72 Stat.
1285; amended Pub. L. 86-418, 2(b), Apr. 8, 1960, 74 Stat. 38; Pub.
L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834;
Pub. L. 98-369, div. A, title VII, 735(c)(10), July 18, 1984, 98 Stat.
983.)
A prior section 4223, act Aug. 16, 1954, ch. 736, 68A Stat. 495,
which related to exemption of articles manufactured or produced by
Indians, was repealed by Pub. L. 85-859, title I, 119(a), Sept. 2,
1958, 72 Stat. 1282. See section 4225 of this title.
1984 -- Subsec. (b)(1). Pub. L. 98-369 substituted ''4218(c)'' for
''section 4218(e)''.
1976 -- Subsec. (b) Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
1960 -- Subsec. (b)(1). Pub. L. 86-418 substituted ''section
4218(e)'' for ''section 4218(d)''.
Amendment by Pub. L. 98-369 effective, except as otherwise provided,
as if included in the provisions of the Highway Revenue Act of 1982,
title V of Pub. L. 97-424, to which such amendment relates, see section
736 of Pub. L. 98-369, set out as a note under section 4051 of this
title.
Amendment by Pub. L. 86-418 applicable only with respect to bicycle
tires and tubes sold by the manufacturer, producer, or importer thereof
on or after the first day of the first month which begins more than 10
days after April 8, 1960, see section 4 of Pub. L. 86-418, set out as a
note under section 4221 of this title.
26 USC ( 4224. Repealed. Pub. L. 89-44, title I, 101(b)(5), June 21,
1965, 79 Stat. 136)
TITLE 26 -- INTERNAL REVENUE CODE
Section, Pub. L. 85-859, title I, 119(a), Sept. 2, 1958, 72 Stat.
1286, exempted, with specified exemptions, articles taxable under
section 4001 from the imposition of the manufacturers excise tax.
A prior section 4224, act Aug. 16, 1954, ch. 736, 68A Stat. 495,
which exempted articles for the exclusive use of any State, Territory,
or political subdivision of either, or the District of Columbia, was
repealed by Pub. L. 85-859, title I, 119(a), Sept. 2, 1958, 72 Stat.
1282.
Repeal applicable with respect to articles sold on or after June 22,
1965, see section 701(a) of Pub. L. 89-44, set out as an Effective Date
of 1965 Amendment note under section 4161 of this title.
26 USC 4225. Exemption of articles manufactured or produced by Indians
TITLE 26 -- INTERNAL REVENUE CODE
No tax shall be imposed under this chapter on any article of native
Indian handicraft manufactured or produced by Indians on Indian
reservations, or in Indian schools, or by Indians under the jurisdiction
of the United States Government in Alaska.
(Added Pub. L. 85-859, title I, 119(a), Sept. 2, 1958, 72 Stat.
1286.)
A prior section 4225, act Aug. 16, 1954, ch. 736, 68A Stat. 496,
which related to exemption for exports, was repealed by Pub. L.
85-859, title I, 119(a), Sept. 2, 1958, 72 Stat. 1282. See section
4221 of this title.
Admission of Alaska into the Union was accomplished Jan. 3, 1959, on
issuance of Proc. No. 3269, Jan. 3, 1959, 24 F.R. 81, 73 Stat. c16,
as required by sections 1 and 8(c) of Pub. L. 85-508, July 7, 1958, 72
Stat. 339, set out as notes preceding section 21 of Title 48,
Territories and Insular Possessions.
26 USC ( 4226. Repealed. Pub. L. 94-455, title XIX, 1904(a)(4), Oct.
4, 1976, 90 Stat. 1811)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added June 29, 1956, ch. 462, title II, 207(a), 70 Stat.
391; amended Sept. 21, 1959, Pub. L. 86-342, title II,
201(c)(1)-(3), 73 Stat. 614; June 29, 1961, Pub. L. 87-61, title II,
206(a), (b), 75 Stat. 127; Aug. 1, 1966, Pub. L. 89-523, 2, 80 Stat.
331, related to floor stocks taxes for 1956 on tires of the type used
on highway vehicles, on tread rubber, on gasoline, for 1959 on gasoline,
for 1961 on certain tires and inner tubes and tread rubber, provisions
relating to overpayment of floor stocks taxes, due date for taxes, taxes
on certain tires and tubes, and definitions of ''dealer'' and ''held by
a dealer''.
A prior section 4226 of this title was renumbered section 4227.
26 USC 4227. Cross reference
TITLE 26 -- INTERNAL REVENUE CODE
For exception for a sale to an Indian tribal government (or its
subdivision) for the exclusive use of an Indian tribal government (or
its subdivision), see section 7871.
(Aug. 16, 1954, ch. 736, 68A Stat. 496, 4226; renumbered 4227,
June 29, 1956, ch. 462, title II, 207(a), 70 Stat. 391; amended June
21, 1965, Pub. L. 89-44, title II, 208(f), 79 Stat. 141; Oct. 4, 1976,
Pub. L. 94-455, title XIX, 1904(a)(5), 90 Stat. 1811; Jan. 14, 1983,
Pub. L. 97-473, title II, 202(b)(8), 96 Stat. 2610; July 18, 1984,
Pub. L. 98-369, div. A, title VII, 735(c)(11), 98 Stat. 983; Oct. 22,
1986, Pub. L. 99-514, title XVIII, 1899A(49), 100 Stat. 2961.)
1986 -- Pub. L. 99-514 amended section generally, substituting
''reference'' for ''references'' in section catchline, struck out par.
(1) designation, substituted ''exception'' for ''exemption'', and struck
out par. (2) relating to cross reference to credit for taxes on tires.
1984 -- Par. (2). Pub. L. 98-369 struck out ''and tubes'' after ''on
tires''.
1983 -- Pub. L. 97-473 designated existing provisions as par. (2)
and added par. (1).
1976 -- Pub. L. 94-455 struck out pars. (1) and (3) relating to
cross references to exemption from tax in case of certain sales to the
United States and to administrative provisions of general applicability,
respectively.
1965 -- Par. (2). Pub. L. 89-44 struck out ''and automobile radio
and television receiving sets,'' after ''tires and inner tubes,''.
Amendment by Pub. L. 98-369 effective, except as otherwise provided,
as if included in the provisions of the Highway Revenue Act of 1982,
title V of Pub. L. 97-424, to which such amendment relates, see section
736 of Pub. L. 98-369, set out as a note under section 4051 of this
title.
For effective date of amendment by Pub. L. 97-473, see section
204(5) of Pub. L. 97-473, set out as an Effective Date note under
section 7871 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1904(d)
of Pub. L. 94-455, set out as a note under section 4041 of this title.
Amendment by Pub. L. 89-44 applicable with respect to articles sold
on or after June 22, 1965, except insofar as such amendments related to
the taxes imposed by sections 4061(b), 4091, and 4131 and, as to such
taxes, applicable with respect to articles sold on or after January 1,
1966, see section 701(a) of Pub. L. 89-44, set out as a note under
section 4161 of this title.
26 USC CHAPTER 33 -- FACILITIES AND SERVICES
TITLE 26 -- INTERNAL REVENUE CODE
Subchapter Sec. /1/
(A.
lRepealed.)
B.
Communications 4251
C.
Transportation by air 4261
(D.
lRepealed.)
E.
Special provisions applicable to services and facilities taxes 4291
Table of subchapters for chapter 33 amended by striking out the item
relating to subchapter B dealing with Communications, effective Jan. 1,
1982, see Pub. L. 90-364, title I, 105(b)(3), June 28, 1968, 82 Stat.
266, as amended by Pub. L. 91-172, title VII, 702(b)(3), Dec. 30,
1969, 83 Stat. 660; Pub. L. 91-614, title II, 201(b)(3), Dec. 31,
1970, 84 Stat. 1843. Repeal of item B was not executed in view of the
amendments to section 4251 of this title by Pub. L. 96-499, Pub. L.
97-34, Pub. L. 97-248, Pub. L. 98-369, Pub. L. 99-514, and Pub. L.
101-508, extending the date in (and finally eliminating) provisions
which had reduced the tax to zero after a specified date.
1970 -- Pub. L. 91-258, title II, 205(c)(5), May 21, 1970, 84 Stat.
242, substituted ''Transportation by air'' for ''Transportation of
persons by air'' in item for subchapter C.
1965 -- Pub. L. 89-44, title III, 301, 304, June 21, 1965, 79
Stat. 145, 148, struck out items for subchapters A and D.
1962 -- Pub. L. 87-508, 5(c)(1), June 28, 1962, 76 Stat. 118,
substituted ''Transportation of persons by air'' for ''Transportation of
persons'' in item for subchapter C.
1958 -- Pub. L. 85-475, 4(b)(1), June 30, 1958, 72 Stat. 260,
substituted ''Transportation of persons'' for ''Transportation'' in item
for subchapter C.
Pub. L. 87-508, 5(d), June 28, 1962, 76 Stat. 119, provided in part
that: ''The amendment made by subsection (c)(1) (amending item for
subchapter C in the analysis) shall apply only with respect to
transportation beginning after November 15, 1962.''
/1/ Section numbers editorially supplied.
26 USC (Subchapter A -- Repealed)
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 4231 to 4234. Repealed. Pub. L. 89-44, title III, 301, June
21, 1965, 79 Stat. 145)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4231, acts Aug. 16, 1954, ch. 736, 68A Stat. 497; Aug.
6, 1956, ch. 1019, 1, 70 Stat. 1074; Sept. 2, 1958, Pub. L.
85-859, title I, 131(a)-(c), 72 Stat. 1286, 1287; Apr. 8, 1960, Pub.
L. 86-422, 1, 74 Stat. 41, imposed a tax on admissions, permanent use
or lease of boxes or seats, sales outside of box office in excess of
established price, sales by proprietors in excess of established price,
and cabarets.
Section 4232, acts Aug. 16, 1954, ch. 736, 68A Stat. 498; Sept.
2, 1958, Pub. L. 85-859, title I, 131(d), 72 Stat. 1287, defined
admission, roof garden, cabaret, or other similar place, and performance
for profit as used in section 4231.
Section 4233, acts Aug. 16, 1954, ch. 736, 68A Stat. 498; Aug.
11, 1955, ch. 792, 1, 69 Stat. 675; Apr. 16, 1958, Pub. L. 85-380,
1-3, 72 Stat. 88; Sept. 2, 1958, Pub. L. 85-859, title I, 131(e),
(f), 72 Stat. 1287; June 25, 1959, Pub. L. 86-70, 22(a), 73 Stat.
146; Sept. 21, 1959, Pub. L. 86-319, 1, 73 Stat. 590; Sept. 21,
1959, Pub. L. 86-344, 2(c), 73 Stat. 617; July 12, 1960, Pub. L.
86-624, 18(d), 74 Stat. 416, granted certain exemptions to certain
charitable, educational, or religious entertainments, agricultural
fairs, certain musical or dramatic performances, swimming pools, etc.,
home and garden tours, historic sites, certain amateur theatricals,
certain amateur baseball games, rodeos, pageants, and certain benefit
performances.
Section 4234, act Aug. 16, 1954, ch. 736, 68A Stat. 501, required
that price of tickets be printed on face or back of such tickets and
provided a penalty for selling tickets not so stamped.
Repeal applicable with respect to admissions, services, or uses after
noon, December 31, 1965, see section 701(b)(1) of Pub. L. 89-44, set
out as an Effective Date of 1965 Amendment note under section 4291 of
this title.
26 USC ( 4241 to 4243. Repealed. Pub. L. 89-44, title III, 301, June
21, 1965, 79 Stat. 145)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4241, acts Aug. 16, 1954, ch. 736, 68A Stat. 501; Sept.
2, 1958, Pub. L. 85-859, title I, 132(a), 72 Stat. 1288; Sept. 21,
1959, Pub. L. 86-344, 3(b), 73 Stat. 618, imposed a tax on dues or
membership fees, initiation, fees, and life memberships in social,
athletic, or sporting clubs or organizations.
Section 4242, act Aug. 16, 1954, ch. 736, 68A Stat. 501, defined
dues and initiation fees as used in section 4241.
Section 4243, acts Aug. 16, 1954, ch. 736, 68A Stat. 502; Sept.
2, 1958, Pub. L. 85-859, title I, 132(b), 72 Stat. 1288; Sept. 21,
1959, Pub. L. 86-344, 3(a), 73 Stat. 618, granted exemptions to
fraternal organizations, payments for capital improvements, and
nonprofit swimming or skating facilities.
Repeal applicable with respect to dues and membership fees
attributable to periods beginning on or after January 1, 1966,
initiation fees and amounts paid for life memberships attributable to
memberships beginning on or after January 1, 1966, initiation fees paid
on or after July 1, 1965, to a new club or organization first making its
facilities available to members on or after such a date, and, in the
case of amounts described in section 4243(b) of this title, 3-year
periods beginning on or after January 1, 1966, see section 701(b)(1) of
Pub. L. 89-44, set out as an Effective Date of 1965 Amendment note
under section 4291 of this title.
26 USC Subchapter B -- Communications
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4251. Imposition of tax.
4252. Definitions.
4253. Exemptions.
4254. Computation of tax.
This subchapter, relating to the tax on communication, was repealed
by Pub. L. 90-364, title I, 105(b)(3), June 28, 1968, 82 Stat. 266,
as amended by Pub. L. 91-172, title VII, 702(b)(3), Dec. 30, 1969, 83
Stat. 660; Pub. L. 91-614, title II, 201(b)(3), Dec. 31, 1970, 84
Stat. 1843, effective with respect to amounts paid pursuant to bills
first rendered on or after Jan. 1, 1982. In the case of communications
services rendered before Nov. 1, 1981, for which a bill has not been
rendered before Jan. 1, 1982, a bill shall be treated as having been
first rendered on Dec. 31, 1981. Repeal of this subchapter was not
executed in view of the amendments to section 4251 of this title by Pub.
L. 96-499, Pub. L. 97-34, Pub. L. 97-248, Pub. L. 98-369, Pub. L.
99-514, Pub. L. 100-203, and Pub. L. 101-508, extending the date in
(and finally eliminating) provisions which had reduced the tax to zero
after a specified date.
26 USC 4251. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax imposed
(1) In general
There is hereby imposed on amounts paid for communications services a
tax equal to the applicable percentage of amounts so paid.
(2) Payment of tax
The tax imposed by this section shall be paid by the person paying
for such services.
(b) Definitions
For purposes of subsection (a) --
(1) Communications services
The term ''communications services'' means --
(A) local telephone service;
(B) toll telephone service; and
(C) teletypewriter exchange service.
(2) Applicable percentage
The term ''applicable percentage'' means 3 percent.
(c) Special rule
For purposes of subsections (a) and (b), in the case of
communications services rendered before November 1 of a calendar year
for which a bill has not been rendered before the close of such year, a
bill shall be treated as having been first rendered on December 31 of
such year.
(Aug. 16, 1954, ch. 736, 68A Stat. 503; Sept. 2, 1958, Pub. L.
85-859, title I, 133(a), 72 Stat. 1289; June 30, 1959, Pub. L. 86-75,
5, 73 Stat. 158; June 30, 1960, Pub. L. 86-564, title II, 202(a)(2),
74 Stat. 290; June 30, 1961, Pub. L. 87-72, 3(a)(2), 75 Stat. 193;
June 28, 1962, Pub. L. 87-508, 3(a)(2), 76 Stat. 114; June 29, 1963,
Pub. L. 88-52, 3(a)(2), 77 Stat. 72; June 30, 1964, Pub. L. 88-348,
2(a)(2), 78 Stat. 237; June 21, 1965, Pub. L. 89-44, title III, 302,
title VII, 701(b)(2)(B), 79 Stat. 145, 156; Mar. 15, 1966, Pub. L.
89-368, title II, 202(a), 80 Stat. 66; Apr. 12, 1968, Pub. L. 90-285,
1(a)(3), 82 Stat. 92; June 28, 1968, Pub. L. 90-364, title I,
105(b)(1), (2), 82 Stat. 265; Dec. 30, 1969, Pub. L. 91-172, title
VII, 702(b)(1), (2), 83 Stat. 660; Dec. 31, 1970, Pub. L. 91-614,
title II, 201(b)(1), (2), 84 Stat. 1843; Dec. 5, 1980, Pub. L. 96-499,
title XI, 1151, 94 Stat. 2694; Aug. 13, 1981, Pub. L. 97-34, title
VIII, 821, 95 Stat. 351; Sept. 3, 1982, Pub. L. 97-248, title II,
282(a), 96 Stat. 568; July 18, 1984, Pub. L. 98-369, div. A, title I,
26, 98 Stat. 507; Oct. 22, 1986, Pub. L. 99-514, title XVIII,
1801(b), 100 Stat. 2785; Dec. 22, 1987, Pub. L. 100-203, title X,
10501, 101 Stat. 1330-438; Nov. 5, 1990, Pub. L. 101-508, title XI,
11217(a), 104 Stat. 1388-437.)
This subchapter, relating to the tax on communications, was repealed
by Pub. L. 90-364, title I, 105(b)(3), June 28, 1968, 82 Stat. 266,
as amended by Pub. L. 91-172, title VII, 702(b)(3), Dec. 30, 1969, 83
Stat. 660; Pub. L. 91-614, title II, 201(b)(3), Dec. 31, 1970, 84
Stat. 1843, effective with respect to amounts paid pursuant to bills
first rendered on or after Jan. 1, 1982. In the case of communications
services rendered before Nov. 1, 1981, for which a bill has not been
rendered before Jan. 1, 1982, a bill shall be treated as having been
first rendered on Dec. 31, 1981.
Pub. L. 96-499, title XI, 1151, Dec. 5, 1980, 94 Stat. 2694; Pub.
L. 97-34, title VIII, 821, Aug. 13, 1981, 95 Stat. 351; Pub. L.
97-248, title II, 282(a), Sept. 3, 1982, 96 Stat. 568; Pub. L.
98-369, div. A, title I, 26, July 18, 1984, 98 Stat. 507; Pub. L.
99-514, title XVIII, 1801(b), Oct. 22, 1986, 100 Stat. 2785; Pub.
L. 100-203, title X, 10501, Dec. 22, 1987, 101 Stat. 1330-438; Pub.
L. 101-508, title XI, 11217(a), Nov. 5, 1990, 104 Stat. 1388-437,
amended section 4251 of this title, relating to the imposition of the
tax on communications, extending the date in (and finally eliminating)
provisions which had reduced the tax to zero after a specified date,
without amending Pub. L. 90-364, title I, 105(b)(3), June 28, 1968, 82
Stat. 266, which, as amended, had repealed this subchapter, effective
with respect to amounts paid pursuant to bills first rendered on or
after Jan. 1, 1982.
1990 -- Subsec. (b)(2). Pub. L. 101-508 substituted ''percent.'' for
''percent; except that, with respect to amounts paid pursuant to bills
first rendered after 1990, the applicable percentage shall be zero.''
1987 -- Subsec. (b)(2). Pub. L. 100-203 amended par. (2) generally.
Prior to amendment, par. (2) read as follows: ''The term 'applicable
percentage' means --
''With respect to amount paid pur-
suant to bills first rendered: The percentage is: During 1983,
1984, 1985, 1986, or 1987 3 During 1988 or thereafter 0.''
1986 -- Subsec. (b)(2). Pub. L. 99-514 inserted ''1985,'' after
''1984,'' in table.
1984 -- Subsec. (b)(2). Pub. L. 98-369 substituted ''During 1983,
1984, 1986, or 1987'' for ''During 1983, 1984, or 1985'' in item
relating to an applicable percentage of 3 and substituted ''During 1988
or thereafter'' for ''During 1986 or thereafter'' in item relating to an
applicable percentage of 0.
1982 -- Subsec. (a). Pub. L. 97-248 added subsec. (a) and struck
out former subsec. (a) which provided that there was a tax on
communication services specified as local telephone service, toll
telephone service, and teletypewriter exchange service, directed that
the tax was to be paid by the person paying for such services, and
designated the tax as the percentage of the amount paid for the services
as set out in the following table:
l''Amounts paid pursuant to
l bills first rendered -- Percent --
''Before January 1, 1973 10 During 1973 9 During 1974 8 During
1975 7 During 1976 6 During 1977 5 During 1978 4 During 1979 3
During 1980 or 1981 2 During 1982, 1983, or 1984 1''
Subsec. (b). Pub. L. 97-248 added subsec. (b) and struck out former
subsec. (b) which provided that the tax imposed by former subsec. (a)
would not apply to amounts paid pursuant to bills first rendered on or
after January 1, 1985.
1981 -- Subsec. (a)(2). Pub. L. 97-34, 821(a), substituted ''During
1982, 1983, or 1984'' for ''During 1982'' in table.
Subsec. (b). Pub. L. 97-34, 821(b), extended termination date to
Jan. 1, 1985, from Jan. 1, 1983.
1980 -- Subsec. (a)(2). Pub. L. 96-499, 1151(a), substituted
''During 1980 or 1981'' for ''During 1980'' and ''During 1982'' for
''During 1981'' in table.
Subsec. (b). Pub. L. 96-499, 1151(b), substituted ''1983'' for
''1982''.
1970 -- Subsec. (a)(2). Pub. L. 91-614, 201(b)(1), substituted
provisions providing the rate of tax on amounts paid for communication
services pursuant to bills first rendered before Jan. 1, 1973 is 10% of
such amount, amounts paid pursuant to bills first rendered during 1973
is 9% of such amount, during 1974 is 8% of such amount, during 1975 is
7% of such amount, during 1976 is 6% of such amount, during 1977 is 5%
of such amount, during 1978 is 4% of such amount, during 1979 is 3% of
such amount, during 1980 is 2% of such amount, and during 1981 is 1% of
such amount for provisions providing the rate of tax on amounts paid for
communication services pursuant to bills first rendered before Jan. 1,
1971 is 10% of such amount, amounts paid pursuant to bills first
rendered during 1971 is 5% of such amount, during 1972 is 3% of such
amount, and during 1973 is 1% of such amount.
Subsec. (b). Pub. L. 91-614, 201(b)(2), substituted ''January 1,
1982'' for ''January 1, 1974''.
1969 -- Subsec. (a)(2). Pub. L. 91-172, 702(b)(1), increased rate
of tax on amounts paid for for communication services from 5 to 10
percent during 1970, from 3 to 5 percent during 1971, from 1 to 3
percent during 1972, and imposed a 1 percent tax on amounts paid for
communication services during 1973.
Subsec. (b). Pub. L. 91-172, 702(b)(2), substituted ''January 1,
1974'' for ''January 1, 1973''.
1968 -- Subsec. (a)(2). Pub. L. 90-364, 105(b)(1), extended from
April 30, 1968, through the end of 1969 the period for the imposition of
the 10 percent rate, thereby increasing the rate from 1 percent to 10
percent for the period May 1, 1968, through the end of 1968 and from 0
percent to 10 percent for 1969, and imposed a rate of 5 percent during
1970, a rate of 3 percent during 1971, and a rate of 1 percent during
1972.
Pub. L. 90-285 substituted ''April 30, 1968'' and ''May 1, 1968'' for
''March 31, 1968'' and ''April 1, 1968'' respectively.
Subsec. (b). Pub. L. 90-364, 105(b)(2), substituted ''1973'' for
''1969''.
Subsec. (c). Pub. L. 90-364, 105(b)(2), extended provisions calling
for treatment of bills not rendered before the end of a year for service
rendered before November 1 of that year as having been first rendered on
December 31 of that year so as to include years subsequent to 1968 and
struck out special provision for the application of subsec. (a) in the
case of communication services rendered before March 1, 1968, for which
a bill was not rendered before May 1, 1968.
Pub. L. 90-285 substituted ''March 1, 1968,'' for ''February 1,
1968'', ''May 1, 1968'' for ''April 1, 1968'', ''April 30, 1968'' for
''March 31, 1968'', and ''February 29, 1968'' for ''January 31, 1968''.
1966 -- Subsec. (a)(2). Pub. L. 89-368, 202(a)(1), increased to 10
percent the schedule of rates for tax imposed for the period up to April
1, 1968, and authorized a reduction to 1 percent for the period after
March 31, 1968, and before January 1, 1969.
Subsec. (c). Pub. L. 89-368, 202(a)(2), conformed subsection to rate
reduction schedule alterations by providing that, in the case of
communications services rendered before February 1, 1968, for which a
bill has not been rendered before April 1, 1968, the bill shall be
treated as having been first rendered on March 31, 1968, and, in the
case of services rendered after January 31, 1968, and before November 1,
1968, for which a bill has not been rendered before January 1, 1969, the
bill shall be treated as having first been rendered on December 31,
1968.
1965 -- Subsec. (a). Pub. L. 89-44, 302, substituted local
telephone service, toll telephone service, and teletypewriter exchange
service, for general telephone service, toll telephone service,
telegraph service, teletypewriter exchange service, wire mileage
service, and wire and equipment service as the taxed services and
reduced the rate of tax to 3 percent during 1966, 2 percent during 1967,
and 1 percent during 1968.
Subsec. (b). Pub. L. 89-44, 302, added subsec. (b). Pub. L. 89-44,
701(b)(2)(B), repealed former subsec. (b), as in effect June 30, 1965,
effective on and after July 1, 1965. Such repealed provision had called
for termination of the tax on general telephone service as of July 1,
1965.
Subsec. (c). Pub. L. 89-44, 302, added subsec. (c).
1964 -- Subsec. (b)(2). Pub. L. 88-348 substituted ''July 1, 1965''
for ''July 1, 1964'' in two places.
1963 -- Subsec. (b)(2). Pub. L. 88-52 substituted ''July 1, 1964''
for ''July 1, 1963'' in two places.
1962 -- Subsec. (b)(2). Pub. L. 87-508 substituted ''July 1, 1963''
for ''July 1, 1962'' in two places.
1961 -- Subsec. (b)(2). Pub. L. 87-72 substituted ''July 1, 1962''
for ''July 1, 1961'' in two places.
1960 -- Subsec. (b)(2). Pub. L. 86-564 substituted ''July 1, 1961''
for ''July 1, 1960'' in two places.
1959 -- Pub. L. 86-75 designated former provisions as subsec. (a)
and added subsec. (b).
1958 -- Pub. L. 85-859 redesignated ''local telephone service'' as
''general telephone service'', ''long distance telephone service'' as
''toll telephone service'' and ''leased wire, teletypewriter or talking
circuit special service'' as ''teletypewriter exchange service'' and
''wire mileage service''.
Amendment by Pub. L. 99-514 effective, except as otherwise provided,
as if included in the provisions of the Tax Reform Act of 1984, Pub. L.
98-369, div. A, to which such amendment relates, see section 1881 of
Pub. L. 99-514, set out as a note under section 48 of this title.
Section 282(b) of Pub. L. 97-248 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply with respect
to amounts paid for communications services pursuant to bills first
rendered after December 31, 1982.''
Amendment by Pub. L. 90-364 effective Apr. 30, 1968, see section
105(c) of Pub. L. 90-364, set out as a note under section 6412 of this
title.
Amendment by Pub. L. 90-285 effective Mar. 31, 1968, see section
1(b) of Pub. L. 90-285, set out as a note under section 6412 of this
title.
Section 202(c) of Pub. L. 89-368 provided that: ''The amendments
made by subsections (a) (amending this section) and (b) (amending
section 4253 of this title) shall apply to amounts paid pursuant to
bills first rendered on or after April 1, 1966, for services rendered on
or after such date. In the case of amounts paid pursuant to bills
rendered on or after such date for services which were rendered before
such date and for which no previous bill was rendered, such amendments
shall apply except with respect to such services as were rendered more
than 2 months before such date. In the case of services rendered more
than 2 months before such date, the provisions of subchapter B of
chapter 33 of the Code in effect at the time such services were
rendered, subject to the provision of section 701(b)(2) of the Excise
Tax Reduction Act of 1965 (see Effective Date of 1965 Amendment note
below), shall apply to the amounts paid for such services.''
Section 701(b)(2)(A) of Pub. L. 89-44 provided that: ''The
amendments made by section 302 (amending this section and sections 4252,
4253, and 4254 of this title) (relating to communication services) shall
apply to amounts paid pursuant to bills rendered on or after January 1,
1966, for services rendered on or after such date. In the case of
amounts paid pursuant to bills rendered on or after January 1, 1966, for
services which were rendered before such date and for which no previous
bill was rendered, such amendments shall apply except with respect to
such services as were rendered more than 2 months before such date. In
the case of services rendered more than 2 months before such date, the
provisions of subchapter B of chapter 33 of the Code in effect at the
time such services were rendered shall apply to the amounts paid for
such services.''
Section 133(b) of Pub. L. 85-859, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) Subject to the provisions of paragraph (2), the amendment made
by subsection (a) (amending this section and sections 4252 to 4254 of
this title) shall apply with respect to amounts paid on or after the
effective date prescribed in section (1)(c) of this Act for services
rendered on or after such date.
''(2) The amendment made by subsection (a) (amending this section and
sections 4252 to 4254 of this title) shall not apply with respect to
amounts paid pursuant to bills rendered before the effective date
prescribed in section 1(c) of this Act. In the case of amounts paid
pursuant to bills rendered on or after such date for services for which
no previous bill was rendered, such amendments shall apply except with
respect to such services as were rendered more than 2 months before such
date. In the case of services rendered more than 2 months before such
date the provisions of subchapter B of chapter 33 of the Internal
Revenue Code of 1986 (formerly I.R.C. 1954) in effect at the time such
services were rendered shall apply to the amounts paid for such
services.''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
26 USC 4252. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Local telephone service
For purposes of this subchapter, the term ''local telephone service''
means --
(1) the access to a local telephone system, and the privilege of
telephonic quality communication with substantially all persons having
telephone or radio telephone stations constituting a part of such local
telephone system, and
(2) any facility or service provided in connection with a service
described in paragraph (1).
The term ''local telephone service'' does not include any service
which is a ''toll telephone service'' or a ''private communication
service'' as defined in subsections (b) and (d).
(b) Toll telephone service
For purposes of this subchapter, the term ''toll telephone service''
means --
(1) a telephonic quality communication for which (A) there is a toll
charge which varies in amount with the distance and elapsed transmission
time of each individual communication and (B) the charge is paid within
the United States, and
(2) a service which entitles the subscriber, upon payment of a
periodic charge (determined as a flat amount or upon the basis of total
elapsed transmission time), to the privilege of an unlimited number of
telephonic communications to or from all or a substantial portion of the
persons having telephone or radio telephone stations in a specified area
which is outside the local telephone system area in which the station
provided with this service is located.
(c) Teletypewriter exchange service
For purposes of this subchapter, the term ''teletypewriter exchange
service'' means the access from a teletypewriter or other data station
to the teletypewriter exchange system of which such station is a part,
and the privilege of intercommunication by such station with
substantially all persons having teletypewriter or other data stations
constituting a part of the same teletypewriter exchange system, to which
the subscriber is entitled upon payment of a charge or charges (whether
such charge or charges are determined as a flat periodic amount, on the
basis of distance and elapsed transmission time, or in some other
manner). The term ''teletypewriter exchange service'' does not include
any service which is ''local telephone service'' as defined in
subsection (a).
(d) Private communication service
For purposes of this subchapter, the term ''private communication
service'' means --
(1) the communication service furnished to a subscriber which
entitles the subscriber --
(A) to exclusive or priority use of any communication channel or
groups of channels, or
(B) to the use of an intercommunication system for the subscriber's
stations,
regardless of whether such channel, groups of channels, or
intercommunication system may be connected through switching with a
service described in subsection (a), (b), or (c),
(2) switching capacity, extension lines and stations, or other
associated services which are provided in connection with, and are
necessary or unique to the use of, channels or systems described in
paragraph (1), and
(3) the channel mileage which connects a telephone station located
outside a local telephone system area with a central office in such
local telephone system,
except that such term does not include any communication service
unless a separate charge is made for such service.
(Aug. 16, 1954, ch. 736, 68A Stat. 503; Sept. 2, 1958, Pub. L.
85-859, title I, 133(a), 72 Stat. 1290; June 28, 1962, Pub. L.
87-508, 4(a), 76 Stat. 115; June 21, 1965, Pub. L. 89-44, title III,
302, 79 Stat. 145.)
This subchapter, relating to the tax on communications was repealed
by Pub. L. 90-364, title I, 105(b)(3), June 28, 1968, 82 Stat. 266,
as amended by Pub. L. 91-172, title VII, 702(b)(3), Dec. 30, 1969, 83
Stat. 660; Pub. L. 91-614, title II, 201(b)(3), Dec. 31, 1970, 84
Stat. 1843, effective with respect to amounts paid pursuant to bills
first rendered on or after Jan. 1, 1982. In the case of communications
services rendered before Nov. 1, 1981, for which a bill has not been
rendered before Jan. 1, 1982, a bill shall be treated as having been
first rendered on Dec. 31, 1981. Repeal of this subchapter was not
executed in view of the amendments to section 4251 of this title by Pub.
L. 96-499, Pub. L. 97-34, Pub. L. 97-248, Pub. L. 98-369, Pub. L.
99-514, Pub. L. 100-203, and Pub. L. 101-508, extending the date in
(and finally eliminating) provisions which had reduced the tax to zero
after a specified date.
1965 -- Subsec. (a). Pub. L. 89-44 substituted definition of ''local
telephone service'' for definition of ''general telephone service''.
Subsec. (b). Pub. L. 89-44 replaced definition of ''toll telephone
service'' as telephone or radio telephone message or conversation for
which there is a toll charge paid within the United States with a
definition which defined the term as a telephonic quality communication
carrying a varying toll charge depending upon distance and elapsed
transmission time and a service entitling the subscriber, upon payment
of a periodic charge, to unlimited telephonic communication in an area
outside the local telephone system area.
Subsec. (c). Pub. L. 89-44 substituted definition of ''teletypewriter
exchange service'' for definition of ''telegraph service''.
Subsec. (d). Pub. L. 89-44 substituted definition of ''private
communication service'' for definition of ''teletypewriter exchange
service''.
Subsecs. (e), (f). Pub. L. 89-44 struck out subsecs. (e) and (f)
which defined wire mileage service and wire and equipment service.
1962 -- Subsec. (e)(1), (2). Pub. L. 87-508 limited wire mileage
service to service not used in the conduct of a trade or business.
1958 -- Subsec. (a). Pub. L. 85-859 substituted definition of
''general telephone service'' for provisions which defined ''local
telephone service'' as any telephone service not taxable as long
distance telephone service; leased wire; teletypewriter or talking
circuit special service; or wire and equipment service, and provided
that amounts paid for the installation of instruments, wires, poles,
switchboards, apparatus, and equipment shall not be considered amounts
paid for service, and that amounts paid for services and facilities
which are exempted from other communication taxes by section 4253(b)
should not be deemed to be within the definition of local telephone
service.
Subsec. (b). Pub. L. 85-859 substituted ''toll telephone service''
for ''long distance telephone service'' and struck out provisions which
defined ''long distance telephone service'' as a telephone or radio
telephone message or conversation for which the toll charge is more than
24 cents.
Subsec. (c). Pub. L. 85-859 substituted ''For purposes of this
subchapter, the term 'telegraph service' means a telegram'' for ''As
used in section 4251 the term 'telegraph service' means a telegraph''.
Subsec. (d). Pub. L. 85-859 substituted provisions defining
''teletypewriter exchange service'' for provisions which defined
''leased wire, teletypewriter or talking circuit special service''.
Subsec. (e). Pub. L. 85-859 substituted provisions defining ''wire
mileage service'' for provisions which defined ''wire and equipment
service'', which were covered by subsec. (f) of this section.
Subsec. (f). Pub. L. 85-859 added subsec. (f). Similar provisions
were formerly contained in subsec. (e) of this section.
Amendment by Pub. L. 89-44 applicable to amounts paid pursuant to
bills rendered on or after January 1, 1966, for services rendered on or
after such date but, in the case of amounts paid pursuant to bills
rendered after January 1, 1966, for services rendered before such date
for which no previous bill had been rendered, applicable except with
respect to such services as were rendered more than two months before
such date, see section 701(b)(2)(A) of Pub. L. 89-44, set out as a note
under section 4251 of this title.
Section 4(c) of Pub. L. 87-508 provided that: ''The amendments made
by subsections (a) and (b) (amending this section and section 4253 of
this title) shall apply with respect to services furnished on or after
January 1, 1963.''
For effective date of amendment made by Pub. L. 85-859, see section
133(b) of Pub. L. 85-859, set out as a note under section 4251 of this
title.
Cases where persons receiving payment must collect tax, see section
4291 of this title.
26 USC 4253. Exemptions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Certain coin-operated service
Service paid for by inserting coins in coin-operated telephones
available to the public shall not be subject to the tax imposed by
section 4251 with respect to local telephone service, or with respect to
toll telephone service if the charge for such toll telephone service is
less than 25 cents; except that where such coin-operated telephone
service is furnished for a guaranteed amount, the amounts paid under
such guarantee plus any fixed monthly or other periodic charge shall be
subject to the tax.
(b) News services
No tax shall be imposed under section 4251, except with respect to
local telephone service, on any payment received from any person for
services used in the collection of news for the public press, or a news
ticker service furnishing a general news service similar to that of the
public press, or radio broadcasting, or in the dissemination of news
through the public press, or a news ticker service furnishing a general
news service similar to that of the public press, or by means of radio
broadcasting, if the charge for such service is billed in writing to
such person.
(c) International, etc., organizations
No tax shall be imposed under section 4251 on any payment received
for services furnished to an international organization, or to the
American National Red Cross.
(d) Servicemen in combat zone
No tax shall be imposed under section 4251 on any payment received
for any toll telephone service which originates within a combat zone, as
defined in section 112, from a member of the Armed Forces of the United
States performing service in such combat zone, as determined under such
section, provided a certificate, setting forth such facts as the
Secretary may by regulations prescribe, is furnished to the person
receiving such payment.
(e) Items otherwise taxed
Only one payment of tax under section 4251 shall be required with
respect to the tax on any service, notwithstanding the lines or stations
of one or more persons are used in furnishing such service.
(f) Common carriers and communications companies
No tax shall be imposed under section 4251 on the amount paid for any
toll telephone service described in section 4252(b)(2) to the extent
that the amount so paid is for use by a common carrier, telephone or
telegraph company, or radio broadcasting station or network in the
conduct of its business as such.
(g) Installation charges
No tax shall be imposed under section 4251 on so much of any amount
paid for the installation of any instrument, wire, pole, switchboard,
apparatus, or equipment as is properly attributable to such
installation.
(h) Nonprofit hospitals
No tax shall be imposed under section 4251 on any amount paid by a
nonprofit hospital for services furnished to such organization. For
purposes of this subsection, the term ''nonprofit hospital'' means a
hospital referred to in section 170(b)(1)(A)(iii) which is exempt from
income tax under section 501(a).
(i) State and local governmental exemption
Under regulations prescribed by the Secretary, no tax shall be
imposed under section 4251 upon any payment received for services or
facilities furnished to the government of any State, or any political
subdivision thereof, or the District of Columbia.
(j) Exception for nonprofit educational organizations
Under regulations prescribed by the Secretary, no tax shall be
imposed under section 4251 on any amount paid by a nonprofit educational
organization for services or facilities furnished to such organization.
For purposes of this subsection, the term ''nonprofit educational
organization'' means an educational organization described in section
170(b)(1)(A)(ii) which is exempt from income tax under section 501(a).
The term also includes a school operated as an activity of an
organization described in section 501(c)(3) which is exempt from income
tax under section 501(a), if such school normally maintains a regular
faculty and curriculum and normally has a regularly enrolled body of
pupils or students in attendance at the place where its educational
activities are regularly carried on.
(k) Filing of exemption certificates
(1) In general
In order to claim an exemption under subsection (c), (h), (i), or
(j), a person shall provide to the provider of communications services a
statement (in such form and manner as the Secretary may provide)
certifying that such person is entitled to such exemption.
(2) Duration of certificate
Any statement provided under paragraph (1) shall remain in effect
until --
(A) the provider of communications services has actual knowledge that
the information provided in such statement is false, or
(B) such provider is notified by the Secretary that the provider of
the statement is no longer entitled to an exemption described in
paragraph (1).
If any information provided in such statement is no longer accurate,
the person providing such statement shall inform the provider of
communications services within 30 days of any change of information.
(Aug. 16, 1954, ch. 736, 68A Stat. 504; Sept. 2, 1958, Pub. L.
85-859, title I, 133(a), 72 Stat. 1290; Sept. 21, 1959, Pub. L.
86-344, 4(a), 73 Stat. 619; June 28, 1962, Pub. L. 87-508, 4(b), 76
Stat. 115; June 21, 1965, Pub. L. 89-44, title III, 302, 79 Stat.
146; Mar. 15, 1966, Pub. L. 89-368, title II, 202(b), 80 Stat. 66;
Dec. 30, 1969, Pub. L. 91-172, title I, 101(j)(27), 83 Stat. 529; Oct.
4, 1976, Pub. L. 94-455, title XIX, 1904(a)(6), 1906(b)(13)(A), 90
Stat. 1811, 1834; Nov. 5, 1990, Pub. L. 101-508, title XI,
11217(c)(1), 104 Stat. 1388-438.)
This subchapter, relating to the tax on communications, was repealed
by Pub. L. 90-364, title I, 105(b)(3), June 28, 1968, 82 Stat. 266,
as amended by Pub. L. 91-172, title VII, 702(b)(3), Dec. 30, 1969, 83
Stat. 660; Pub. L. 91-614, title II, 201(b)(3), Dec. 31, 1970, 84
Stat. 1843, effective with respect to amounts paid pursuant to bills
first rendered on or after Jan. 1, 1982. In the case of communications
services rendered before Nov. 1, 1981, for which a bill has not been
rendered before Jan. 1, 1982, a bill shall be treated as having been
first rendered on Dec. 31, 1981. Repeal of this subchapter was not
executed in view of the amendments to section 4251 of this title by Pub.
L. 96-499, Pub. L. 97-34, Pub. L. 97-248, Pub. L. 98-369, Pub. L.
99-514, Pub. L. 100-203, and Pub. L. 101-508, extending the date in
(and finally eliminating) provisions which had reduced the tax to zero
after a specified date.
1990 -- Subsec. (k). Pub. L. 101-508 added subsec. (k).
1976 -- Subsec. (d). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsecs. (i), (j). Pub. L. 94-455, 1904(a)(6), added subsecs. (i)
and (j).
1969 -- Subsec. (h). Pub. L. 91-172 substituted ''section
170(b)(1)(A)(iii)'' for ''section 503(b)(5)''.
1966 -- Subsec. (h). Pub. L. 89-368 added subsec. (h).
1965 -- Subsec. (a). Pub. L. 89-44 substituted ''with respect to
local telephone service, or with respect to toll telephone service if
the charge for such toll telephone service is less than 25 cents'', for
''with respect to general telephone service, or with respect to toll
telephone service or telegraph service if the charge for such toll
telephone service or telegraph service is less than 25 cents''.
Subsec. (b). Pub. L. 89-44 substituted ''local telephone service''
for ''general telephone service'' and ''such service'' for ''such
services''.
Subsec. (c). Pub. L. 89-44 substituted ''International, etc.,
organizations'' for ''Certain organizations'' in heading.
Subsec. (d). Pub. L. 89-44 reenacted subsec. (d) without change.
Subsec. (e). Pub. L. 89-44 substituted ''any service'' for ''toll
telephone service, telegraph service, or teletypewriter exchange
service''.
Subsec. (f). Pub. L. 89-44 substituted amounts paid for any toll
telephone service for amounts paid for wire mileage service, wire and
equipment service, and use of any telephone or radiotelephone line or
channel which constitutes general telephone service if such line or
channel connects stations between any two of which there would otherwise
be a toll charge.
Subsec. (g). Pub. L. 89-44 reenacted subsec. (g) without change.
Subsecs. (h) to (j). Pub. L. 89-44 struck out subsecs. (h) to (j),
which related to terminal facilities in case of wire mileage service and
to certain interior and private communications services.
1962 -- Subsec. (j). Pub. L. 87-508 added subsec. (j).
1959 -- Subsec. (f). Pub. L. 86-344 substituted ''Common carriers
and communications companies'' for ''Special wire service in company
business'' in heading, incorporated existing provisions in opening and
closing statements and par. (1) and added par. (2).
1958 -- Subsec. (a). Pub. L. 85-859 substituted ''general telephone
service, or with respect to toll telephone service or telegraph service
if the charge for such toll telephone service or telegraph service is
less than 25 cents'' for ''local telephone service''.
Subsec. (b). Pub. L. 85-859 substituted ''general telephone service,
on any payment received from any person for services used'' for ''local
telephone service, upon any payment received from any person for
services or facilities utilized''.
Subsec. (c). Pub. L. 85-859 substituted ''on any payment received for
services furnished to an international organization, or to the American
National Red Cross'' for ''upon any payment received for services or
facilities furnished to an international organization, or any
organization created by act of Congress to act in matters of relief
under the treaty of Geneva of August 22, 1864''.
Subsec. (d). Pub. L. 85-859 substituted ''on any payment received for
any toll telephone service'' for ''with respect to long distance
telephone service upon any payment received for any telephone or radio
telephone message''.
Subsec. (e). Pub. L. 85-859 substituted ''toll telephone service,
telegraph service, or teletypewriter exchange service'' for ''long
distance telephone service or telegraph service'' and ''in furnishing
such service'' for ''in the transmission of such dispatch, message or
conversation''.
Subsec. (f). Pub. L. 85-859 substituted ''any wire mileage service or
wire and equipment service as is used in the conduct'' for ''the service
described in sections 4252(d) and (e) as is utilized in the conduct''.
Subsecs. (g) to (i). Pub. L. 85-859 added subsecs. (g) to (i).
Section 11217(c)(2) of Pub. L. 101-508 provided that:
''(A) In general. -- The amendment made by paragraph (1) (amending
this section) shall apply to any claim for exemption made after the date
of the enactment of this Act (Nov. 5, 1990).
''(B) Duration of existing certificates. -- Any annual certificate of
exemption effective on the date of the enactment of this Act (Nov. 5,
1990) shall remain effective until the end of the annual period.''
Amendment by section 1904(a)(6) of Pub. L. 94-455 effective on first
day of first month which begins more than 90 days after Oct. 4, 1976,
see section 1904(d) of Pub. L. 94-455, set out as a note under section
4041 of this title.
Amendment by Pub. L. 91-172 effective Jan. 1, 1970, see section
101(k)(1) of Pub. L. 91-172, set out as an Effective Date note under
section 4940 of this title.
Amendment by Pub. L. 89-368 applicable to amounts paid pursuant to
bills first rendered on or after April 1, 1966, for services rendered on
or after such date and to amounts paid pursuant to bills rendered on or
after such date for services which were rendered before such date and
for which no previous bill was rendered except with respect to such
services as were rendered more than two months before such date and, as
to services rendered more than 2 months before such date, direction that
the provisions of subchapter B of chapter 33 of the Code in effect at
the time such services were rendered, be applied, subject to the
provision of section 701(b)(2) of the Excise Tax Reduction Act of 1965.
Amendment by Pub. L. 89-44 applicable to amounts paid pursuant to
bills rendered on or after January 1, 1966, for services rendered on or
after such date, but, in the case of amounts paid pursuant to bills
rendered after January 1, 1966, for services rendered before such date
for which no previous bill had been rendered, applicable except with
respect to such services as were rendered more than two months before
such date, see section 701(b)(2)(A) of Pub. L. 89-44, set out as a note
under section 4251 of this title.
Amendment by Pub. L. 87-508 applicable with respect to services
furnished on or after Jan. 1, 1963, see section 4(c) of Pub. L.
87-508, set out as a note under section 4252 of this title.
Section 4(b) of Pub. L. 86-344, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) Subject to the provisions of paragraph (2), the amendment made
by subsection (a) (amending this section) shall apply with respect to
amounts paid on or after January 1, 1959, for services rendered on or
after such date.
''(2) The amendment made by subsection (a) (amending this section)
shall not apply with respect to amounts paid pursuant to bills rendered
before January 1, 1959. In the case of amounts paid pursuant to bills
rendered on or after such date for services for which no bill was
rendered before such date, such amendment shall apply except with
respect to such services as were rendered more than 2 months before such
date. In the case of services rendered more than 2 months before such
date, the provisions of subchapter B of chapter 33 of the Internal
Revenue Code of 1986 (formerly I.R.C. 1954) in effect at the time such
services were rendered shall apply to the amounts paid for such
services.''
For effective date of amendment made by Pub. L. 85-859, see section
133(b) of Pub. L. 85-859, set out as a note under section 4251 of this
title.
26 USC 4254. Computation of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
If a bill is rendered the taxpayer for local telephone service or
toll telephone service --
(1) the amount on which the tax with respect to such services shall
be based shall be the sum of all charges for such services included in
the bill; except that
(2) if the person who renders the bill groups individual items for
purposes of rendering the bill and computing the tax, then (A) the
amount on which the tax with respect to each such group shall be based
shall be the sum of all items within that group, and (B) the tax on the
remaining items not included in any such group shall be based on the
charge for each item separately.
(b) Where payment is made for toll telephone service in coin-operated
telephones
If the tax imposed by section 4251 with respect to toll telephone
service is paid by inserting coins in coin-operated telephones, tax
shall be computed to the nearest multiple of 5 cents, except that, where
the tax is midway between multiples of 5 cents, the next higher multiple
shall apply.
(c) Certain State and local taxes not included
For purposes of this subchapter, in determining the amounts paid for
communications services, there shall not be included the amount of any
State or local tax imposed on the furnishing or sale of such services,
if the amount of such tax is separately stated in the bill.
(Aug. 16, 1954, ch. 736, 68A Stat. 504; Sept. 2, 1958, Pub. L.
85-859, title I, 133(a), 72 Stat. 1291; June 21, 1965, Pub. L. 89-44,
title III, 302, 79 Stat. 147; Nov. 12, 1977, Pub. L. 95-172, 2(a), 91
Stat. 1358.)
This subchapter, relating to the tax on communications was repealed
by Pub. L. 90-364, title I, 105(b)(3), June 28, 1968, 82 Stat. 266,
as amended by Pub. L. 91-172, title VII, 702(b)(3), Dec. 30, 1969, 83
Stat. 660; Pub. L. 91-614, title II, 201(b)(3), Dec. 31, 1970, 84
Stat. 1843, effective with respect to amounts paid pursuant to bills
first rendered on or after Jan. 1, 1982. In the case of communications
services rendered before Nov. 1, 1981, for which a bill has not been
rendered before Jan. 1, 1982, a bill shall be treated as having been
first rendered on Dec. 31, 1981. Repeal of this subchapter was not
executed in view of the amendments to section 4251 of this title by Pub.
L. 96-499, Pub. L. 97-34, Pub. L. 97-248, Pub. L. 98-369, Pub. L.
99-514, Pub. L. 100-203, and Pub. L. 101-508, extending the date in
(and finally eliminating) provisions which had reduced the tax to zero
after a specified date.
1977 -- Subsec. (c). Pub. L. 95-172 added subsec. (c).
1965 -- Subsec. (a). Pub. L. 89-44 substituted ''local telephone
service or toll telephone service'' for ''general telephone service,
toll telephone service, or telegraph service''.
Subsec. (b). Pub. L. 89-44 substituted ''toll telephone service'' for
''toll telephone service or telegraph service'' in catchline and text.
1958 -- Subsec. (a). Pub. L. 85-859 provided that if the person who
renders the bill groups individual items for purposes of rendering the
bill and computing the tax, then the amount on which the tax with
respect to each group shall be based shall be the sum of all items
within that group, and the tax on remaining items not included in any
such group shall be based on the charge of each item separately.
Subsec. (b). Pub. L. 85-859 substituted ''toll telephone service''
for ''long distance telephone service''.
Section 2(b) of Pub. L. 95-172 provided that: ''The amendment made
by this section (amending this section) shall take effect only with
respect to amounts paid pursuant to bills first rendered on or after the
first day of the first month which begins more than 20 days after the
date of the enactment of this Act (Nov. 12, 1977). For purposes of the
preceding sentence, in the case of communications services rendered more
than 2 months before the effective date provided in the preceding
sentence, no bill shall be treated as having been first rendered on or
after such effective date.''
Amendment by Pub. L. 89-44 applicable to amounts paid pursuant to
bills rendered on or after January 1, 1966, for service rendered on or
after such date, but, in the case of amounts paid pursuant to bills
rendered after January 1, 1966, for services rendered before such date
for which no previous bill had been rendered, applicable except with
respect to such services as were rendered more than two months before
such date, see section 701(b)(2)(A) of Pub. L. 89-44, set out as a note
under section 4251 of this title.
For effective date of amendment made by Pub. L. 85-859, see section
133(b) of Pub. L. 85-859, set out as a note under section 4251 of this
title.
26 USC Subchapter C -- Transportation by Air
TITLE 26 -- INTERNAL REVENUE CODE
Part
I. Persons.
II. Property.
III. Special provisions relating to taxes on transportation by air.
/1/
/1/ So in original. Does not conform to part heading.
26 USC PART I -- PERSONS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4261. Imposition of tax.
4262. Definition of taxable transportation.
4263. Special rules.
1970 -- Pub. L. 91-258, title II, 205(c)(4), May 21, 1970, 84 Stat.
242, substituted ''Transportation by Air'' for ''Transportation of
Persons by Air'' in subchapter heading, inserted part I to III headings
in subchapter analysis, inserted ''PART I -- PERSONS'' as analysis
heading preceding section 4261, struck out item 4263, and redesignated
item 4264 as 4263.
1962 -- Pub. L. 87-508, 5(b), June 28, 1962, 76 Stat. 115,
substituted ''Transportation of Persons by Air'' for ''Transportation of
Persons'' in subchapter heading.
1958 -- Pub. L. 85-475, 4(b)(2), June 30, 1958, 72 Stat. 260,
substituted ''Transportation of Persons'' for ''Transportation'' in
subchapter heading and struck out parts I-III, which were included in
subchapter C.
1956 -- Act July 25, 1956, ch. 725, 5, 70 Stat. 646, added items
4262 and 4264 and redesignated former item 4262 as 4263.
26 USC 4261. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
There is hereby imposed upon the amount paid for taxable
transportation (as defined in section 4262) of any person a tax equal to
10 percent of the amount so paid. In the case of amounts paid outside
of the United States for taxable transportation, the tax imposed by this
subsection shall apply only if such transportation begins and ends in
the United States.
(b) Seats, berths, etc.
There is hereby imposed upon the amount paid for seating or sleeping
accommodations in connection with transportation and with respect to
which a tax is imposed by subsection (a), a tax equal to 10 percent of
the amount so paid.
(c) Use of international travel facilities
There is hereby imposed a tax of $6 upon any amount paid (whether
within or without the United States) for any transportation of any
person by air, if such transportation begins in the United States. This
subsection shall not apply to any transportation all of which is taxable
under subsection (a) (determined without regard to sections 4281 and
4282).
(d) By whom paid
Except as provided in section 4263(a), the taxes imposed by this
section shall be paid by the person making the payment subject to the
tax.
(e) Exemption for certain helicopter uses
No tax shall be imposed under subsection (a) or (b) on air
transportation by helicopter for the purpose of --
(1) transporting individuals, equipment, or supplies in the
exploration for, or the development or removal of, hard minerals, oil,
or gas, or
(2) the planting, cultivation, cutting, or transportation of, or
caring for, trees (including logging operations),
but only if the helicopter does not take off from, or land at, a
facility eligible for assistance under the Airport and Airway
Development Act of 1970, or otherwise use services provided pursuant to
the Airport and Airway Improvement Act of 1982 during such use.
(f) Exemption for certain emergency medical transportation
No tax shall be imposed under this section or section 4271 on any air
transportation by helicopter for the purpose of providing emergency
medical services if such helicopter --
(1) does not take off from, or land at, a facility eligible for
assistance under the Airport and Airway Development Act of 1970 during
such transportation, and
(2) does not otherwise use services provided pursuant to the Airport
and Airway Improvement Act of 1982 during such transportation.
(g) Termination
The taxes imposed by this section shall apply with respect to
transportation beginning after August 31, 1982, and before January 1,
1996.
(Aug. 16, 1954, ch. 736, 68A Stat. 506; July 25, 1956, ch. 725, 1,
4(b), 70 Stat. 644, 646; June 30, 1959, Pub. L. 86-75, 4, 73 Stat.
158; June 30, 1960, Pub. L. 86-564, title II, 202(a)(3), 74 Stat. 290;
June 30, 1961, Pub. L. 87-72, 3(a)(3), 75 Stat. 193; June 28, 1962,
Pub. L. 87-508, 5(a), (b), 76 Stat. 115; June 29, 1963, Pub. L. 88-52,
3(a)(3), 77 Stat. 72; June 30, 1964, Pub. L. 88-348, 2(a)(3), 78
Stat. 237; June 21, 1965, Pub. L. 89-44, title III, 303(a), 79 Stat.
148, May 21, 1970, Pub. L. 91-258, title II, 203(a), 84 Stat. 238;
Oct. 4, 1976, Pub. L. 94-455, title XIX, 1904(a)(7), 90 Stat. 1812;
July 1, 1980, Pub. L. 96-298, 1(b), 94 Stat. 829; Sept. 3, 1982, Pub.
L. 97-248, title II, 280(a), 96 Stat. 564; July 18, 1984, Pub. L.
98-369, div. A, title X, 1018(b), 98 Stat. 1021; Oct. 22, 1986, Pub.
L. 99-514, title XVIII, 1878(c)(2), 100 Stat. 2903; Dec. 30, 1987,
Pub. L. 100-223, title IV, 402(a)(1), 404(a), (c), 101 Stat. 1532,
1533; Dec. 19, 1989, Pub. L. 101-239, title VII, 7503(a), 103 Stat.
2362; Nov. 5, 1990, Pub. L. 101-508, title XI, 11213(a)(1), (d)(1),
104 Stat. 1388-432, 1388-435.)
The Airport and Airway Development Act of 1970, referred to in
subsecs. (e)(2) and (f)(1), is title I of Pub. L. 91-258, May 21,
1970, 84 Stat. 219, as amended, which was classified principally to
chapter 25 ( 1701 et seq.) of Title 49, Appendix, Transportation.
Sections 1 to 30 of that Act, which were classified to sections 1701 to
1730 of Title 49, Appendix, were repealed by Pub. L. 97-248, title V,
523(a), Sept. 3, 1982, 96 Stat. 695. For complete classification of
this Act to the Code, see Tables.
The Airport and Airway Improvement Act of 1982, referred to in
subsecs. (e)(2) and (f)(2), is title V of Pub. L. 97-248, Sept. 3,
1982, 96 Stat. 671, as amended, which is classified principally to
chapter 31 ( 2201 et seq.) of Title 49, Appendix. For complete
classification of this Act to the Code, see Short Title note set out
under section 2201 of Title 49, Appendix, and Tables.
1990 -- Subsecs. (a), (b). Pub. L. 101-508, 11213(a)(1),
substituted ''10 percent'' for ''8 percent''.
Subsec. (g). Pub. L. 101-508, 11213(d)(1), substituted ''January 1,
1996'' for ''January 1, 1991''.
1989 -- Subsec. (c). Pub. L. 101-239 substituted ''$6'' for ''$3''.
1987 -- Subsec. (e). Pub. L. 100-223, 404(c), which directed the
substitution of ''Improvement Act'' for ''System Improvement Act'' could
not be executed because such words do not appear.
Subsec. (f). Pub. L. 100-223, 404(a), added subsec. (f). Former
subsec. (f) redesignated (g).
Pub. L. 100-223, 402(a)(1), substituted ''January 1, 1991'' for
''January 1, 1988''.
Subsec. (g). Pub. L. 100-223, 404(a), redesignated former subsec.
(f) as (g).
1986 -- Subsec. (e)(1). Pub. L. 99-514, amended par. (1) generally.
Prior to amendment, par. (1) read as follows: ''transporting
individuals, equipment, or supplies in --
''(A) the exploration for, or the development or removal of, hard
minerals, or
''(B) the exploration for oil or gas, or''.
1984 -- Subsec. (e)(1). Pub. L. 98-369 amended par. (1) generally,
designating existing provisions as subpar. (A) and adding subpar. (B).
1982 -- Subsec. (e). Pub. L. 97-248 substituted provisions relating
to exemptions for certain helicopter uses for provisions that effective
with respect to transportation beginning after Sept. 30, 1980, the rate
of taxes imposed by subsecs. (a) and (b) would be 5 percent and taxes
imposed by subsec. (c) would not apply.
Subsec. (f). Pub. L. 97-248 added subsec. (f).
1980 -- Subsec. (e). Pub. L. 96-298 substituted ''September 30,
1980'' for ''June 30, 1980''.
1976 -- Subsec. (a). Pub. L. 94-455, 1904(a)(7)(A), struck out
''which begins after June 30, 1970'' after ''any person''.
Subsec. (b). Pub. L. 94-455, 1904(a)(7)(A), struck out ''which
begins after June 30, 1970'' after ''with transportation''.
Subsec. (c). Pub. L. 94-455, 1904(a)(7)(B), struck out ''and begins
after June 30, 1970'' after ''United States''.
1970 -- Subsec. (a). Pub. L. 91-258 consolidated former provisions
of subsecs. (a) and (b) for imposition of tax on amounts paid within
and outside the United States, substituting an 8 percent rate commencing
after June 30, 1970, for prior 5 percent rate commencing after Nov. 15,
1962.
Subsec. (b). Pub. L. 91-258 redesignated subsec. (c) as (b),
substituting an 8 percent rate in connection with transportation which
begins after June 30, 1970, and with respect to which a tax is imposed
by subsec. (a) for prior 5 percent rate in connection with
transportation which began after Nov. 15, 1962, and with respect to
which a tax had been imposed by former provisions of subsecs. (a) and
(b). Former subsec. (b) provisions for imposition of tax on amounts
paid outside the United States were incorporated in subsec. (a).
Subsecs. (c), (d). Pub. L. 91-258 added subsec. (c), redesignated
former subsec. (c) as (d), and substituted ''section 4263(a)'' for
''section 4264''.
Subsec. (e). Pub. L. 91-258 added subsec. (e).
1965 -- Pub. L. 89-44 substituted ''November 15, 1962'' for
''November 15, 1962, and before July 1, 1965'' wherever appearing.
1964 -- Pub. L. 88-348 substituted ''July 1, 1965'' for ''July 1,
1964'' wherever appearing.
1963 -- Pub. L. 88-52 substituted ''July 1, 1964'' for ''July 1,
1963'' wherever appearing.
1962 -- Subsecs. (a), (b). Pub. L. 87-508, 5(b), struck out
imposition of tax on transportation of persons by rail, motor vehicle,
or water and substituted ''tax equal to 5 percent of the amount so paid
in connection with transportation which begins after November 15, 1962,
and before July 1, 1963'' for ''tax equal to 10 percent of the amount so
paid for transportation which begins before November 16, 1962''.
Pub. L. 87-508, 5(a), substituted provisions imposing a tax equal to
10 percent of the amount paid for transportation which begins before
Nov. 16, 1962, for provisions imposing a tax equal to 10 percent of the
amount paid before July 1, 1962, or 5 percent of the amount paid on or
after July 1, 1962.
Subsec. (c). Pub. L. 87-508, 5(b), substituted ''tax equivalent to 5
percent of the amount so paid in connection with transportation which
begins after November 15, 1962, and before July 1, 1963'' for '' tax
equivalent to 10 percent of the amount so paid in connection with
transportation which begins before November 16, 1962''.
Pub. L. 87-508, 5(a), substituted provision imposing a tax
equivalent to 10 percent of the amount paid in connection with
transportation which begins before Nov. 16, 1962 for provision imposing
a tax equivalent to 10 percent of the amount paid before July 1, 1962,
or 5 percent of the amount paid on or after July 1, 1962.
1961 -- Pub. L. 87-72 substituted ''July 1, 1962'' for ''July 1,
1961'', wherever appearing.
1960 -- Pub. L. 86-564 substituted ''July 1, 1961'' for ''July 1,
1960'' wherever appearing.
1959 -- Pub. L. 86-75 reduced tax on transportation of persons from
ten to five percent effective July 1, 1960.
1956 -- Subsec. (a). Act July 25, 1956, 1, substituted ''taxable
transportation (as defined in section 4262) of any person by rail, motor
vehicle, water, or air a tax'' for ''the transportation of persons by
rail, motor vehicle, water, or air within or without the United States a
tax''.
Subsec. (b). Act July 25, 1956, 1, substituted ''taxable
transportation (as defined in section 4262) of any person by rail, motor
vehicle, water, or air, but only if such transportation begins and ends
in the United States'' for ''transportation of persons by rail, motor
vehicle, water, or air which begins and ends in the United States''.
Subsec. (d). Act July 25, 1956, 4(b), substituted ''Except as
provided in section 4264, the'' for ''The''.
Section 11213(a)(3) of Pub. L. 101-508 provided that: ''The
amendments made by this subsection (amending this section and section
4271 of this title) shall apply to transportation beginning after
November 30, 1990, but shall not apply to amounts paid on or before such
date.''
Section 7503(b) of Pub. L. 101-239 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply with respect
to transportation beginning after December 31, 1989, which was not paid
for before such date.''
Section 404(d)(1) of Pub. L. 100-223 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to
transportation beginning after September 30, 1988, but shall not apply
to amounts paid on or before such date.''
Amendment by Pub. L. 99-514 effective, except as otherwise provided,
as if included in the provisions of the Tax Reform Act of 1984, Pub. L.
98-369, div. A, to which such amendment relates, see section 1881 of
Pub. L. 99-514, set out as a note under section 48 of this title.
Section 1018(c)(2) of Pub. L. 98-369 provided that: ''The amendment
made by subsection (b) (amending this section) shall apply to
transportation beginning after March 31, 1984, but shall not apply to
any amount paid on or before such date.''
Section 280(d) of Pub. L. 97-248 provided that: ''The amendments
made by this section (amending this section and sections 4271, 4281, and
6156 of this title and repealing sections 4491 to 4494 and 6426 of this
title) shall apply with respect to transportation beginning after August
31, 1982; except that such amendments shall not apply to any amount
paid on or before such date.''
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1904(d)
of Pub. L. 94-455, set out as a note under section 4041 of this title.
Amendment by Pub. L. 91-258 applicable to transportation beginning
after June 30, 1970, see section 211(b) of Pub. L. 91-258, set out as a
note under section 4041 of this title.
Section 701(b)(3) of Pub. L. 89-44 provided that: ''The amendments
made by section 303 (amending this section) shall apply with respect to
amounts paid for transportation, and amounts paid for accommodations in
connection with transportation, beginning on or after July 1, 1965.''
Section 5(b) of Pub. L. 87-508 provided that the amendment made by
that section is effective with respect to transportation beginning after
Nov. 15, 1962.
Section 6 of act July 25, 1956, provided that: ''The amendments made
by this Act (amending this section and sections 4262 to 4264, 4291, and
6421 of this title) shall apply to amounts paid on or after the first
day of the first month which begins more than sixty days after the date
of the enactment of this Act (July 25, 1956) for transportation
commencing on or after such first day.''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
Cases where persons receiving payment must collect tax, see section
4291 of this title.
26 USC 4262. Definition of taxable transportation
TITLE 26 -- INTERNAL REVENUE CODE
(a) Taxable transportation; in general
For purposes of this part, except as provided in subsection (b), the
term ''taxable transportation'' means --
(1) transportation by air which begins in the United States or in the
225-mile zone and ends in the United States or in the 225-mile zone;
and
(2) in the case of transportation by air other than transportation
described in paragraph (1), that portion of such transportation which is
directly or indirectly from one port or station in the United States to
another port or station in the United States, but only if such portion
is not a part of uninterrupted international air transportation (within
the meaning of subsection (c)(3)).
(b) Exclusion of certain travel
For purposes of this part, the term ''taxable transportation'' does
not include that portion of any transportation by air which meets all 4
of the following requirements:
(1) such portion is outside the United States;
(2) neither such portion nor any segment thereof is directly or
indirectly --
(A) between (i) a point where the route of the transportation leaves
or enters the continental United States, or (ii) a port or station in
the 225-mile zone, and
(B) a port or station in the 225-mile zone;
(3) such portion --
(A) begins at either (i) the point where the route of the
transportation leaves the United States, or (ii) a port or station in
the 225-mile zone, and
(B) ends at either (i) the point where the route of the
transportation enters the United States, or (ii) a port or station in
the 225-mile zone; and
(4) a direct line from the point (or the port or station) specified
in paragraph (3)(A), to the point (or the port or station) specified in
paragraph (3)(B), passes through or over a point which is not within 225
miles of the United States.
(c) Definitions
For purposes of this section --
(1) Continental United States
The term ''continental United States'' means the District of Columbia
and the States other than Alaska and Hawaii.
(2) 225-mile zone
The term ''225-mile zone'' means that portion of Canada and Mexico
which is not more than 225 miles from the nearest point in the
continental United States.
(3) Uninterrupted international air transportation
The term ''uninterrupted international air transportation'' means any
transportation by air which is not transportation described in
subsection (a)(1) and in which --
(A) the scheduled interval between (i) the beginning or end of the
portion of such transportation which is directly or indirectly from one
port or station in the United States to another port or station in the
United States and (ii) the end or beginning of the other portion of such
transportation is not more than 12 hours, and
(B) the scheduled interval between the beginning or end and the end
or beginning of any two segments of the portion of such transportation
referred to in subparagraph (A)(i) is not more than 12 hours.
For purposes of this paragraph, in the case of personnel of the
United States Army, Air Force, Navy, Marine Corps, and Coast Guard
traveling in uniform at their own expense when on official leave,
furlough, or pass, the scheduled interval described in subparagraph (A)
shall be deemed to be not more than 12 hours if a ticket for the
subsequent portion of such transportation is purchased within 12 hours
after the end of the earlier portion of such transportation and the
purchaser accepts and utilizes the first accommodations actually
available to him for such subsequent portion.
(d) Transportation
For purposes of this part, the term ''transportation'' includes
layover or waiting time and movement of the aircraft in deadhead
service.
(e) Authority to waive 225-mile zone provisions
(1) In general
If the Secretary of the Treasury determines that Canada or Mexico has
entered into a qualified agreement --
(A) the Secretary shall publish a notice of such determination in the
Federal Register, and
(B) effective with respect to transportation beginning after the date
specified in such notice, to the extent provided in the agreement, the
term ''225-mile zone'' shall not include part or all of the country with
respect to which such determination is made.
(2) Termination of waiver
If a determination was made under paragraph (1) with respect to any
country and the Secretary of the Treasury subsequently determines that
the agreement is no longer in effect or that the agreement is no longer
a qualified agreement --
(A) the Secretary shall publish a notice of such determination in the
Federal Register, and
(B) subparagraph (B) of paragraph (1) shall cease to apply with
respect to transportation beginning after the date specified in such
notice.
(3) Qualified agreement
For purposes of this subsection, the term ''qualified agreement''
means an agreement between the United States and Canada or Mexico (as
the case may be) --
(A) setting forth that portion of such country which is not to be
treated as within the 225-mile zone, and
(B) providing that the tax imposed by such country on transportation
described in subparagraph (A) will be at a level which the Secretary of
the Treasury determines to be appropriate.
(4) Requirement that agreement be submitted to Congress
No notice may be published under paragraph (1)(A) with respect to any
qualified agreement before the date 90 days after the date on which a
copy of such agreement was furnished to the Committee on Ways and Means
of the House of Representatives and the Committee on Finance of the
Senate.
(Added July 25, 1956, ch. 725, 3, 70 Stat. 644; amended June 25,
1959, Pub. L. 86-70, 22(b), 73 Stat. 146; July 12, 1960, Pub. L.
86-624, 18(a), 74 Stat. 416; June 28, 1962, Pub. L. 87-508, 5(b), 76
Stat. 116; June 21, 1965, Pub. L. 89-44, title VIII, 803(a), 79 Stat.
160; May 21, 1970, Pub. L. 91-258, title II, 203(b), 84 Stat. 238;
Sept. 3, 1982, Pub. L. 97-248, title II, 281A(a)(1), (2), 96 Stat. 566,
567.)
A prior section 4262 was renumbered 4263, and later repealed.
1982 -- Subsec. (c)(3). Pub. L. 97-248, 281A(a)(1), substituted
''12 hours'' for ''6 hours'' wherever appearing.
Subsec. (e). Pub. L. 97-248, 281A(a)(2), added subsec. (e).
1970 -- Subsec. (a). Pub. L. 91-258, 203(b)(1)-(3), substituted
''part'' for ''subchapter'' in introductory text, ''transportation by
air'' for ''transportation'' in par. (1), and ''in the case of
transportation by air'' for ''in the case of transportation'' in par.
(2), respectively.
Subsec. (b). Pub. L. 91-258, 203(b)(1), (4), substituted ''part''
for ''subchapter'' and ''transportation by air which'' for
''transportation which'', in introductory text, respectively.
Subsec. (d). Pub. L. 91-258, 203(b)(5), added subsec. (d).
1965 -- Subsec. (c)(4). Pub. L. 89-44 inserted sentence relating to
personnel of the Armed Forces traveling in uniform at their own expense
following subpar. (B).
1962 -- Subsec. (a). Pub. L. 87-508 substituted in introductory
phrase ''subchapter'' for ''part'' and inserted in par. (2) '', but
only if such portion is not a part of uninterrupted international air
transportation (within the meaning of subsection (c)(3))''.
Subsec. (b). Pub. L. 87-508 substituted in introductory phrase
''subchapter'' for ''part''.
Subsec. (c)(3). Pub. L. 87-508 added par. (3).
1960 -- Subsec. (c)(1). Pub. L. 86-624 inserted ''and Hawaii'' after
''Alaska''.
1959 -- Subsec. (c)(1). Pub. L. 86-70 substituted ''the District of
Columbia and the States other than Alaska'' for ''the existing 48 States
and the District of Columbia''.
Section 281A(a)(3) of Pub. L. 97-248 provided that: ''The
amendments made by this subsection (amending this section) shall apply
to transportation beginning after August 31, 1982.''
Amendment by Pub. L. 91-258 applicable to transportation beginning
after June 30, 1970, see section 211(b) of Pub. L. 91-258, set out as a
note under section 4041 of this title.
Section 803(b) of Pub. L. 89-44 provided that: ''The amendment made
by subsection (a) (amending this section) shall apply with respect to
amounts paid for transportation beginning on or after July 1, 1965.''
Section 5(b) of Pub. L. 87-508 provided that the amendment made by
that section is effective with respect to transportation beginning after
Nov. 15, 1962.
Amendment by Pub. L. 86-624 effective August 21, 1959, see section
18(k) of Pub. L. 86-624, set out as a note under section 3121 of this
title.
Amendment by Pub. L. 86-70 effective Jan. 3, 1959, see section
22(i) of Pub. L. 86-70, set out as a note under section 3121 of this
title.
Section applicable to amounts paid on or after first day of first
month which begins more than sixty days after July 25, 1956, for
transportation commencing on or after such first day, see section 6 of
act July 25, 1956, set out as an Effective Date of 1956 Amendment note
under section 4261 of this title.
26 USC 4263. Special rules
TITLE 26 -- INTERNAL REVENUE CODE
(a) Payments made outside the United States for prepaid orders
If the payment upon which tax is imposed by section 4261 is made
outside the United States for a prepaid order, exchange order, or
similar order, the person furnishing the initial transportation pursuant
to such order shall collect the amount of the tax.
(b) Tax deducted upon refunds
Every person who refunds any amount with respect to a ticket or order
which was purchased without payment of the tax imposed by section 4261
shall deduct from the amount refundable, to the extent available, any
tax due under such section as a result of the use of a portion of the
transportation purchased in connection with such ticket or order, and
shall report to the Secretary the amount of any such tax remaining
uncollected.
(c) Payment of tax
Where any tax imposed by section 4261 is not paid at the time payment
for transportation is made, then, under regulations prescribed by the
Secretary, to the extent that such tax is not collected under any other
provision of this subchapter --
(1) such tax shall be paid by the person paying for the
transportation or by the person using the transportation;
(2) such tax shall be paid within such time as the Secretary shall
prescribe by regulations after whichever of the following first occurs:
(A) the rights to the transportation expire; or
(B) the time when the transportation becomes subject to tax; and
(3) payment of such tax shall be made to the Secretary, to the person
to whom the payment for transportation was made, or, in the case of
transportation other than transportation described in section
4262(a)(1), to any person furnishing any portion of such transportation.
(d) Application of tax
The tax imposed by section 4261 shall apply to any amount paid within
the United States for transportation of any person by air unless the
taxpayer establishes, pursuant to regulations prescribed by the
Secretary at the time of payment for the transportation, that the
transportation is not transportation in respect of which tax is imposed
by section 4261.
(e) Round trips
In applying this subchapter to a round trip, such round trip shall be
considered to consist of transportation from the point of departure to
the destination, and of separate transportation thereafter.
(f) Transportation outside the northern portion of the Western
Hemisphere
In applying this subchapter to transportation any part of which is
outside the northern portion of the Western Hemisphere, if the route of
such transportation leaves and reenters the northern portion of the
Western Hemisphere, such transportation shall be considered to consist
of transportation to a point outside such northern portion, and of
separate transportation thereafter. For purposes of this subsection,
the term ''northern portion of the Western Hemisphere'' means the area
lying west of the 30th meridian west of Greenwich, east of the
international dateline, and north of the Equator, but not including any
country of South America.
(Added July 25, 1956, ch. 725, 4(a), 70 Stat. 645, 4264; amended
June 28, 1962, Pub. L. 87-508, 5(b), 76 Stat. 117; renumbered 4263,
May 21, 1970, Pub. L. 91-258, title II, 205(c)(2), 84 Stat. 242;
amended Oct. 4, 1976, Pub. L. 94-455, title XIX, 1906(b)(13)(A), 90
Stat. 1834.)
A prior section 4263, acts Aug. 16, 1954, ch. 736, 68A Stat. 506,
4263, formerly 4262, renumbered and amended July 25, 1956, ch. 725,
2, 70 Stat. 644; Aug. 7, 1956, ch. 1024, 1, 70 Stat. 1077; June
29, 1957, Pub. L. 85-74, 71 Stat. 243; Sept. 2, 1958, Pub. L.
85-859, title I, 134, 72 Stat. 1292; June 28, 1962, Pub. L. 87-508,
5(b), 76 Stat. 117, which provided for exemptions, subsecs. (a) to
(d) relating to commutation travel, etc., certain organizations;
members of the Armed Forces, and small aircraft on nonestablished lines,
respectively, was repealed by Pub. L. 91-258, title II, 205(c)(1), May
21, 1970, 84 Stat. 242, effective on July 1, 1970, as provided in
section 211(a) of Pub. L. 91-258, set out as a note under section 4041
of this title.
1976 -- Subsecs. (b) to (d). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary''.
1962 -- Subsec. (c)(3). Pub. L. 87-508 provided for payment of tax,
in the case of transportation other than transportation described in
section 4262(a)(1), to any person furnishing any portion of the
transportation.
Subsec. (d). Pub. L. 87-508 inserted ''by air'' after
''transportation of any person''.
Subsec. (e). Pub. L. 87-508 substituted ''subchapter'' for ''part''.
Subsec. (f). Pub. L. 87-508 substituted ''subchapter'' for ''part'',
struck out par. (1) designation for provision respecting transportation
outside the northern portion of the Western Hemisphere and par. (2)
prohibiting consideration as a stop at a port within the United States a
stop at an intermediate port at which vessel is not authorized to
discharge and take on passengers.
Section 5(b) of Pub. L. 87-508 provided that the amendment made by
that section is effective with respect to transportation beginning after
Nov. 15, 1962.
Section applicable to amounts paid on or after first day of first
month which begins more than sixty days after July 25, 1956, for
transportation commencing on or after such first day, see section 6 of
act July 25, 1956, set out as an Effective Date of 1956 Amendment note
under section 4261 of this title.
26 USC PART II -- PROPERTY
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4271. Imposition of tax.
4272. Definition of taxable transportation, etc.
1970 -- Pub. L. 91-258, title II, 204, May 21, 1970, 84 Stat. 239,
added ''PART II -- PROPERTY'' and items 4271 and 4272.
26 USC 4271. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
There is hereby imposed upon the amount paid within or without the
United States for the taxable transportation (as defined in section
4272) of property a tax equal to 6.25 percent of the amount so paid for
such transportation. The tax imposed by this subsection shall apply
only to amounts paid to a person engaged in the business of transporting
property by air for hire.
(b) By whom paid
(1) In general
Except as provided by paragraph (2), the tax imposed by subsection
(a) shall be paid by the person making the payment subject to tax.
(2) Payments made outside the United States
If a payment subject to tax under subsection (a) is made outside the
United States and the person making such payment does not pay such tax,
such tax --
(A) shall be paid by the person to whom the property is delivered in
the United States by the person furnishing the last segment of the
taxable transportation in respect of which such tax is imposed, and
(B) shall be collected by the person furnishing the last segment of
such taxable transportation.
(c) Determination of amounts paid in certain cases
For purposes of this section, in any case in which a person engaged
in the business of transporting property by air for hire and one or more
other persons not so engaged jointly provide services which include
taxable transportation of property, and the person so engaged receives,
for the furnishing of such taxable transportation, a portion of the
receipts from the joint providing of such services, the amount paid for
the taxable transportation shall be treated as being the sum of (1) the
portion of the receipts so received, and (2) any expenses incurred by
any of the persons not so engaged which are properly attributable to
such taxable transportation and which are taken into account in
determining the portion of the receipts so received.
(d) Termination
The tax imposed by subsection (a) shall apply with respect to
transportation beginning after August 31, 1982, and before January 1,
1996.
(Added Pub. L. 91-258, title II, 204, May 21, 1970, 84 Stat. 239;
amended Pub. L. 94-455, title XIX, 1904(a)(8), Oct. 4, 1976, 90 Stat.
1812; Pub. L. 96-298, 1(b), July 1, 1980, 94 Stat. 829; Pub. L.
97-248, title II, 280(b), Sept. 3, 1982, 96 Stat. 564; Pub. L.
100-223, title IV, 402(a)(2), Dec. 30, 1987, 101 Stat. 1532; Pub. L.
101-508, title XI, 11213(a)(2), (d)(1), Nov. 5, 1990, 104 Stat.
1388-432, 1388-435.)
A prior section 4271, act Aug. 16, 1954, ch. 736, 68A Stat. 507,
508, which related to tax for the transportation of property, was
repealed by Pub. L. 85-475, 4(a), June 30, 1958, 72 Stat. 260. For
effective date of repeal, see section 4(c) of Pub. L. 85-475, set out
as an Effective Date of 1958 Amendment note under section 6415 of this
title.
1990 -- Subsec. (a). Pub. L. 101-508, 11213(a)(2), substituted
''6.25 percent'' for ''5 percent''.
Subsec. (d). Pub. L. 101-508, 11213(d)(1), substituted ''January 1,
1996'' for ''January 1, 1991''.
1987 -- Subsec. (d). Pub. L. 100-223 substituted ''1991'' for
''1988''.
1982 -- Subsec. (d). Pub. L. 97-248 substituted provision that the
tax imposed by subsec. (a) shall apply with respect to transportation
beginning after Aug. 31, 1982, and before Jan. 1, 1988, for provision
that effective with respect to transportation beginning after Sept. 30,
1980, the tax imposed by subsec. (a) would not apply.
1980 -- Subsec. (d). Pub. L. 96-298 substituted ''September 30,
1980'' for ''June 30, 1980''.
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''which begins after
June 30, 1970'' after ''of property''.
Amendment by section 11213(a)(2) of Pub. L. 101-508 applicable to
transportation beginning after Nov. 30, 1990, but inapplicable to
amounts paid on or before such date, see section 11213(a)(3) of Pub. L.
101-508, set out as a note under section 4261 of this title.
Amendment by Pub. L. 97-248 applicable with respect to
transportation beginning after Aug. 31, 1982, but inapplicable to
amounts paid on or before such date, see section 280(d) of Pub. L.
97-248, set out as a note under section 4261 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1904(d)
of Pub. L. 94-455, set out as a note under section 4041 of this title.
Section applicable to transportation beginning after June 30, 1970,
see section 211(b) of Pub. L. 91-258, set out as an Effective Date of
1970 Amendment note under section 4041 of this title.
26 USC 4272. Definition of taxable transportation, etc.
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
For purposes of this part, except as provided in subsection (b), the
term ''taxable transportation'' means transportation by air which begins
and ends in the United States.
(b) Exceptions
For purposes of this part, the term ''taxable transportation'' does
not include --
(1) that portion of any transportation which meets the requirements
of paragraphs (1), (2), (3), and (4) of section 4262(b), or
(2) under regulations prescribed by the Secretary, transportation of
property in the course of exportation (including shipment to a
possession of the United States) by continuous movement, and in due
course so exported.
(c) Excess baggage of passengers
For purposes of this part, the term ''property'' does not include
excess baggage accompanying a passenger traveling on an aircraft
operated on an established line.
(d) Transportation
For purposes of this part, the term ''transportation'' includes
layover or waiting time and movement of the aircraft in deadhead
service.
(Added Pub. L. 91-258, title II, 204, May 21, 1970, 84 Stat. 240;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
Prior sections 4272 and 4273 were repealed by Pub. L. 85-475, 4(a),
June 30, 1958, 72 Stat. 260. For effective date of repeal, see section
4(c) of Pub. L. 85-475, set out as an Effective Date of 1958 Amendment
note under section 6415 of this title.
Section 4272, act Aug. 16, 1954, ch. 736, 68A Stat. 507, 508,
related to exemptions from tax for the transportation of property.
Section 4273, act Aug. 16, 1954, ch. 736, 68A Stat. 507, 508,
related to registration in connection with the tax for the
transportation of property.
1976 -- Subsec. (b)(2). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary''.
26 USC PART III -- SPECIAL PROVISIONS APPLICABLE TO TAXES ON
TRANSPORTATION BY AIR
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4281. Small aircraft on nonestablished lines.
4282. Transportation by air for other members of affiliated group.
(4283. Repealed.)
1990 -- Pub. L. 101-508, title XI, 11213(e)(2), Nov. 5, 1990, 104
Stat. 1388-436, struck out item 4283 ''Reduction in aviation-related
taxes in certain cases''.
1987 -- Pub. L. 100-223, title IV, 405(c), Dec. 30, 1987, 101
Stat. 1535, added item 4283.
1970 -- Pub. L. 91-258, title II, 205(a)(1), May 21, 1970, 84 Stat.
241, inserted ''PART III -- SPECIAL PROVISIONS APPLICABLE TO TAXES ON
TRANSPORTATION BY AIR.''
26 USC 4281. Small aircraft on nonestablished lines
TITLE 26 -- INTERNAL REVENUE CODE
The taxes imposed by sections 4261 and 4271 shall not apply to
transportation by an aircraft having a maximum certificated takeoff
weight of 6,000 pounds or less, except when such aircraft is operated on
an established line. For purposes of the preceding sentence, the term
''maximum certificated takeoff weight'' means the maximum such weight
contained in the type certificate or airworthiness certificate.
(Added Pub. L. 91-258, title II, 205(a)(1), May 21, 1970, 84 Stat.
241; amended Pub. L. 97-248, title II, 280(c)(2)(B), Sept. 3, 1982, 96
Stat. 564.)
A prior section 4281, act Aug. 16, 1954, ch. 736, 68A Stat. 508,
which related to tax on transportation of oil by pipeline, was repealed
by Pub. L. 85-475, 4(a), June 30, 1958, 72 Stat. 260. For effective
date of repeal, see section 4(c) of Pub. L. 85-475, set out as an
Effective Date of 1958 Amendment note under section 6415 of this title.
1982 -- Pub. L. 97-248 struck out ''(as defined in section
4492(b))'' after ''certificated takeoff weight'', and inserted provision
defining ''maximum certificated takeoff weight''.
Amendment by Pub. L. 97-248 applicable with respect to
transportation beginning after Aug. 31, 1982, but inapplicable to
amounts paid on or before such date, see section 280(d) of Pub. L.
97-248, set out as a note under section 4261 of this title.
Section effective on July 1, 1970, see section 211(a) of Pub. L.
91-258, set out as an Effective Date of 1970 Amendment note under
section 4041 of this title.
26 USC 4282. Transportation by air for other members of affiliated
group
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
Under regulations prescribed by the Secretary, if --
(1) one member of an affiliated group is the owner or lessee of an
aircraft, and
(2) such aircraft is not available for hire by persons who are not
members of such group,
no tax shall be imposed under section 4261 or 4271 upon any payment
received by one member of the affiliated group from another member of
such group for services furnished to such other member in connection
with the use of such aircraft.
(b) Affiliated group
For purposes of subsection (a), the term ''affiliated group'' has the
meaning assigned to such term by section 1504(a), except that all
corporations shall be treated as includible corporations (without any
exclusion under section 1504(b)).
(Added Pub. L. 91-258, title II, 205(a)(1), May 21, 1970, 84 Stat.
241; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976,
90 Stat. 1834.)
A prior section 4282, act Aug. 16, 1954, ch. 736, 68A Stat. 508,
which defined ''fair charge'' in connection with the tax on
transportation of oil by pipeline, was repealed by Pub. L. 85-475,
4(a), June 30, 1958, 72 Stat. 260. For effective date of repeal, see
section 4(c) of Pub. L. 85-475, set out as an Effective Date of 1958
Amendment note under section 6415 of this title.
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
26 USC ( 4283. Repealed. Pub. L. 101-508, title XI, 11213(e)(1), Nov.
5, 1990, 104 Stat. 1388-436)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added Pub. L. 100-223, title IV, 405(a), Dec. 30, 1987,
101 Stat. 1533; amended Pub. L. 101-239, title VII, 7501(a)-(b)(2),
Dec. 19, 1989, 103 Stat. 2361, provided for reduction in
aviation-related taxes in certain cases.
26 USC (Subchapter D -- Repealed)
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 4286, 4287. Repealed. Pub. L. 89-44, title III, 304, June
21, 1965, 79 Stat. 148)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4286, act Aug. 16, 1954, ch. 736, 68A Stat. 510, imposed a
tax equivalent to 10 percent of the amount collected for the use of
safety deposit boxes.
Section 4287, act Aug. 16, 1954, ch. 736, 68A Stat. 510, defined
safety deposit box.
Section 701(b)(4) of Pub. L. 89-44 provided that: ''The amendments
made by section 304 (repealing these sections) shall apply with respect
to use periods beginning on or after July 1, 1965.''
26 USC Subchapter E -- Special Provisions Applicable to Services and
Facilities Taxes
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4291. Cases where persons receiving payment must collect tax.
(4292. Repealed.)
4293. Exemption for United States and possessions.
(4294, 4295. Repealed.)
1976 -- Pub. L. 94-455, title XIX, 1904(b)(4), Oct. 4, 1976, 90
Stat. 1815, struck out items 4292, 4294, and 4295 relating to State and
local governmental exemption, exemption for nonprofit educational
organizations, and cross reference to general administrative provisions,
respectively.
1958 -- Pub. L. 85-859, title I, 135(b), Sept. 2, 1958, 72 Stat.
1292, added item 4294 and redesignated former item 4294 as 4295.
26 USC 4291. Cases where persons receiving payment must collect tax
TITLE 26 -- INTERNAL REVENUE CODE
Except as otherwise provided in section 4263(a), every person
receiving any payment for facilities or services on which a tax is
imposed upon the payor thereof under this chapter shall collect the
amount of the tax from the person making such payment.
(Aug. 16, 1954, ch. 736, 68A Stat. 511; July 25, 1956, ch. 725,
4(c), 70 Stat. 646; Sept. 2, 1958, Pub. L. 85-859, title I, 131(g), 72
Stat. 1287; June 21, 1965, Pub. L. 89-44, title III, 305(a), 79 Stat.
148; May 21 1970, Pub. L. 91-258, title II, 205(c)(3), 84 Stat. 242.)
1970 -- Pub. L. 91-258 substituted ''section 4263(a)'' for ''section
4264(a)''.
1965 -- Pub. L. 89-44 struck out reference to section 4231 and
struck out sentence referring to tax imposed on life memberships by
section 4241.
1958 -- Pub. L. 85-859 substituted ''Except as otherwise provided in
sections 3241 and 4262(a)'' for ''Except as provided in section
4264(a)''.
1956 -- Act July 25, 1956, inserted ''Except as provided in section
4264(a)'', and struck out provisions which related to collection of tax
where payment specified in section 4261 was made outside the United
States for a prepaid order, exchange order, or similar order.
Amendment by Pub. L. 91-258 effective on July 1, 1970, see section
211(a) of Pub. L. 91-258, set out as a note under section 4041 of this
title.
Section 701(b)(1) of Pub. L. 89-44 provided that:
''(A) The amendments made by sections 301 and 305 (repealing sections
4231 to 4234 and 4241 to 4243 of this title and amending this section
and section 6040 of this title) insofar as they relate to the taxes
imposed by section 4231 of the Code, shall apply with respect to
admissions, services, or uses after noon, December 31, 1965.
''(B) The amendments made by sections 301 and 305 insofar as they
relate to the taxes imposed by section 4241 of the Code, shall apply
with respect to --
''(i) dues and membership fees attributable to periods beginning on
or after January 1, 1966;
''(ii) initiation fees (other than initiation fees to which clause
(iii) applies) and amounts paid for life memberships attributable to
memberships beginning on or after January 1, 1966;
''(iii) initiation fees paid on or after July 1, 1965, to a new club
or organization which first makes its facilities available to members on
or after such date; and
''(iv) in the case of amounts described in section 4243(b) of the
Code, 3-year periods beginning on or after January 1, 1966.''
Amendment by Pub. L. 85-859 effective on first day of first calendar
quarter which begins more than 60 days after Sept. 2, 1958, see section
1(c) of Pub. L. 85-859.
Amendment by act July 25, 1956, applicable to amounts paid on or
after first day of first month which begins more than sixty days after
July 25, 1956, for transportation commencing on or after such first day,
see section 6 of act July 25, 1956, set out as a note under section 4261
of this title.
26 USC ( 4292. Repealed. Pub. L. 94-455, title XIX, 1904(a)(9), Oct.
4, 1976, 90 Stat. 1812)
TITLE 26 -- INTERNAL REVENUE CODE
Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 511; June 30,
1958, Pub. L. 85-475, 4(b)(3), 72 Stat. 260; May 21, 1970, Pub. L.
91-258, title II, 205(a)(2), 84 Stat. 241, provided tax exemption for
any payment received for services or facilities furnished to any State,
Territory, or political subdivision of such, or the District of
Columbia.
Repeal effective on first day of first month which begins more than
90 days after Oct. 4, 1976, see section 1904(d) of Pub. L. 94-455,
set out as an Effective Date of 1976 Amendment note under section 4041
of this title.
26 USC 4293. Exemption for United States and possessions
TITLE 26 -- INTERNAL REVENUE CODE
The Secretary of the Treasury may authorize exemption from the taxes
imposed by subchapter A of chapter 31, section 4041, section 4051,
chapter 32 (other than the taxes imposed by sections 4064 and 4121) and
subchapter B of chapter 33, as to any particular article, or service or
class of articles or services, to be purchased for the exclusive use of
the United States, if he determines that the imposition of such taxes
with respect to such articles or services, or class of articles or
services will cause substantial burden or expense which can be avoided
by granting tax exemption and that full benefit of such exemption, if
granted, will accrue to the United States.
(Aug. 16, 1954, ch. 736, 68A Stat. 511; May 21, 1970, Pub. L.
91-258, title II, 205(a)(3), 84 Stat. 241; Oct. 4, 1976, Pub. L.
94-455, title XIX, 1906(b)(13)(B), 90 Stat. 1834; Feb. 10, 1978, Pub.
L. 95-227, 2(b)(3), 92 Stat. 12; Oct. 21, 1978, Pub. L. 95-502, title
II, 202(b), 92 Stat. 1697; Nov. 9, 1978, Pub. L. 95-618, title II,
201(c)(2), 92 Stat. 3184; Nov. 10, 1988, Pub. L. 100-647, title VI,
6103(a), 102 Stat. 3711; Nov. 5, 1990, Pub. L. 101-508, title XI,
11221(c), 104 Stat. 1388-444.)
1990 -- Pub. L. 101-508 inserted ''subchapter A of chapter 31,''
before ''section 4041''.
1988 -- Pub. L. 100-647 inserted reference to section 4051 of this
title.
1978 -- Pub. L. 95-618 substituted ''taxes imposed by sections 4064
and 4121'' for ''tax imposed by section 4121''.
Pub. L. 95-502 substituted ''section 4041, chapter 32'' for
''chapters 31 and 32''.
Pub. L. 95-227 inserted ''(other than the tax imposed by section
4121)'' after ''chapters 31 and 32''.
1976 -- Pub. L. 94-455 substituted ''Secretary of the Treasury'' for
''Secretary'' after ''The''.
1970 -- Pub. L. 91-258 substituted ''subchapter B'' for
''subchapters B and C''.
Amendment by Pub. L. 101-508 effective Jan. 1, 1991, with exception
for contracts binding on Sept. 30, 1990, and at all times thereafter,
see section 11221(f) of Pub. L. 101-508, set out as an Effective Date
note under section 4001 of this title.
Section 6103(b) of Pub. L. 100-647 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect on the
date of the enactment of this Act (Nov. 10, 1988).''
Amendment by Pub. L. 95-618 applicable with respect to 1980 and
later model year automobiles, see section 201(g) of Pub. L. 95-618, set
out as an Effective Date note under section 4064 of this title.
Amendment by Pub. L. 95-502 effective Oct. 1, 1980, see section
202(d) of Pub. L. 95-502, set out as an Effective Date note under
section 4042 of this title.
Amendment by Pub. L. 95-227 applicable with respect to sales after
Mar. 31, 1978, see section 2(d) of Pub. L. 95-227, set out as an
Effective Date note under section 4121 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1906(d)
of Pub. L. 94-455, set out as a note under section 6013 of this title.
Amendment by Pub. L. 91-258 effective July 1, 1970, see section
211(a) of Pub. L. 91-258, set out as a note under section 4041 of this
title.
26 USC ( 4294, 4295. Repealed. Pub. L. 94-455, title XIX,
1904(a)(10), (11), Oct. 4, 1976, 90 Stat. 1812)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4294, added Pub. L. 85-859, title I, 135(a), Sept. 2,
1958, 72 Stat. 1292; amended Pub. L. 86-344, 2(d), Sept. 21, 1959,
73 Stat. 618; Pub. L. 91-72, title I, 101(j)(28), Dec. 30, 1969, 83
Stat. 529; Pub. L. 91-258, title II, 205(a)(4), May 21, 1970, 84
Stat. 241, provided an exemption from tax for services and facilities
furnished to a nonprofit educational organization and defined
''nonprofit educational organization''.
Section 4295, act Aug. 16, 1954, ch. 736, 68A Stat. 511, 4295,
formerly 4294, renumbered Sept. 2, 1958, Pub. L. 85-859, title I,
135(a), 72 Stat. 1292, related to a cross reference to general
administrative provisions.
Repeal effective on first day of first month which begins more than
90 days after Oct. 4, 1976, see section 1904(d) of Pub. L. 94-455,
set out as an Effective Date of 1976 Amendment note under section 4041
of this title.
26 USC CHAPTER 34 -- POLICIES ISSUED BY FOREIGN INSURERS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4371. Imposition of tax.
4372. Definitions.
4373. Exemptions.
4374. Liability for tax.
The provisions of a prior chapter 34, Documentary Stamp Taxes, were
set out as:
Subchapter A, Issuance of capital stock and certificates of
indebtedness by a corporation, comprising sections 4301 to 4305 and 4311
to 4316.
Subchapter B, Sale or transfers of capital stock and certificates of
indebtedness of a corporation, comprising sections 4321 to 4324, 4331 to
4333, 4341 to 4345, and 4351 to 4354.
Subchapter C, Conveyances, comprising sections 4361 to 4363.
Subchapter D, Policies issued by foreign insurers, comprising
sections 4371 to 4375.
Subchapter E, Miscellaneous provisions applicable to documentary
stamp taxes, comprising sections 4381 to 4384.
Subchapters A and B were repealed by Pub. L. 89-44, title IV,
401(a), June 21, 1965, 79 Stat. 148.
Subchapter C was struck out by Pub. L. 94-455, title XIX,
1904(a)(12), Oct. 4, 1976, 90 Stat. 1812.
Subchapter D heading was struck out, sections 4371 to 4373 were
reenacted without change, section 4374, ''liability for tax'', was
substituted for section 4374, ''payment of tax'', and section 4375 was
struck out by Pub. L. 94-455, title XIX, 1904(a)(12).
Subchapter E, section 4381 was repealed by Pub. L. 89-44, title IV,
401(c), June 21, 1965, 79 Stat. 148, and sections 4382 to 4384 were
struck out by Pub. L. 94-455, title XIX, 1904(a)(12), Oct. 4, 1976,
90 Stat. 1812.
The subject matter of the prior sections was as follows:
A prior section 4301, acts Aug. 16, 1954, ch. 736, 68A Stat. 513;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1293; Apr.
8, 1960, Pub. L. 86-416, 1, 74 Stat. 36, imposed a tax, based upon
the actual value of the certificates or shares, upon each original issue
of shares or certificates of stock issued by a corporation.
A prior section 4302, acts Aug. 16, 1954, ch. 736, 68A Stat. 513;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1293, made
provision for a determination of tax in the case of recapitalization.
A prior section 4303, acts Aug. 16, 1954, ch. 736, 68A Stat. 514;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1293 granted
exemptions for common trust funds, pooled investment funds, and
installment purchases of certain shares or certificates, and directed
attention to section 4382 for other exemptions.
A prior section 4304, acts Aug. 16, 1954, ch. 736, 68A Stat. 514;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1294, called
for the affixing of the stamps representing the tax imposed by section
4301 upon the stock books or corresponding records of the corporation.
A prior section 4305, acts Aug. 16, 1954, ch. 736, 68A Stat. 514;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1294, made
cross-references to sections 4381 and 4384 and subtitle F.
A prior section 4311, acts Aug. 16, 1954, ch. 736, 68A Stat. 514;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1294,
imposed a tax on all certificates of indebtedness issued by a
corporation.
A prior section 4312, acts Aug. 16, 1954, ch. 736, 4312, formerly
4313, 68A Stat. 514, renumbered Sept. 2, 1958, Pub. L. 85-859, title
I, 141(a), 72 Stat. 1294, provided that every renewal of any
certificate of indebtedness should be taxed as a new issue.
A prior section 4313, acts Aug. 16, 1954, ch. 736, 4313, formerly
4314, 68A Stat. 514, renumbered Sept. 2, 1958, Pub. L. 85-859, title
I, 141(a), 72 Stat. 1294, provided for the method of determining the
rate of taxation in the case of a bond conditioned for the repayment of
money and given in a penal sum greater than the debt secured.
A prior section 4314, acts Aug. 16, 1954, ch. 736, 4314, formerly
4315, 68A Stat. 514, renumbered Sept. 2, 1958, Pub. L. 85-859, title
I, 141(a), 72 Stat. 1294, granted an exemption to instruments under
the terms of which the obligee was required to make installment payments
of not more than 20 percent annually, and made reference to section 4382
for other exemptions.
A prior section 4315, acts Aug. 16, 1954, ch. 736, 4315, formerly
4316, 68A Stat. 514, renumbered and amended Sept. 2, 1958, Pub. L.
85-859, title I, 141(a), 72 Stat. 1294, made cross references to
sections 4381 and 4384 and subtitle F.
A prior section 4321, acts Aug. 16, 1954, ch. 736, 68A Stat. 515;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1295; Sept.
21, 1959, Pub. L. 86-344, 5(a), 73 Stat. 619, imposed a tax upon the
sale or transfer of shares or certificates of stock or of rights to
subscribe to receive such shares or certificates issued by a
corporation.
A prior section 4322, acts Aug. 16, 1954, ch. 736, 68A Stat. 515;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1295,
granted exemptions in the case of sales by brokers or registered
nominees and in the case of odd lot sales.
A prior section 4323, acts Aug. 16, 1954, ch. 736, 68A Stat. 516;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1296; Sept.
21, 1959, Pub. L. 86-344, 5(b), 73 Stat. 619, called for the affixing
of the stamps representing the tax upon the books of the corporation and
the certification of the actual value of the shares transferred, and
made reference to section 4352 in the case of transfers shown otherwise
than by the books of the corporation.
A prior section 4324, acts Aug. 16, 1954, ch. 736, 68A Stat. 516;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1296, made
cross references to other sections and subtitles for definitions,
penalties, and other general and administrative provisions.
A prior section 4331, acts Aug. 16, 1954, ch. 736, 68A Stat. 516;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1296,
imposed a tax upon each sale or transfer of any certificate of
indebtedness issued by a corporation.
A prior section 4332, acts Aug. 16, 1954, ch. 736, 68A Stat. 516;
Jan. 28, 1956, ch. 19, 70 Stat. 9; Sept. 2, 1958, Pub. L. 85-859,
title I, 141(a), 72 Stat. 1296, granted exemptions in the case of
transfers and sales by brokers and installment purchases of obligations
and made reference to other exemptions listed in other sections.
A prior section 4333, acts Aug. 16, 1954, ch. 736, 68A Stat. 516;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1296, made
cross references to other sections and subtitles for definitions,
penalties, and other general and administrative provisions.
A prior section 4341, acts Aug. 16, 1954, ch. 736, 68A Stat. 517;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1297,
granted an exemption from the imposition of the tax under sections 4321
and 4331 in the case of transfers as collateral security and as security
for performance.
A prior section 4342, acts Aug. 16, 1954, ch. 736, 68A Stat. 517;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1297,
granted exemptions in the case of delivery or transfer of instruments by
a fiduciary to his nominee or between nominees or by a custodian.
A prior section 4343, acts Aug. 16, 1954, ch. 736, 68A Stat. 517;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1297,
provided that taxes imposed by sections 4321 and 4331 would not apply in
specified cases involving decedents, minors, incompetents, financial
institutions, bankrupts, successors, foreign governments and aliens,
trustees, and survivors.
A prior section 4344, Pub. L. 85-859, title I, 141(a), Sept. 2,
1958, 72 Stat. 1298, made provision for an exemption from tax in the
case of specified loan transactions, worthless stock and obligations,
and transfers between certain revocable trusts.
A prior section 4345, acts Aug. 16, 1954, ch. 736, 4345, formerly
4344, 68A Stat. 518, renumbered and amended Sept. 2, 1958, Pub. L.
85-859, title I, 141(a), 72 Stat. 1298, required an exemption
certificate setting forth the facts as prescribed by regulations.
A prior section 4346, acts Aug. 16, 1954, ch. 736, 4346, formerly
4345, 68A Stat. 518, renumbered Sept. 2, 1958, Pub. L. 85-859, title
I, 141(a), 72 Stat. 1298, made cross reference to other sections for
additional exemptions.
A prior section 4351, acts Aug. 16, 1954, ch. 736, 68A Stat. 518;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1299,
defined registered nominee and sale or transfer.
A prior section 4352, acts Aug. 16, 1954, ch. 736, 4352, formerly
4353, 68A Stat. 519, renumbered Sept. 2, 1958, Pub. L. 85-859, title
I, 141(a), 72 Stat. 1299, provided for the affixing of the stamps
required either on the instrument itself or on the memorandum or bill of
sale.
A prior section 4353, Pub. L. 85-859, title I, 141(a), Sept. 2,
1958, 72 Stat. 1299, made provision for the payment of tax through the
national securities exchanges without the use of stamps.
A prior section 4354, acts Aug. 16, 1954, ch. 736, 68A Stat. 519;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1299, made
cross references to section 4384 and subtitle F for penalties and other
general and administrative provisions.
A prior section 4361, acts Aug. 16, 1954, ch. 736, 68A Stat. 520;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1299; June
21, 1965, Pub. L. 89-44, title IV, 401(b), 79 Stat. 148, related to
the imposition of a tax on each deed, instrument, or writing by which
any realty is sold, assigned, transferred, or otherwise conveyed.
A prior section 4362, acts Aug. 16, 1954, ch. 736, 68A Stat. 520;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1300,
related to exemptions to the tax imposed by former section 4361.
A prior section 4363, acts Aug. 16, 1954, ch. 736, 68A Stat. 520;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1300,
related to cross references to former section 4384 and subtitle F of
this title.
A prior section 4375, acts Aug. 16, 1954, ch. 736, 68A Stat. 522;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1301, made
cross-references to section 4384 and subtitle F.
A prior section 4381, acts Aug. 16, 1954, ch. 736, 68A Stat. 523,
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1302,
defined certificates of indebtedness, corporation, and shares or
certificates of stock.
A prior section 4382, acts Aug. 16, 1954, ch. 736, 68A Stat. 523;
Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72 Stat. 1302; Oct.
16, 1962, Pub. L. 87-834, 6(e)(2), 76 Stat. 984, granted exemptions
to Government and state obligations, etc.
A prior section 4383, Pub. L. 85-859, title I, 141(a), Sept. 2,
1958, 72 Stat. 1303, related to the taxation of continuing and
terminated partnerships.
A prior section 4384, acts Aug. 16, 1954, ch. 736, 68A Stat. 524,
4384, formerly 4383, renumbered and amended Sept. 2, 1958, Pub. L.
85-859, title I, 141(a), 72 Stat. 1303, related to liability for the
tax.
1976 -- Pub. L. 94-455, title XIX, 1904(a)(12), Oct. 4, 1976, 90
Stat. 1812, substituted ''Policies Issued by Foreign Insurers'' for
''Documentary Stamp Taxes'' as chapter heading and struck out items
relating to subchapters C to E.
1965 -- Pub. L. 89-44, title IV, 401(a), June 21, 1965, 79 Stat.
148, struck out items relating to subchapters A and B.
Section 701(c)(1) of Pub. L. 89-44 provided that: ''The amendments
made by section 401 (repealing sections 4301 to 4305, 4311 to 4315, 4321
to 4324, 4331 to 4333, 4341 to 4346, 4351 to 4354 and 4381 of this
title) (relating to documentary stamp taxes) shall apply on and after
January 1, 1966.''
Repeal of sections 4361 to 4363, 4375, 4382 to 4384 by section
1904(a)(12) of Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1904(d)
of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note
under section 4041 of this title.
26 USC 4371. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
There is hereby imposed, on each policy of insurance, indemnity bond,
annuity contract, or policy of reinsurance issued by any foreign insurer
or reinsurer, a tax at the following rates:
(1) Casualty insurance and indemnity bonds
4 cents on each dollar, or fractional part thereof, of the premium
paid on the policy of casualty insurance or the indemnity bond, if
issued to or for, or in the name of, an insured as defined in section
4372(d);
(2) Life insurance, sickness, and accident policies, and annuity
contracts
1 cent on each dollar, or fractional part thereof, of the premium
paid on the policy of life, sickness, or accident insurance, or annuity
contract; and
(3) Reinsurance
1 cent on each dollar, or fractional part thereof, of the premium
paid on the policy of reinsurance covering any of the contracts taxable
under paragraph (1) or (2).
(Aug. 16, 1954, ch. 736, 68A Stat. 521; Mar. 13, 1956, ch. 83,
5(9), 70 Stat. 49; Sept. 2, 1958, Pub. L. 85-859, title I, 141(a), 72
Stat. 1300; June 25, 1959, Pub. L. 86-69, 3(f)(3), 73 Stat. 140; June
21, 1965, Pub. L. 89-44, title VIII, 804(b), 79 Stat. 160; Oct. 4,
1976, Pub. L. 94-455, title XIX, 1904(a)(12), 90 Stat. 1812; July 18,
1984, Pub. L. 98-369, div. A, title II, 211(b)(23), 98 Stat. 757; Dec.
22, 1987, Pub. L. 100-203, title X, 10242(c)(3), 101 Stat. 1330-423;
Dec. 19, 1989, Pub. L. 101-239, title VII, 7811(i)(11), 103 Stat.
2411.)
1989 -- Par. (2). Pub. L. 101-239 struck out '', unless the insurer
is subject to tax under section 842(b)'' after ''or annuity contract''.
1987 -- Par. (2). Pub. L. 100-203 substituted ''section 842(b)'' for
''section 813''.
1984 -- Par. (2). Pub. L. 98-369 substituted ''section 813'' for
''section 819''.
1976 -- Pub. L. 94-455 substituted in par. (1) ''4 cents'' for
''four cents'' and ''premium paid'' for ''premium charged'', in pars.
(2) and (3) ''1 cent'' for ''one cent'' and ''premium paid'' for
''premium charged'', and struck out provision following par. (3)
relating to computation of tax on premium paid in lieu of premium
charged.
1965 -- Pub. L. 89-44 inserted last sentence relating to computation
of tax on premium paid in lieu of premium charged.
1959 -- Par. (2). Pub. L. 86-69 substituted ''section 819'' for
''section 816''.
1958 -- Pub. L. 85-859 substituted ''is hereby imposed, on each
policy of insurance, indemnity bond, annuity contract, or policy of
reinsurance issued by any foreign insurer or reinsurer, a tax'' for
''shall be imposed a tax on each policy of insurance, indemnity bond,
annuity contract, or policy of reinsurance issued by any foreign insurer
or reinsurer''.
1956 -- Par. (2). Act Mar. 13, 1956, substituted ''section 816''
for ''section 807''.
Amendment by Pub. L. 101-239 effective, except as otherwise
provided, as if included in the provision of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such
amendment relates, see section 7817 of Pub. L. 101-239, set out as a
note under section 1 of this title.
Amendment by Pub. L. 100-203 applicable to taxable years beginning
after Dec. 31, 1987, see section 10242(d) of Pub. L. 100-203, set out
as a note under section 816 of this title.
Amendment by Pub. L. 98-369 applicable to taxable years beginning
after Dec. 31, 1983, see section 215 of Pub. L. 98-369, set out as an
Effective Date note under section 801 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1904(d)
of Pub. L. 94-455, set out as a note under section 4041 of this title.
Amendment by Pub. L. 89-44 applicable with respect to policies,
bonds, and contracts with respect to which the tax imposed by this
section is required to be paid on the basis of a return, see section
804(c) of Pub. L. 89-44, set out as a note under section 4374 of this
title.
Amendment by Pub. L. 86-69 applicable only with respect to taxable
years beginning after Dec. 31, 1957, see section 4 of Pub. L. 86-69,
set out as an Effective Date note under section 381 of this title.
Amendment by Pub. L. 85-859 effective on first day of first calendar
quarter which begins more than 60 days after Sept. 2, 1958, see section
1(c) of Pub. L. 85-859.
Amendment by act Mar. 13, 1956, applicable only to taxable years
beginning after Dec. 31, 1954, see section 6 of act Mar. 13, 1956, set
out as a note under section 316 of this title.
26 USC 4372. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Foreign insurer or reinsurer
For purposes of section 4371, the term ''foreign insurer or
reinsurer'' means an insurer or reinsurer who is a nonresident alien
individual, or a foreign partnership, or a foreign corporation. The
term includes a nonresident alien individual, foreign partnership, or
foreign corporation which shall become bound by an obligation of the
nature of an indemnity bond. The term does not include a foreign
government, or municipal or other corporation exercising the taxing
power.
(b) Policy of casualty insurance
For purposes of section 4371(1), the term ''policy of casualty
insurance'' means any policy (other than life) or other instrument by
whatever name called whereby a contract of insurance is made, continued,
or renewed.
(c) Indemnity bond
For purposes of this chapter the term ''indemnity bond'' means any
instrument by whatever name called whereby an obligation of the nature
of an indemnity, fidelity, or surety bond is made, continued, or
renewed. The term includes any bond for indemnifying any person who
shall have become bound or engaged as surety, and any bond for the due
execution or performance of any contract, obligation, or requirement, or
the duties of any office or position, and to account for money received
by virtue thereof, where a premium is charged for the execution of such
bond.
(d) Insured
For purposes of section 4371(1), the term ''insured'' means --
(1) a domestic corporation or partnership, or an individual resident
of the United States, against, or with respect to, hazards, risks,
losses, or liabilities wholly or partly within the United States, or
(2) a foreign corporation, foreign partnership, or nonresident
individual, engaged in a trade or business within the United States,
against, or with respect to hazards, risks, or liabilities within the
United States.
(e) Policy of life, sickness, or accident insurance, or annuity
contract
For the purpose of section 4371(2), the term ''policy of life,
sickness, or accident insurance, or annuity contract'' means any policy
or other instrument by whatever name called whereby a contract of
insurance or an annuity contract is made, continued, or renewed with
respect to the life or hazards to the person of a citizen or resident of
the United States.
(f) Policy of reinsurance
For the purpose of section 4371(3), the term ''policy of
reinsurance'' means any policy or other instrument by whatever name
called whereby a contract of reinsurance is made, continued, or renewed
against, or with respect to, any of the hazards, risks, losses, or
liabilities covered by contracts taxable under paragraph (1) or (2) of
section 4371.
(Aug. 16, 1954, ch. 736, 68A Stat. 521; Sept. 2, 1958, Pub. L.
85-859, title I, 141(a), 72 Stat. 1300; Oct. 4, 1976, Pub. L. 94-455,
title XIX, 1904(a)(12), 90 Stat. 1812.)
1976 -- Subsec. (a). Pub. L. 94-455 substituted ''section 4371'' for
''this subchapter'', and inserted provision that term does not include a
foreign government, or municipal or other corporation exercising the
taxing power.
Subsec. (c). Pub. L. 94-455 substituted ''this chapter'' for ''this
subchapter''.
1958 -- Subsec. (d)(2). Pub. L. 85-859 inserted ''against, or''
before ''with respect to''.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1904(d)
of Pub. L. 94-455, set out as a note under section 4041 of this title.
Amendment by Pub. L. 85-859 effective on first day of first calendar
quarter which begins more than 60 days after Sept. 2, 1958, see section
1(c) of Pub. L. 85-859.
26 USC 4373. Exemptions
TITLE 26 -- INTERNAL REVENUE CODE
The tax imposed by section 4371 shall not apply to --
(1) Effectively connected items
Any amount which is effectively connected with the conduct of a trade
or business within the United States unless such amount is exempt from
the application of section 882(a) pursuant to a treaty obligation of the
United States.
(2) Indemnity bond
Any indemnity bond required to be filed by any person to secure
payment of any pension, allowance, allotment, relief, or insurance by
the United States, or to secure a duplicate for, or the payment of, any
bond, note, certificate of indebtedness, war-saving certificate, warrant
or check, issued by the United States.
(Aug. 16, 1954, ch. 736, 68A Stat. 522; Sept. 2, 1958, Pub. L.
85-859, title I, 141(a), 72 Stat. 1301; Oct. 4, 1976, Pub. L. 94-455,
title XIX, 1904(a)(12), 90 Stat. 1813; Nov. 10, 1988, Pub. L.
100-647, title I, 1012(q)(13)(A), 102 Stat. 3525.)
1988 -- Par. (1). Pub. L. 100-647 amended par. (1) generally,
substituting provisions relating to effectively connected items for
provisions relating to domestic agent.
1976 -- Par. (1). Pub. L. 94-455 substituted ''State, or in the
District of Columbia, within'' for ''State, Territory, or District of
the United States within''.
1958 -- Pub. L. 85-859 reenacted section without change.
Section 1012(q)(13)(B) of Pub. L. 100-647 provided that: ''The
amendment made by subparagraph (A) (amending this section) shall apply
with respect to premiums paid after the date 30 days after the date of
the enactment of this Act (Nov. 10, 1988).''
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1904(d)
of Pub. L. 94-455, set out as a note under section 4041 of this title.
26 USC 4374. Liability for tax
TITLE 26 -- INTERNAL REVENUE CODE
The tax imposed by this chapter shall be paid, on the basis of a
return, by any person who makes, signs, issues, or sells any of the
documents and instruments subject to the tax, or for whose use or
benefit the same are made, signed, issued, or sold. The United States
or any agency or instrumentality thereof shall not be liable for the
tax.
(Aug. 16, 1954, ch. 736, 68A Stat. 522; Sept. 2, 1958, Pub. L.
85-859, title I, 141(a), 72 Stat. 1301; June 21, 1965, Pub. L. 89-44,
title VIII, 804(a)(1), (2), 79 Stat. 160; Oct. 4, 1976, Pub. L.
94-455, title XIX, 1904(a)(12), 90 Stat. 1813.)
For provisions of prior sections 4375, 4381 to 4384, see Prior
Provisions note preceding section 4371 of this title.
1976 -- Pub. L. 94-455 substituted in section catchline ''Liability
for tax'' for ''Payment of tax'' and in text provisions relating to
payment of tax on basis of a return and to tax-exempt status of United
States and its agencies and instrumentalities for provisions relating to
placing of stamps on any policy, indemnity bond, or annuity contract
referred to in section 4371 and to regulation by Secretary that tax be
paid on basis of a return.
1965 -- Pub. L. 89-44 substituted ''Payment of tax'' for ''Affixing
of stamps'' in section catchline, and inserted sentence authorizing
Secretary or his delegate to provide by regulation for payment on basis
of a return of tax imposed by section 4371.
1958 -- Pub. L. 85-859 reenacted section without change.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1904(d)
of Pub. L. 94-455, set out as a note under section 4041 of this title.
Section 804(c) of Pub. L. 89-44 provided that: ''The amendments
made by subsection (a) (amending this section) shall take effect on July
1, 1965. The amendments made by subsection (b) (amending section 4371
of this title) shall apply with respect to policies, bonds, and
contracts with respect to which the tax imposed by section 4371 of the
Code is required to be paid on the basis of a return.''
Section 141(b) of Pub. L. 85-859 mandated that only changes in the
partnership occurring on or after the effective date specified in
section 1(c) of Pub. L. 85-859 shall be taken into account in the
determination of whether a partnership is a continuing or terminated
one.
26 USC CHAPTER 35 -- TAXES ON WAGERING
TITLE 26 -- INTERNAL REVENUE CODE
Subchapter Sec. /1/
A.
Tax on wagers 4401
B.
Occupational tax 4411
C.
Miscellaneous provisions 4421
/1/ Section numbers editorially supplied.
26 USC Subchapter A -- Tax on Wagers
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4401. Imposition of tax.
4402. Exemptions.
4403. Record requirements.
4404. Territorial extent.
4405. Cross references.
26 USC 4401. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Wagers
(1) State authorized wagers
There shall be imposed on any wager authorized under the law of the
State in which accepted an excise tax equal to 0.25 percent of the
amount of such wager.
(2) Unauthorized wagers
There shall be imposed on any wager not described in paragraph (1) an
excise tax equal to 2 percent of the amount of such wager.
(b) Amount of wager
In determining the amount of any wager for the purposes of this
subchapter, all charges incident to the placing of such wager shall be
included; except that if the taxpayer establishes, in accordance with
regulations prescribed by the Secretary, that an amount equal to the tax
imposed by this subchapter has been collected as a separate charge from
the person placing such wager, the amount so collected shall be
excluded.
(c) Persons liable for tax
Each person who is engaged in the business of accepting wagers shall
be liable for and shall pay the tax under this subchapter on all wagers
placed with him. Each person who conducts any wagering pool or lottery
shall be liable for and shall pay the tax under this subchapter on all
wagers placed in such pool or lottery. Any person required to register
under section 4412 who receives wagers for or on behalf of another
person without having registered under section 4412 the name and place
of residence of such other person shall be liable for and shall pay the
tax under this subchapter on all such wagers received by him.
(Aug. 16, 1954, ch. 736, 68A Stat. 525; Sept. 2, 1958, Pub. L.
85-859, title I, 151(a), 72 Stat. 1304; Oct. 29, 1974, Pub. L.
93-499, 3(a), 88 Stat. 1550; Oct. 4, 1976, Pub. L. 94-455, title XIX,
1906(b)(13)(A), 90 Stat. 1834; Oct. 25, 1982, Pub. L. 97-362, title I,
109(a), 96 Stat. 1731.)
1982 -- Subsec. (a). Pub. L. 97-362 substituted provision that there
shall be imposed on any wager authorized under the law of the State in
which accepted an excise tax equal to 0.25 percent of the amount of such
wager and that there shall be imposed on any other wager an excise tax
equal to 2 percent of the amount of such wager for provision that there
be imposed on wagers, as defined in section 4421, an excise tax equal to
2 percent of the amount thereof.
1976 -- Subsec. (b). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
1974 -- Subsec. (a). Pub. L. 93-499 substituted ''2 percent'' for
''10 percent''.
1958 -- Subsec. (c). Pub. L. 85-859 made all persons required to
register under section 4412 of this title who receive wagers for or on
behalf of another person without having registered under section 4412 of
this title the name and place of residence of such other person liable
for the tax on all such wagers received by them.
Section 109(c)(1) of Pub. L. 97-362 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect on
January 1, 1983.''
Section 3(d)(1) of Pub. L. 93-499 provided that: ''The amendments
made by this section (enacting section 4424 and amending this section
and section 4411 of this title) take effect on December 1, 1974, and
shall apply only with respect to wagers placed on or after such date.''
Section 151(b) of Pub. L. 85-859 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply with respect
to wagers received after the date of the enactment of this Act (Sept. 2,
1958).''
Imposition of occupational tax, see section 4411 of this title.
26 USC 4402. Exemptions
TITLE 26 -- INTERNAL REVENUE CODE
No tax shall be imposed by this subchapter --
(1) Parimutuels
On any wager placed with, or on any wager placed in a wagering pool
conducted by, a parimutuel wagering enterprise licensed under State law,
(2) Coin-operated devices
On any wager placed in a coin-operated device (as defined in section
4462 as in effect for years beginning before July 1, 1980), or on any
amount paid, in lieu of inserting a coin, token, or similar object, to
operate a device described in section 4462(a)(2) (as so in effect), or
(3) State-conducted lotteries, etc.
On any wager placed in a sweepstakes, wagering pool, or lottery which
is conducted by an agency of a State acting under authority of State
law, but only if such wager is placed with the State agency conducting
such sweepstakes, wagering pool, or lottery, or with its authorized
employees or agents.
(Aug. 16, 1954, ch. 736, 68A Stat. 525; Sept. 2, 1958, Pub. L.
85-859, title I, 152(b), 72 Stat. 1305; June 21, 1965, Pub. L. 89-44,
title IV, 405(a), title VIII, 813(a), 79 Stat. 149, 170; Oct. 4,
1976, Pub. L. 94-455, title XII, 1208(a), 90 Stat. 1709; Nov. 6, 1978,
Pub. L. 95-600, title V, 521(c)(1), 92 Stat. 2884.)
Section 4462, referred to in par. (2), was repealed by Pub. L.
95-600, title V, 521(b), Nov. 6, 1978, 92 Stat. 2884.
1978 -- Par. (2). Pub. L. 95-600 substituted ''(as defined in
section 4462 as in effect for years beginning before July 1, 1980)'' for
''with respect to which an occupational tax is imposed by section 4461''
and ''(as so in effect), or'' for ''if an occupational tax is imposed
with respect to such device by section 4461, or''.
1976 -- Par. (3). Pub. L. 94-455, among other changes, substituted
in heading ''State-conducted lotteries, etc.'' for ''State-conducted
sweepstakes.'', and struck out provision that no tax be imposed on any
wager placed in a sweepstakes, wagering pool, or lottery in which the
ultimate winners are determined by the results of a horse race.
1965 -- Par. (2). Pub. L. 89-44, 405(a), substituted ''section
4462(a)(2),'' for ''section 4462(a)(2)(B),''.
Par. (3). Pub. L. 89-44, 813(a), added par. (3).
1958 -- Par. (2). Pub. L. 85-859 inserted provisions exempting from
the tax amounts paid to operate a device described in section
4462(a)(2)(B), if an occupational tax is imposed with respect to such
device by section 4461 of this title.
Pub. L. 95-600, title V, 521(d)(2), Nov. 6, 1978, 92 Stat. 2885,
provided that: ''The amendments made by subsections (b) (repealing
sections 4461 to 4464 of this title) and (c) (amending this section and
section 4901 of this title) shall apply with respect to years beginning
after June 30, 1980.''
Section 1208(c)(1) of Pub. L. 94-455 provided that: ''The amendment
made by subsection (a) (amending this section)) shall apply with respect
to wagers placed after March 10, 1964''.
Section 701(c)(2) of Pub. L. 89-44 provided in part that: ''The
amendments made by sections 403 (amending sections 4461 and 4462 of this
title) (relating to occupational tax on coin-operated devices) and 404
(repealing sections 4471 to 4474) (relating to occupational tax on
bowling alleys, billiard and pool tables), and by subsections (a)
(amending this section), (b) (amending section 4901 of this title) and
(d) (amending section 4914 of this title) of section 405 (relating to
technical and conforming changes) shall apply on and after July 1,
1965.''
Section 813(b) of Pub. L. 89-44 provided that: ''The amendment made
by subsection (a) (amending this section) shall apply with respect to
wagers placed after March 10, 1964.''
Section 152(c) of Pub. L. 85-859, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that: ''The amendments made
by subsections (a) and (b) (amending this section and section 4462 of
this title) shall take effect on the effective date specified in section
1(c) of this Act (the first day of the first calendar quarter beginning
more than 60 days after Sept. 2, 1958). In the case of the year
beginning July 1, 1958, where the trade or business on which the tax is
imposed under section 4461 of the Internal Revenue Code of 1986
(formerly I.R.C. 1954) was commenced before such effective date, the tax
imposed for such year solely by reason of the amendment made by
subsection (a) --
''(1) shall be the amount reckoned proportionately from such
effective date through June 30, 1959, and
''(2) shall be due on, and payable on or before, the last day of the
month the first day of which is such effective date.''
26 USC 4403. Record requirements
TITLE 26 -- INTERNAL REVENUE CODE
Each person liable for tax under this subchapter shall keep a daily
record showing the gross amount of all wagers on which he is so liable,
in addition to all other records required pursuant to section 6001(a).
(Aug. 16, 1954, ch. 736, 68A Stat. 525.)
26 USC 4404. Territorial extent
TITLE 26 -- INTERNAL REVENUE CODE
The tax imposed by this subchapter shall apply only to wagers
(1) accepted in the United States, or
(2) placed by a person who is in the United States
(A) with a person who is a citizen or resident of the United States,
or
(B) in a wagering pool or lottery conducted by a person who is a
citizen or resident of the United States.
(Aug. 16, 1954, ch. 736, 68A Stat. 525.)
26 USC 4405. Cross references
TITLE 26 -- INTERNAL REVENUE CODE
For penalties and other administrative provisions applicable to this
subchapter, see sections 4421 to 4423, inclusive; and subtitle F.
(Aug. 16, 1954, ch. 736, 68A Stat. 526.)
26 USC Subchapter B -- Occupational Tax
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4411. Imposition of tax.
4412. Registration.
4413. Certain provisions made applicable.
4414. Cross references.
26 USC 4411. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
There shall be imposed a special tax of $500 per year to be paid by
each person who is liable for the tax imposed under section 4401 or who
is engaged in receiving wagers for or on behalf of any person so liable.
(b) Authorized persons
Subsection (a) shall be applied by substituting ''$50'' for ''$500''
in the case of --
(1) any person whose liability for tax under section 4401 is
determined only under paragraph (1) of section 4401(a), and
(2) any person who is engaged in receiving wagers only for or on
behalf of persons described in paragraph (1).
(Aug. 16, 1954, ch. 736, 68A Stat. 527; Oct. 29, 1974, Pub. L.
93-499, 3(b), 88 Stat. 1550; Oct. 25, 1982, Pub. L. 97-362, title I,
109(b), 96 Stat. 1731.)
1982 -- Pub. L. 97-362 designated existing provisions as subsec.
(a), in subsec. (a), as so designated, substituted ''liable for the tax
imposed'' for ''liable for tax'', and added subsec. (b).
1974 -- Pub. L. 93-499 substituted ''$500'' for ''$50''.
Section 109(c)(2) of Pub. L. 97-362 provided that: ''The amendment
made by subsection (b) (amending this section) shall take effect on July
1, 1983.''
Amendment by Pub. L. 93-499 effective Dec. 1, 1974, and applicable
only with respect to wagers placed on or after such date, see section
3(d)(1) of Pub. L. 93-499, set out as a note under section 4401 of this
title.
Registering Before December 1, 1974
Section 3(d)(2) of Pub. L. 93-499, as amended by Pub. L. 99-514,
2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(A) Any person who, on December 1, 1974, is engaged in an activity
which makes him liable for payment of the tax imposed by section 4411 of
the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as in effect
on such date) shall be treated as commencing such activity on such date
for purposes of such section and section 4901 of such Code.
''(B) Any person who, before December 1, 1974. --
''(i) became liable for and paid the tax imposed by section 4411 of
the Internal Revenue Code of 1986 (as in effect on July 1, 1974) for the
year ending June 30, 1975, shall not be liable for any additional tax
under such section for such year, and
''(ii) registered under section 4412 of such Code (as in effect on
July 1, 1974) for the year ending June 30, 1975, shall not be required
to reregister under such section for such year.''
General provisions relating to occupational taxes, see section 4901
et seq. of this title.
Posting occupational tax stamps, see section 6806 of this title.
26 USC 4412. Registration
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirement
Each person required to pay a special tax under this subchapter shall
register with the official in charge of the internal revenue district --
(1) his name and place of residence;
(2) if he is liable for tax under subchapter A, each place of
business where the activity which makes him so liable is carried on, and
the name and place of residence of each person who is engaged in
receiving wagers for him or on his behalf; and
(3) if he is engaged in receiving wagers for or on behalf of any
person liable for tax under subchapter A, the name and place of
residence of each such person.
(b) Firm or company
Where subsection (a) requires the name and place of residence of a
firm or company to be registered, the names and places of residence of
the several persons constituting the firm or company shall be
registered.
(c) Supplemental information
In accordance with regulations prescribed by the Secretary, the
Secretary may require from time to time such supplemental information
from any person required to register under this section as may be
needful to the enforcement of this chapter.
(Aug. 16, 1954, ch. 736, 68A Stat. 527; Oct. 4, 1976, Pub. L.
94-455, title XIX, 1906(b)(13)(I), 90 Stat. 1835.)
1976 -- Subsec. (c). Pub. L. 94-455 substituted ''the Secretary
may'' for ''he or his delegate may''.
Persons registered before Dec. 1, 1974 under this section (as in
effect on July 1, 1974) for the year ending June 30, 1975, not required
to reregister under this section for such year, see section 3(d)(2) of
Pub. L. 93-499, set out as a note under section 4411 of this title.
Liability in case of death or change of location, see section 4905 of
this title.
Penalty for failure to register, see section 7272 of this title.
26 USC 4413. Certain provisions made applicable
TITLE 26 -- INTERNAL REVENUE CODE
Sections 4901, 4902, 4904, 4905, and 4906 shall extend to and apply
to the special tax imposed by this subchapter and to the persons upon
whom it is imposed, and for that purpose any activity which makes a
person liable for special tax under this subchapter shall be considered
to be a business or occupation referred to in such sections. No other
provision of sections 4901 to 4907, inclusive, shall so extend or apply.
(Aug. 16, 1954, ch. 736, 68A Stat. 527.)
26 USC 4414. Cross references
TITLE 26 -- INTERNAL REVENUE CODE
For penalties and other general and administrative provisions
applicable to this subchapter, see sections 4421 to 4423, inclusive;
and subtitle F.
(Aug. 16, 1954, ch. 736, 68A Stat. 527.)
26 USC Subchapter C -- Miscellaneous Provisions
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4421. Definitions.
4422. Applicability of Federal and State laws.
4423. Inspection of books.
4424. Disclosure of wagering tax information.
1974 -- Pub. L. 93-499, 3(c)(2), Oct. 29, 1974, 88 Stat. 1551,
added item 4424.
26 USC 4421. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
For purposes of this chapter --
(1) Wager
The term ''wager'' means --
(A) any wager with respect to a sports event or a contest placed with
a person engaged in the business of accepting such wagers,
(B) any wager placed in a wagering pool with respect to a sports
event or a contest, if such pool is conducted for profit, and
(C) any wager placed in a lottery conducted for profit.
(2) Lottery
The term ''lottery'' includes the numbers game, policy, and similar
types of wagering. The term does not include --
(A) any game of a type in which usually
(i) the wagers are placed,
(ii) the winners are determined, and
(iii) the distribution of prizes or other property is made, in the
presence of all persons placing wagers in such game, and
(B) any drawing conducted by an organization exempt from tax under
sections 501 and 521, if no part of the net proceeds derived from such
drawing inures to the benefit of any private shareholder or individual.
(Aug. 16, 1954, ch. 736, 68A Stat. 528.)
26 USC 4422. Applicability of Federal and State laws
TITLE 26 -- INTERNAL REVENUE CODE
The payment of any tax imposed by this chapter with respect to any
activity shall not exempt any person from any penalty provided by a law
of the United States or of any State for engaging in the same activity,
nor shall the payment of any such tax prohibit any State from placing a
tax on the same activity for State or other purposes.
(Aug. 16, 1954, ch. 736, 68A Stat. 528.)
26 USC 4423. Inspection of books
TITLE 26 -- INTERNAL REVENUE CODE
Notwithstanding section 7605(b), the books of account of any person
liable for tax under this chapter may be examined and inspected as
frequently as may be needful to the enforcement of this chapter.
(Aug. 16, 1954, ch. 736, 68A Stat. 528.)
26 USC 4424. Disclosure of wagering tax information
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
Except as otherwise provided in this section, neither the Secretary
nor any other officer or employee of the Treasury Department may divulge
or make known in any manner whatever to any person --
(1) any original, copy, or abstract of any return, payment, or
registration made pursuant to this chapter,
(2) any record required for making any such return, payment, or
registration, which the Secretary is permitted by the taxpayer to
examine or which is produced pursuant to section 7602, or
(3) any information come at by the exploitation of any such return,
payment, registration, or record.
(b) Permissible disclosure
A disclosure otherwise prohibited by subsection (a) may be made in
connection with the administration or civil or criminal enforcement of
any tax imposed by this title. However, any document or information so
disclosed may not be --
(1) divulged or made known in any manner whatever by any officer or
employee of the United States to any person except in connection with
the administration or civil or criminal enforcement of this title, nor
(2) used, directly or indirectly, in any criminal prosecution for any
offense occurring before the date of enactment of this section.
(c) Use of documents possessed by taxpayer
Except in connection with the administration or civil or criminal
enforcement of any tax imposed by this title --
(1) any stamp denoting payment of the special tax under this chapter,
(2) any original, copy, or abstract possessed by a taxpayer of any
return, payment, or registration made by such taxpayer pursuant to this
chapter, and
(3) any information come at by the exploitation of any such document,
shall not be used against such taxpayer in any criminal proceeding.
(d) Inspection by committees of Congress
Section 6103(f) shall apply with respect to any return, payment, or
registration made pursuant to this chapter.
(Added Pub. L. 93-499, 3(c)(1), Oct. 29, 1974, 88 Stat. 1550;
amended Pub. L. 94-455, title XII, 1202(h)(6), title XIX,
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1688, 1834.)
1976 -- Subsec. (a). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary'' wherever appearing.
Subsec. (d). Pub. L. 94-455, 1202(h)(6), substituted ''6103(f)'' for
''6103(d)''.
Amendment by section 1202(h)(6) of Pub. L. 94-455 effective Jan. 1,
1977, see section 1202(i) of Pub. L. 94-455, set out as a note under
section 6103 of this title.
Section effective Dec. 1, 1974, and applicable only with respect to
wagers placed on or after such date, see section 3(d)(1) of Pub. L.
93-499, set out as an Effective Date of 1974 Amendment note under
section 4401 of this title.
26 USC CHAPTER 36 -- CERTAIN OTHER EXCISE TAXES
TITLE 26 -- INTERNAL REVENUE CODE
Subchapter Sec. /1/
A.
Harbor maintenance tax 4461
B.
Transportation by water 4471
B.
Occupational tax on coin-operated devices /2/ 4461
(C.
lRepealed.)
D.
Tax on use of certain vehicles 4481
(E.
lRepealed.)
F.
Tax on removal of hard mineral resources from deep seabed 4495
1989 -- Pub. L. 101-239, title VII, 7504(b), Dec. 19, 1989, 103
Stat. 2363, added item for subchapter B ''Transportation by water''.
1986 -- Pub. L. 99-662, title XIV, 1402(b), Nov. 17, 1986, 100
Stat. 4269, added item for subchapter A.
1982 -- Pub. L. 97-248, title II, 280(c)(2)(A), Sept. 3, 1982, 96
Stat. 564, struck out item for subchapter E.
1980 -- Pub. L. 96-283, title IV, 402(b), June 28, 1980, 94 Stat.
584, added item for subchapter F.
1970 -- Pub. L. 91-258, title II, 206(d)(1), May 21, 1970, 84 Stat.
246, added item for subchapter E.
1965 -- Pub. L. 89-44, title IV, 402, 404, June 21, 1965, 79 Stat.
148, 149, struck out items for subchapters A and C.
1956 -- Act June 29, 1956, ch. 462, title II, 206(c), 70 Stat.
391, added item for subchapter D.
/1/ Section numbers editorially supplied.
/2/ Subchapter repealed by Pub. L. 95-600 without corresponding
amendment of chapter analysis.
26 USC Subchapter A -- Harbor Maintenance Tax
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4461. Imposition of tax.
4462. Definitions and special rules.
A prior subchapter A ( 4451 to 4457), act Aug. 16, 1954, ch. 736,
68A Stat. 529, 530, which related to tax on playing cards, was repealed
by Pub. L. 89-44, title IV, 402, June 21, 1965, 79 Stat. 148. Repeal
of sections 4451 to 4457 applicable on and after June 22, 1965, see
section 701(c)(2) of Pub. L. 89-44, set out in part as an Effective
Date of 1965 Amendment note under section 4905 of this title.
26 USC 4461. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
There is hereby imposed a tax on any port use.
(b) Amount of tax
The amount of the tax imposed by subsection (a) on any port use shall
be an amount equal to 0.125 percent of the value of the commercial cargo
involved.
(c) Liability and time of imposition of tax
(1) Liability
The tax imposed by subsection (a) shall be paid by --
(A) in the case of cargo entering the United States, the importer,
(B) in the case of cargo to be exported from the United States, the
exporter, or
(C) in any other case, the shipper.
(2) Time of imposition
Except as provided by regulations, the tax imposed by subsection (a)
shall be imposed --
(A) in the case of cargo to be exported from the United States, at
the time of loading, and
(B) in any other case, at the time of unloading.
(Added Pub. L. 99-662, title XIV, 1402(a), Nov. 17, 1986, 100 Stat.
4266; amended Pub. L. 101-508, title XI, 11214(a), Nov. 5, 1990, 104
Stat. 1388-436.)
For prior section 4461, see Prior Provisions note set out preceding
section 4471 of this title.
1990 -- Subsec. (b). Pub. L. 101-508 substituted ''0.125 percent''
for ''0.04 percent''.
Section 11214(b) of Pub. L. 101-508 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect on
January 1, 1991.''
Section 1402(c) of Pub. L. 99-662 provided that: ''The amendments
made by this section (enacting this section and section 4462 of this
title) shall take effect on April 1, 1987.''
Section 1403(b) of Pub. L. 99-662 provided that: ''There are
authorized to be appropriated to the Department of the Treasury (from
the fees collected under paragraphs (9) and (10) of section 13031(a) of
the Consolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C.
58c(9), (10))) such sums as may be necessary to pay all expenses of
administration incurred by such Department in administering subchapter A
of chapter 36 of the Internal Revenue Code of 1954 (now 1986) (this
subchapter) for periods to which such fees apply.''
Section 1407 of Pub. L. 99-662, as amended by Pub. L. 100-647,
title II, 2002(c), Nov. 10, 1988, 102 Stat. 3597, provided that:
''(a) Initial Study. -- The Secretary of the Treasury, in
consultation with United States ports, the Secretary of the Army, the
Secretary of Transportation, the United States Trade Representative and
other appropriate Federal agencies, shall conduct a study to determine
the impact of the port use tax imposed under section 4461(a) of the
Internal Revenue Code of 1954 (now 1986) on potential diversions of
cargo from particular United States ports to any port in a country
contiguous to the United States. The report of the study shall be
submitted to the Ways and Means Committee of the House of
Representatives and the Committee on Finance of the United States Senate
not later than December 1, 1988.
''(b) Review. -- The Secretary of the Treasury may, at any time,
review and revise the findings of the study conducted pursuant to
subsection (a) with respect to any United States port (or to any
transaction or class of transactions at such port).
''(c) Implementation of Findings. -- For purposes of section
4462(d)(2)(B) of the Internal Revenue Code of 1954 (now 1986), the
findings of the study or review conducted pursuant to subsections (a)
and (b) of this section shall be effective 60 days after notification to
the ports concerned.''
26 USC 4462. Definitions and special rules
TITLE 26 -- INTERNAL REVENUE CODE
(a) Definitions
For purposes of this subchapter --
(1) Port use
The term ''port use'' means --
(A) the loading of commercial cargo on, or
(B) the unloading of commercial cargo from,
a commercial vessel at a port.
(2) Port
(A) In general
The term ''port'' means any channel or harbor (or component thereof)
in the United States, which --
(i) is not an inland waterway, and
(ii) is open to public navigation.
(B) Exception for certain facilities
The term ''port'' does not include any channel or harbor with respect
to which no Federal funds have been used since 1977 for construction,
maintenance, or operation, or which was deauthorized by Federal law
before 1985.
(C) Special rule for Columbia River
The term ''port'' shall include the channels of the Columbia River in
the States of Oregon and Washington only up to the downstream side of
Bonneville lock and dam.
(3) Commercial cargo
(A) In general
The term ''commercial cargo'' means any cargo transported on a
commercial vessel, including passengers transported for compensation or
hire.
(B) Certain items not included
The term ''commercial cargo'' does not include --
(i) bunker fuel, ship's stores, sea stores, or the legitimate
equipment necessary to the operation of a vessel, or
(ii) fish or other aquatic animal life caught and not previously
landed on shore.
(4) Commercial vessel
(A) In general
The term ''commercial vessel'' means any vessel used --
(i) in transporting cargo by water for compensation or hire, or
(ii) in transporting cargo by water in the business of the owner,
lessee, or operator of the vessel.
(B) Exclusion of ferries
(i) In general
The term ''commercial vessel'' does not include any ferry engaged
primarily in the ferrying of passengers (including their vehicles)
between points within the United States, or between the United States
and contiguous countries.
(ii) Ferry
The term ''ferry'' means any vessel which arrives in the United
States on a regular schedule during its operating season at intervals of
at least once each business day.
(5) Value
(A) In general
The term ''value'' means, except as provided in regulations, the
value of any commercial cargo as determined by standard commercial
documentation.
(B) Transportation of passengers
In the case of the transportation of passengers for hire, the term
''value'' means the actual charge paid for such service or the
prevailing charge for comparable service if no actual charge is paid.
(b) Special rule for Alaska, Hawaii, and possessions
(1) In general
No tax shall be imposed under section 4461(a) with respect to --
(A) cargo loaded on a vessel in a port in the United States mainland
for transportation to Alaska, Hawaii, or any possession of the United
States for ultimate use or consumption in Alaska, Hawaii, or any
possession of the United States,
(B) cargo loaded on a vessel in Alaska, Hawaii, or any possession of
the United States for transportation to the United States mainland,
Alaska, Hawaii, or such a possession for ultimate use or consumption in
the United States mainland, Alaska, Hawaii, or such a possession,
(C) the unloading of cargo described in subparagraph (A) or (B) in
Alaska, Hawaii, or any possession of the United States, or in the United
States mainland, respectively, or
(D) cargo loaded on a vessel in Alaska, Hawaii, or a possession of
the United States and unloaded in the State or possession in which
loaded.
(2) Cargo does not include crude oil with respect to Alaska
For purposes of this subsection, the term ''cargo'' does not include
crude oil with respect to Alaska.
(3) United States mainland
For purposes of this subsection, the term ''United States mainland''
means the continental United States (not including Alaska).
(c) Coordination of tax where transportation subject to tax imposed
by section 4042
No tax shall be imposed under this subchapter with respect to the
loading or unloading of any cargo on or from a vessel if any fuel of
such vessel has been (or will be) subject to the tax imposed by section
4042 (relating to tax on fuel used in commercial transportation on
inland waterways).
(d) Nonapplicability of tax to certain cargo
(1) In general
Subject to paragraph (2), the tax imposed by section 4461(a) shall
not apply to bonded commercial cargo entering the United States for
transportation and direct exportation to a foreign country.
(2) Imposition of charges
Paragraph (1) shall not apply to any cargo exported to Canada or
Mexico --
(A) during the period --
(i) after the date on which the Secretary determines that the
Government of Canada or Mexico (as the case may be) has imposed a
substantially equivalent tax, fee, or charge on commercial vessels or
commercial cargo utilizing ports of such country, and
(ii) subject to subparagraph (B), before the date on which the
Secretary determines that such tax, fee, charge has been discontinued by
such country, and
(B) with respect to a particular United States port (or to any
transaction or class of transactions at any such port) to the extent
that the study made pursuant to section 1407(a) of the Water Resources
Development Act of 1986 (or a review thereof pursuant to section 1407(b)
of such Act) finds that --
(i) the imposition of the tax imposed by this subchapter at such port
(or to any transaction or class of transactions at such port) is not
likely to divert a significant amount of cargo from such port to a port
in a country contiguous to the United States, or that any such diversion
is not likely to result in significant economic loss to such port, or
(ii) the nonapplicability of such tax at such port (or to any
transaction or class of transactions at such port) is likely to result
in significant economic loss to any other United States port.
(e) Exemption for United States
No tax shall be imposed under this subchapter on the United States or
any agency or instrumentality thereof.
(f) Extension of provisions of law applicable to customs duty
(1) In general
Except to the extent otherwise provided in regulations, all
administrative and enforcement provisions of customs laws and
regulations shall apply in respect of the tax imposed by this subchapter
(and in respect of persons liable therefor) as if such tax were a
customs duty. For purposes of the preceding sentence, any penalty
expressed in terms of a relationship to the amount of the duty shall be
treated as not less than the amount which bears a similar relationship
to the value of the cargo.
(2) Jurisdiction of courts and agencies
For purposes of determining the jurisdiction of any court of the
United States or any agency of the United States, the tax imposed by
this subchapter shall be treated as if such tax were a customs duty.
(3) Administrative provisions applicable to tax law not to apply
The tax imposed by this subchapter shall not be treated as a tax for
purposes of subtitle F or any other provision of law relating to the
administration and enforcement of internal revenue taxes.
(g) Special rules
Except as provided by regulations --
(1) Tax imposed only once
Only 1 tax shall be imposed under section 4461(a) with respect to the
loading on and unloading from, or the unloading from and the loading on,
the same vessel of the same cargo.
(2) Exception for intraport movements
Under regulations, no tax shall be imposed under section 4461(a) on
the mere movement of cargo within a port.
(3) Relay cargo
Only 1 tax shall be imposed under section 4461(a) on cargo (moving
under a single bill of lading) which is unloaded from one vessel and
loaded onto another vessel at any port in the United States for relay to
or from any port in Alaska, Hawaii, or any possession of the United
States. For purposes of this paragraph, the term ''cargo'' does not
include any item not treated as cargo under subsection (b)(2).
(h) Exemption for humanitarian and development assistance cargos
No tax shall be imposed under this subchapter on any nonprofit
organization or cooperative for cargo which is owned or financed by such
nonprofit organization or cooperative and which is certified by the
United States Customs Service as intended for use in humanitarian or
development assistance overseas.
(i) Regulations
The Secretary may prescribe such additional regulations as may be
necessary to carry out the purposes of this subchapter including, but
not limited to, regulations --
(1) providing for the manner and method of payment and collection of
the tax imposed by this subchapter,
(2) providing for the posting of bonds to secure payment of such tax,
(3) exempting any transaction or class of transactions from such tax
where the collection of such tax is not administratively practical, and
(4) providing for the remittance or mitigation of penalties and the
settlement or compromise of claims.
(Added Pub. L. 99-662, title XIV, 1402(a), Nov. 17, 1986, 100 Stat.
4266; amended Pub. L. 100-647, title II, 2002(b), title VI, 6109(a),
6110(a), Nov. 10, 1988, 102 Stat. 3597, 3712.)
Section 1407(a) and (b) of the Water Resources Development Act of
1986, referred to in subsec. (d)(2)(B), is section 1407(a) and (b) of
Pub. L. 99-662, title XIV, Nov. 17, 1986, 100 Stat. 4272, 4273, which
is set out as a note under section 4461 of this title.
For prior section 4462, see Prior Provisions note set out preceding
section 4471 of this title.
1988 -- Subsec. (b)(1)(B). Pub. L. 100-647, 2002(b), amended
subpar. (B) generally. Prior to amendment, subpar. (B) read as
follows: ''cargo loaded on a vessel in Alaska, Hawaii, or any
possession of the United States for transportation to the United States
mainland for ultimate use or consumption in the United States
mainland,''.
Subsec. (g)(3). Pub. L. 100-647, 6110(a), added par. (3).
Subsecs. (h), (i). Pub. L. 100-647, 6109(a), added subsec. (h) and
redesignated former subsec. (h) as (i).
Amendment by section 2002(b) of Pub. L. 100-647 effective as if
included in the provision of the Harbor Maintenance Revenue Act of 1986,
Pub. L. 99-662, title XIV, to which it relates, see section 2002(d) of
Pub. L. 100-647, set out as a note under section 4042 of this title.
Section 6109(b) of Pub. L. 100-647 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect on
April 1, 1987.''
Section 6110(b) of Pub. L. 100-647 provided that: ''The amendment
made by this section (amending this section) shall take effect on the
date of the enactment of this Act (Nov. 10, 1988).''
Section effective Apr. 1, 1987, see section 1402(c) of Pub. L.
99-662, set out as a note under section 4461 of this title.
26 USC Subchapter B -- Transportation by Water
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4471. Imposition of tax.
4472. Definitions and special rules. /1/
A prior subchapter B, consisting of sections 4461 to 4464 of this
title, was repealed by Pub. L. 95-600, title V, 521(b), Nov. 6, 1978,
92 Stat. 2884, applicable with respect to years beginning after June
30, 1980.
Section 4461, acts Aug. 16, 1954, ch. 736, 68A Stat. 531; Sept.
21, 1959, Pub. L. 86-344, 6(a), 73 Stat. 620; June 21, 1965, Pub.
L. 89-44, title IV, 403(a), 79 Stat. 148, imposed a special tax on
persons who maintained for use or permitted use of coin-operated gaming
devices and provided an exception from such tax.
Section 4462, acts Aug. 16, 1954, ch. 736, 68A Stat. 531; Sept.
2, 1958, Pub. L. 85-859, title I, 152(a), 72 Stat. 1304; June 21,
1965, Pub. L. 89-44, title IV, 403(b), 79 Stat. 149; Oct. 4, 1976,
Pub. L. 94-455, title XII, 1208(b), 90 Stat. 1709, defined
coin-operated gaming devices.
Section 4463, act Aug. 16, 1954, ch. 736, 68A Stat. 531, related
to administrative provisions.
Section 4464, added Pub. L. 92-178, title IV, 402(a), Dec. 10,
1971, 85 Stat. 534, and amended Pub. L. 94-455, title XIX,
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95-600, title V,
521(a), Nov. 6, 1978, 92 Stat. 2884, related to credit for
State-imposed taxes.
/1/ So in original. Does not conform to section catchline.
26 USC 4471. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
There is hereby imposed a tax of $3 per passenger on a covered
voyage.
(b) By whom paid
The tax imposed by this section shall be paid by the person providing
the covered voyage.
(c) Time of imposition
The tax imposed by this section shall be imposed only once for each
passenger on a covered voyage, either at the time of first embarkation
or disembarkation in the United States.
(Added Pub. L. 101-239, title VII, 7504(a), Dec. 19, 1989, 103 Stat.
2362.)
A prior section 4471 was contained in subchapter C of this chapter
prior to repeal by Pub. L. 89-44, title IV, 404, June 21, 1965, 79
Stat. 149.
Section 7504(c) of Pub. L. 101-239 provided that:
''(1) In general. -- The amendments made by this section (enacting
this subchapter) shall apply to voyages beginning after December 31,
1989, which were not paid for before such date.
''(2) No deposits required before april 1, 1990. -- No deposit of any
tax imposed by subchapter B of chapter 36 of the Internal Revenue Code
of 1986, as added by this section, shall be required to be made before
April 1, 1990.''
26 USC 4472. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
For purposes of this subchapter --
(1) Covered voyage
(A) In general
The term ''covered voyage'' means a voyage of --
(i) a commercial passenger vessel which extends over 1 or more
nights, or
(ii) a commercial vessel transporting passengers engaged in gambling
aboard the vessel beyond the territorial waters of the United States,
during which passengers embark or disembark the vessel in the United
States. Such term shall not include any voyage on any vessel owned or
operated by the United States, a State, or any agency or subdivision
thereof.
(B) Exception for certain voyages on passenger vessels
The term ''covered voyage'' shall not include a voyage of a passenger
vessel of less than 12 hours between 2 ports in the United States.
(2) Passenger vessel
The term ''passenger vessel'' means any vessel having berth or
stateroom accommodations for more than 16 passengers.
(Added Pub. L. 101-239, title VII, 7504(a), Dec. 19, 1989, 103 Stat.
2362.)
A prior section 4472 was contained in subchapter C of this chapter
prior to repeal by Pub. L. 89-44, title IV, 404, June 21, 1965, 79
Stat. 149.
26 USC (Subchapter C -- Repealed)
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 4471 to 4474. Repealed. Pub. L. 89-44, title IV, 404, June
21, 1965, 79 Stat. 149)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4471, act Aug. 16, 1954, ch. 736, 68A Stat. 532, imposed a
$20 annual tax upon bowling alleys, billiard tables, and pool tables to
be paid by operators of bowling alleys, billiard rooms, and pool rooms.
Section 4472, act Aug. 16, 1954, ch. 736, 68A Stat. 532, defined
bowling alley, billiard room, and pool room.
Section 4473, acts Aug. 16, 1954, ch. 736, 68A Stat. 532; Sept.
2, 1958, Pub. L. 85-859, title I, 153(a), 72 Stat. 1305, granted
exemptions for hospitals, the armed forces, and certain non-profit and
governmental organizations.
Section 4474, act Aug. 16, 1954, ch. 736, 68A Stat. 532, made
cross references to chapter 40 and subtitle F for penalties and
administrative provisions.
Repeal applicable on and after July 1, 1965, see section 701(c)(2) of
Pub. L. 89-44, set out in part as an Effective Date of 1965 Amendment
note under section 4402 of this title.
26 USC Subchapter D -- Tax on Use of Certain Vehicles
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4481. Imposition of tax.
4482. Definitions.
4483. Exemptions.
4484. Cross references.
1983 -- Pub. L. 97-473, title II, 202(b)(11), Jan. 14, 1983, 96
Stat. 2610, substituted ''Cross references'' for ''Cross reference'' in
item 4484.
1956 -- Act June 29, 1956, ch. 462, title II, 206(a), 70 Stat.
389, added subchapter heading and analysis of sections.
26 USC 4481. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
A tax is hereby imposed on the use of any highway motor vehicle which
(together with the semitrailers and trailers customarily used in
connection with highway motor vehicles of the same type as such highway
motor vehicle) has a taxable gross weight of at least 55,000 pounds at
the rate specified in the following table:
(b) By whom paid
The tax imposed by this section shall be paid by the person in whose
name the highway motor vehicle is, or is required to be, registered
under the law of the State or contiguous foreign country in which such
vehicle is, or is required to be, registered, or, in case the highway
motor vehicle is owned by the United States, by the agency or
instrumentality of the United States operating such vehicle.
(c) Proration of tax
(1) Where first use occurs after first month
If in any taxable period the first use of the highway motor vehicle
is after the first month in such period, the tax shall be reckoned
proportionately from the first day of the month in which such use occurs
to and including the last day in such taxable period.
(2) Where vehicle destroyed or stolen
(A) In general
If in any taxable period a highway motor vehicle is destroyed or
stolen before the first day of the last month in such period and not
subsequently used during such taxable period, the tax shall be reckoned
proportionately from the first day of the month in such period in which
the first use of such highway motor vehicle occurs to and including the
last day of the month in which such highway motor vehicle was destroyed
or stolen.
(B) Destroyed
For purposes of subparagraph (A), a highway motor vehicle is
destroyed if such vehicle is damaged by reason of an accident or other
casualty to such an extent that it is not economic to rebuild.
(d) One tax liability per period
(1) In general
To the extent that the tax imposed by this section is paid with
respect to any highway motor vehicle for any taxable period, no further
tax shall be imposed by this section for such taxable period with
respect to such vehicle.
(2) Cross reference
For privilege of paying tax imposed by this section in installments,
see section 6156.
(e) Period tax in effect
The tax imposed by this section shall apply only to use before
October 1, 1999.
(Added June 29, 1956, ch. 462, title II, 206(a), 70 Stat. 390;
amended June 29, 1961, Pub. L. 87-61, title II, 203(a), (b)(1), (2)(A),
(B), 75 Stat. 124; Dec. 31, 1970, Pub. L. 91-605, title III,
303(a)(7), (8), 84 Stat. 1744; May 5, 1976, Pub. L. 94-280, title III,
303(a)(7), (8), 90 Stat. 456; Nov. 6, 1978, Pub. L. 95-599, title V,
502(a)(6), (7), 92 Stat. 2756; Jan. 6, 1983, Pub. L. 97-424, title V,
513(a), (d), 516(a)(4), 96 Stat. 2177, 2179, 2182; July 18, 1984, Pub.
L. 98-369, div. A, title VII, 734(f), title IX, 901(a), 98 Stat. 980,
1003; Apr. 2, 1987, Pub. L. 100-17, title V, 502(a)(5), 507(a), 101
Stat. 256, 260; Nov. 5, 1990, Pub. L. 101-508, title XI, 11211(c)(5),
104 Stat. 1388-426; Dec. 18, 1991, Pub. L. 102-240, title VIII,
8002(a)(5), 105 Stat. 2203.)
1991 -- Subsec. (e). Pub. L. 102-240, which directed the
substitution of ''1999'' for ''1995'' in subsec. (c), was executed by
making the substitution in subsec. (e) to reflect the probable intent
of Congress, because ''1995'' does not appear in subsec. (c).
1990 -- Subsec. (e). Pub. L. 101-508 substituted ''1995'' for
''1993''.
1987 -- Subsec. (b). Pub. L. 100-17, 507(a), inserted ''or
contiguous foreign country'' after ''State''.
Subsec. (e). Pub. L. 100-17, 502(a)(5), substituted ''1993'' for
''1988''.
1984 -- Subsec. (a). Pub. L. 98-369, 901(a), in amending subsec.
(a) generally, substituted ''55,000'' for ''33,000'' in provisions
preceding table, struck out heading ''(1) In general'', substituted
table provisions for former table which provided:
and struck out par. (2) which provided applicable rates and maximum
taxes for taxable periods beginning July 1, 1984 through 1988 or
thereafter.
Pub. L. 98-369, 734(f), struck out from subsec. (a), as subsec.
(a) was in effect before the amendments made by section 513(a) of Pub.
L. 97-424: ''In case of the taxable period beginning on July 1, 1984,
and ending on September 30, 1984, the tax shall be at the rate of 75
cents for such period for each 1,000 pounds of taxable gross weight or
fraction thereof.'' See 1983 Amendment note below.
1983 -- Subsec. (a). Pub. L. 97-424, 513(a), substituted ''at least
33,000 pounds at the rate specified in the following table:'' for ''more
than 26,000 pounds, at the rate of $3.00 a year for each 1,000 pounds of
taxable gross weight or fraction thereof.'', and added pars. (1) and
(2).
Subsec. (c). Pub. L. 97-424, 513(d), designated existing provisions
as par. (1) and added par. (2).
Subsec. (e). Pub. L. 97-424, 516(a)(4), substituted ''1988'' for
''1984'' after ''October 1,''.
1978 -- Subsec. (a). Pub. L. 95-599, 502(a)(6), substituted
''1984'' for ''1979'' in two places.
Subsec. (e). Pub. L. 95-599, 502(a)(7), substituted ''1984'' for
''1979''.
1976 -- Subsec. (a). Pub. L. 94-280, 303(a)(7), substituted
''1979'' for ''1977'' in two places.
Subsec. (e). Pub. L. 94-280, 303(a)(8), substituted ''1979'' for
''1977''.
1970 -- Subsec. (a). Pub. L. 91-605, 303(a)(7), substituted
''1977'' for ''1972'' in two places.
Subsec. (e). Pub. L. 91-605, 303(a)(8), substituted ''1977'' for
''1972''.
1961 -- Subsec. (a). Pub. L. 87-61, 203(a), (b)(2)(A), increased
rate of tax from $1.50 to $3.00 a year, and provided for a tax at the
rate of 75 cents for each 1,000 pounds during the period beginning on
July 1, 1972, and ending on September 30, 1972.
Subsec. (c). Pub. L. 87-61, 203(b)(2)(B), substituted ''any taxable
period'' for ''any year'', ''after the first month in such period'' for
''after July 31'', and ''the last day in such taxable period'' for ''the
last day of June following''.
Subsec. (d). Pub. L. 87-61, 203(b)(2)(B), made conforming changes to
refer to payment of tax for a taxable period instead of payment for a
year, and inserted cross reference to section 6156.
Subsec. (e). Pub. L. 87-61, 203(b)(1), substituted ''before October
1, 1972'' for ''after June 30, 1956, and before July 1, 1972''.
Section 507(d) of Pub. L. 100-17 provided that: ''The amendments
made by subsections (a) and (b) (amending this section and section 4483
of this title) shall take effect on July 1, 1987.''
Amendment by section 734(f) of Pub. L. 98-369 effective, except as
otherwise provided, as if included in the provisions of the Highway
Revenue Act of 1982, title V of Pub. L. 97-424, to which such amendment
relates, see section 736 of Pub. L. 98-369, set out as a note under
section 4051 of this title.
Section 901(c) of Pub. L. 98-369 provided that: ''The amendment
made by subsection (a) (amending this section) (and the provisions of
subsection (b) (set out below)) shall take effect on July 1, 1984.''
Section 513(f) of Pub. L. 97-424, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) In general. -- Except as otherwise provided in this subsection,
the amendments made by this section (amending this section and sections
4482 and 4483 of this title and enacting provisions set out below) shall
take effect on July 1, 1984.
''(2) Special rule in the case of certain owner-operators. --
''(A) In general. -- In the case of a small owner-operator, paragraph
(1) of this subsection and paragraph (2) of section 4481(a) of the
Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as added by this
section) shall be applied by substituting for each date contained in
such paragraphs a date which is 1 year after the date so contained.
''(B) Small owner-operator. -- For purposes of this paragraph, the
term ''small owner-operator'' means any person who owns and operates at
any time during the taxable period no more than 5 highway motor vehicles
with respect to which a tax is imposed by section 4481 of such Code for
such taxable period.
''(No subpar. (C) has been enacted.)
''(D) Aggregation of vehicle ownerships. -- For purposes of
subparagraph (B), all highway motor vehicles with respect to which a tax
is imposed by section 4481 of such Code which are owned by --
''(i) any trade or business (whether or not incorporated) which is
under common control with the taxpayer (within the meaning of section
52(b)), or
''(ii) any member of any controlled groups of corporations of which
the taxpayer is a member, for any taxable period shall be treated as
being owned by the taxpayer during such period. The Secretary shall
prescribe regulations which provide attribution rules that take into
account, in addition to the persons and entities described in the
preceding sentence, taxpayers who own highway motor vehicles through
partnerships, joint ventures, and corporations.
''(E) Controlled groups of corporations. -- For purposes of this
paragraph, the term 'controlled group of corporations' has the meaning
given to such term by section 1563(a), except that --
''(i) 'more than 50 percent' shall be substituted for 'at least 80
percent' each place it appears in section 1563(a)(1), and
''(ii) the determination shall be made without regard to subsections
(a)(4) and (e)(3)(C) of section 1563.
''(F) Highway motor vehicles. -- For purposes of this paragraph, the
term 'highway motor vehicle' has the meaning given to such term by
section 4482(a) of such Code.''
Amendment by Pub. L. 87-61 effective July 1, 1961, see section 208
of Pub. L. 87-61, set out as a note under section 4041 of this title.
Section effective June 29, 1956, see section 211 of act June 29,
1956, set out as an Effective Date of 1956 Amendment note under section
4041 of this title.
Section 507(c) of Pub. L. 100-17 provided that: ''The Secretary of
the Treasury or the delegate of the Secretary shall within 120 days
after the date of the enactment of this section (Apr. 2, 1987) prescribe
regulations governing payment of the tax imposed by section 4481 of the
Internal Revenue Code of 1986 on any highway motor vehicle operated by a
motor carrier domiciled in any contiguous foreign country or owned or
controlled by persons of any contiguous foreign country. Such
regulations shall include a procedure by which the operator of such
motor vehicle shall evidence that such operator has paid such tax at the
time such motor vehicle enters the United States. In the event of the
failure to provide evidence of payment, such regulations may provide for
denial of entry of such motor vehicle into the United States.''
Section 901(b) of Pub. L. 98-369, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) Special rule for taxable period beginning on july 1, 1984. --
In the case of a small owner-operator, the amount of the tax imposed by
section 4481 of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)
on the use of any highway motor vehicle subject to tax under section
4481(a) of such Code (as amended by subsection (a)) for the taxable
period which begins on July 1, 1984, shall be the lesser of --
''(A) $3 for each 1,000 pounds of taxable gross weight (or fraction
thereof), or
''(B) the amount of the tax which would be imposed under such section
4481(a) without regard to this paragraph.
''(2) Exemption for vehicles used for less than 5,000 miles (and
certain other amendments) to take effect on july 1, 1984. -- In the case
of a small owner-operator, notwithstanding subsection (f)(2) of section
513 of the Highway Revenue Act of 1982 (section 513(f)(2) of Pub. L.
97-424, set out as an Effective Date of 1983 Amendment note below), the
amendments made by subsections (b), (c), and (d) of such section
(amending sections 4481 to 4483 of this title) shall take effect on July
1, 1984.
''(3) Small owner-operator defined. -- For purposes of this
subsection, the term 'small owner-operator' has the meaning given such
term by section 513(f)(2) of the Highway Revenue Act of 1982.
''(4) Taxable gross weight. -- For purposes of this subsection, the
term 'taxable gross weight' has the same meaning as when used in section
4481 of the Internal Revenue Code of 1986.''
Part I ( 931-934) of subtitle D of title IX of div. A of Pub. L.
98-369, as amended by Pub. L. 99-514, 2, Oct. 22, 1986, 100 Stat.
2095, provided that:
''SEC. 931. WHETHER HEAVY VEHICLES BEAR FAIR SHARE OF HIGHWAY COSTS.
''The Secretary of Transportation shall conduct a study of whether
highway motor vehicles with taxable gross weights of 80,000 pounds or
more bear their fair share of the costs of the highway system.
''SEC. 932. TRANS-BORDER TRUCKING.
''The Secretary of Transportation shall conduct a study to determine
the significance of the tax imposed by section 4481 of the Internal
Revenue Code of 1986 (relating to tax on use of certain vehicles) on
trans-border trucking operations.
''SEC. 933. WEIGHT-DISTANCE TAXES.
''The Secretary of Transportation shall conduct a study to evaluate
the feasibility and ability of weight-distance truck taxes to provide
the greatest degree of equity among highway users, to ease the costs of
compliance of such taxes, and to improve the efficiency by which such
taxes might be administered. Such study shall also include an
evaluation of the evasion potential for weight-distance taxes and an
assessment of the benefits to interstate commerce of replacing all
Federal truck taxes (other than fuel taxes) with a weight-distance tax.
''SEC. 934. REPORTS, ETC.
''(a) Consultation With Treasury. -- Studies conducted under this
part shall be conducted in consultation with the Secretary of the
Treasury.
''(b) Report. -- Not later than October 1, 1987, the Secretary of
Transportation shall submit to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance of the Senate a
report on each study conducted under this part together with such
recommendations as the Secretary may deem advisable.''
Section 513(g) of Pub. L. 97-424 provided that the Secretary of
Transportation, in consultation with the Secretary of the Treasury,
conduct a study of alternatives to the tax on heavy vehicles imposed by
section 4481(a) of the Internal Revenue Code, and plans for improving
the collecting and enforcement of such tax and alternatives to such tax,
such alternatives to include taxes based either singly or in suitable
combinations on vehicle size or configuration; vehicle weight, both
registered and actual operating weight; and distance traveled, and such
plans for improving tax collection and enforcement to provide for
Federal and State co-operation in such activities. The study was to be
conducted in consultation with State officials, motor carriers, and
other affected parties, and the Secretary of Transportation was to
submit a report and recommendations to the Committee on Ways and Means
of the House of Representatives and the Committee on Finance of the
Senate not later than Jan. 1, 1985.
title 49 section 10530.
26 USC 4482. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Highway motor vehicle
For purposes of this subchapter, the term ''highway motor vehicle''
means any motor vehicle which is a highway vehicle.
(b) Taxable gross weight
For purposes of this subchapter, the term ''taxable gross weight''
when used with respect to any highway motor vehicle, means the sum of --
(1) the actual unloaded weight of --
(A) such highway motor vehicle fully equipped for service, and
(B) the semitrailers and trailers (fully equipped for service)
customarily used in connection with highway motor vehicles of the same
type as such highway motor vehicle, and
(2) the weight of the maximum load customarily carried on highway
motor vehicles of the same type as such highway motor vehicle and on the
semitrailers and trailers referred to in paragraph (1)(B).
Taxable gross weight shall be determined under regulations prescribed
by the Secretary (which regulations may include formulas or other
methods for determining the taxable gross weight of vehicles by classes,
specifications, or otherwise).
(c) Other definitions and special rule
For purposes of this subchapter --
(1) State
The term ''State'' means a State and the District of Columbia.
(2) Year
The term ''year'' means the one-year period beginning on July 1.
(3) Use
The term ''use'' means use in the United States on the public
highways.
(4) Taxable period
The term ''taxable period'' means any year beginning before July 1,
1999, and the period which begins on July 1, 1999, and ends at the close
of September 30, 1999.
(5) Customary use
A semitrailer or trailer shall be treated as customarily used in
connection with a highway motor vehicle if such vehicle is equipped to
tow such semitrailer or trailer.
(d) Special rule for taxable period in which termination date occurs
In the case of the taxable period which ends on September 30, 1999,
the amount of the tax imposed by section 4481 with respect to any
highway motor vehicle shall be determined by reducing each dollar amount
in the table contained in section 4481(a) by 75 percent.
(Added June 29, 1956, ch. 462, title II, 206(a), 70 Stat. 390;
amended June 29, 1961, Pub. L. 87-61, title II, 203(b)(2)(C), 75 Stat.
125; Dec. 31, 1970, Pub. L. 91-605, title III, 303(a)(9), 84 Stat.
1744; May 5, 1976, Pub. L. 94-280, title III, 303(a)(9), 90 Stat. 456;
Oct. 4, 1976, Pub. L. 94-455, title XIX, 1904(c), 1906(b)(13)(A), 90
Stat. 1818, 1834; Nov. 6, 1978, Pub. L. 95-599, title V, 502(a)(8), 92
Stat. 2756; Jan. 6, 1983, Pub. L. 97-424, title V, 513(c), (e),
516(a)(4), 96 Stat. 2179, 2182; Apr. 2, 1987, Pub. L. 100-17, title V,
502(a)(5), 101 Stat. 256; Nov. 5, 1990, Pub. L. 101-508, title XI,
11211(c)(5), 104 Stat. 1388-426; Dec. 18, 1991, Pub. L. 102-240, title
VIII, 8002(a)(5), 105 Stat. 2203.)
1991 -- Subsecs. (c)(4), (d). Pub. L. 102-240 substituted ''1999''
for ''1995'' wherever appearing.
1990 -- Subsecs. (c)(4), (d). Pub. L. 101-508 substituted ''1995''
for ''1993'' wherever appearing.
1987 -- Subsecs. (c)(4), (d). Pub. L. 100-17 substituted ''1993''
for ''1988'' wherever appearing.
1983 -- Subsec. (c). Pub. L. 97-424, 513(c)(2), inserted ''and
special rule'' in heading.
Subsec. (c)(4). Pub. L. 97-424, 516(a)(4), substituted ''1988'' for
''1984'' wherever appearing.
Subsec. (c)(5). Pub. L. 97-424, 513(c)(1), added par. (5).
Subsec. (d). Pub. L. 97-424, 513(e), added subsec. (d).
1978 -- Subsec. (c)(4). Pub. L. 95-599 substituted ''1984'' for
''1979'' wherever appearing.
1976 -- Subsec. (b). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (c)(1). Pub. L. 94-455, 1904(c), substituted ''State and the
District of Columbia'' for ''State, a Territory of the United States,
and the District of Columbia''.
Subsec. (c)(4). Pub. L. 94-280 substituted ''1979'' for ''1977''
wherever appearing.
1970 -- Subsec. (c)(4). Pub. L. 91-605 substituted ''1977'' for
''1972'' wherever appearing.
1961 -- Subsec. (c)(4). Pub. L. 87-61 added par. (4).
Amendment by section 513(c), (e) of Pub. L. 97-424 effective July 1,
1984, see section 513(f) of Pub. L. 97-424, set out as a note under
section 4481 of this title.
Amendment by section 1904(c) of Pub. L. 94-455 effective on first
day of first month which begins more than 90 days after Oct. 4, 1976,
see section 1904(d) of Pub. L. 94-455, set out as a note under section
4041 of this title.
Amendment by Pub. L. 87-61 effective July 1, 1961, see section 208
of Pub. L. 87-61, set out as a note under section 4041 of this title.
Amendment by section 513(c) of Pub. L. 97-424 effective July 1,
1984, in the case of a small owner-operator, notwithstanding section
513(f)(2) of Pub. L. 97-424, see section 901(b)(2) of Pub. L. 98-369,
set out as a note under section 4481 of this title.
26 USC 4483. Exemptions
TITLE 26 -- INTERNAL REVENUE CODE
(a) State and local governmental exemption
Under regulations prescribed by the Secretary, no tax shall be
imposed by section 4481 on the use of any highway motor vehicle by any
State or any political subdivision of a State.
(b) Exemption for United States
The Secretary of the Treasury may authorize exemption from the tax
imposed by section 4481 as to the use by the United States of any
particular highway motor vehicle, or class of highway motor vehicles, if
he determines that the imposition of such tax with respect to such use
will cause substantial burden or expense which can be avoided by
granting tax exemption and that full benefit of such exemption, if
granted, will accrue to the United States.
(c) Certain transit-type buses
Under regulations prescribed by the Secretary, no tax shall be
imposed by section 4481 on the use of any bus which is of the transit
type (rather than of the intercity type) by a person who, for the last 3
months of the preceding year (or for such other period as the Secretary
may by regulations prescribe for purposes of this subsection), met the
60-percent passenger fare revenue test set forth in section 6421(b)(2)
(as in effect on the day before the date of the enactment of the Energy
Tax Act of 1978) as applied to the period prescribed for purposes of
this subsection.
(d) Exemption for trucks used for less than 5,000 miles on public
highways
(1) Suspension of tax
(A) In general
If --
(i) it is reasonable to expect that the use of any highway motor
vehicle on public highways during any taxable period will be less than
5,000 miles, and
(ii) the owner of such vehicle furnishes such information as the
Secretary may by forms or regulations require with respect to the
expected use of such vehicle,
then the collection of the tax imposed by section 4481 with respect
to the use of such vehicle shall be suspended during the taxable period.
(B) Suspension ceases to apply where use exceeds 5,000 miles
Subparagraph (A) shall cease to apply with respect to any highway
motor vehicle whenever the use of such vehicle on public highways during
the taxable period exceeds 5,000 miles.
(2) Exemption
If --
(A) the collection of the tax imposed by section 4481 with respect to
any highway motor vehicle is suspended under paragraph (1),
(B) such vehicle is not used during the taxable period on public
highways for more than 5,000 miles, and
(C) except as otherwise provided in regulations, the owner of such
vehicle furnishes such information as the Secretary may require with
respect to the use of such vehicle during the taxable period,
then no tax shall be imposed by section 4481 on the use of such
vehicle for the taxable period.
(3) Refund where tax paid and vehicle not used for more than 5,000
miles
If --
(A) the tax imposed by section 4481 is paid with respect to any
highway motor vehicle for any taxable period, and
(B) the requirements of subparagraphs (B) and (C) of paragraph (2)
are met with respect to such taxable period,
the amount of such tax shall be credited or refunded (without
interest) to the person who paid such tax.
(4) Relief from liability for tax under certain circumstances where
truck is transferred
Under regulations prescribed by the Secretary, the owner of a highway
motor vehicle with respect to which the collection of the tax imposed by
section 4481 is suspended under paragraph (1) shall not be liable for
the tax imposed by section 4481 (and the new owner shall be liable for
such tax) with respect to such vehicle if --
(A) such vehicle is transferred to a new owner,
(B) such suspension is in effect at the time of such transfer, and
(C) the old owner furnishes such information as the Secretary by
forms and regulations requires with respect to the transfer of such
vehicle.
(5) 7,500-miles exemption for agricultural vehicles
(A) In general
In the case of an agricultural vehicle, paragraphs (1) and (2) shall
be applied by substituting ''7,500'' for ''5,000'' each place it
appears.
(B) Definitions
For purposes of this paragraph --
(i) Agricultural vehicle
The term ''agricultural vehicle'' means any highway motor vehicle --
(I) used primarily for farming purposes, and
(II) registered (under the laws of the State in which such vehicle is
required to be registered) as a highway motor vehicle used for farming
purposes.
(ii) Farming purposes
The term ''farming purposes'' means the transporting of any farm
commodity to or from a farm or the use directly in agricultural
production.
(iii) Farm commodity
The term ''farm commodity'' means any agricultural or horticultural
commodity, feed, seed, fertilizer, livestock, bees, poultry, fur-bearing
animals, or wildlife.
(6) Owner defined
For purposes of this subsection, the term ''owner'' means, with
respect to any highway motor vehicle, the person described in section
4481(b).
(e) Reduction in tax for trucks used in logging
The tax imposed by section 4481 shall be reduced by 25 percent with
respect to any highway motor vehicle if --
(1) the exclusive use of such vehicle during any taxable period is
the transportation, to and from a point located on a forested site, of
products harvested from such forested site, and
(2) such vehicle is registered (under the laws of the State in which
such vehicle is required to be registered) as a highway motor vehicle
used in the transportation of harvested forest products.
(f) Reduction in tax for trucks base-plated in a contiguous foreign
country
If the base for registration purposes of any highway motor vehicle is
in a contiguous foreign country for any taxable period, the tax imposed
by section 4481 for such period shall be 75 percent of the tax which
would (but for this subsection) be imposed by section 4481 for such
period.
(g) Termination of exemptions
Subsections (a) and (c) shall not apply on and after October 1, 1999.
(Added June 29, 1956, ch. 462, title II, 206(a), 70 Stat. 391;
amended Oct. 4, 1976, Pub. L. 94-455, title XIX, 1906(b)(13)(A), (B),
90 Stat. 1834; Nov. 9, 1978, Pub. L. 95-618, title II, 233(a)(3)(C),
92 Stat. 3191; Jan. 6, 1983, Pub. L. 97-424, title V, 513(b),
516(b)(3), 96 Stat. 2177, 2183; July 18, 1984, Pub. L. 98-369, div. A,
title IX, 902(a), 903(a), 98 Stat. 1004; Apr. 2, 1987, Pub. L.
100-17, title V, 502(b)(5), 507(b), 101 Stat. 257, 260; Nov. 5, 1990,
Pub. L. 101-508, title XI, 11211(d)(4), 104 Stat. 1388-427; Dec. 18,
1991, Pub. L. 102-240, title VIII, 8002(b)(4), 105 Stat. 2203.)
The date of the enactment of the Energy Tax Act of 1978, referred to
in subsec. (c), is the date of enactment of Pub. L. 95-618, which was
approved Nov. 9, 1978.
1991 -- Subsec. (g). Pub. L. 102-240 substituted ''1999'' for
''1995''.
1990 -- Subsec. (g). Pub. L. 101-508 substituted ''1995'' for
''1993''.
1987 -- Subsec. (f). Pub. L. 100-17, 507(b), added subsec. (f).
Former subsec. (f) redesignated (g).
Pub. L. 100-17, 502(b)(5), substituted ''1993'' for ''1988''.
Subsec. (g). Pub. L. 100-17, 507(b), redesignated former subsec.
(f) as (g).
1984 -- Subsec. (d)(5), (6). Pub. L. 98-369, 903(a), added par.
(5) and redesignated former par. (5) as (6).
Subsecs. (e), (f). Pub. L. 98-369, 902(a), added subsec. (e) and
redesignated former subsec. (e) as (f).
1983 -- Subsec. (d). Pub. L. 97-424, 513(b), added subsec. (d).
Subsec. (e). Pub. L. 97-424, 516(b)(3), added subsec. (e).
1978 -- Subsec. (c). Pub. L. 95-618 inserted ''(as in effect on the
day before the date of the enactment of the Energy Tax Act of 1978)''
after ''section 6421(b)(2)''.
1976 -- Subsecs. (a), (c). Pub. L. 94-455, 1906(b)(13)(A), struck
out ''or his delegate'' after ''Secretary'' wherever appearing.
Subsec. (b). Pub. L. 94-455, 1906(b)(13)(B), inserted ''of the
Treasury'' after ''Secretary''.
Amendment by section 507(b) of Pub. L. 100-17 effective July 1,
1987, see section 507(d) of Pub. L. 100-17, set out as a note under
section 4481 of this title.
Section 902(b) of Pub. L. 98-369 provided that: ''The amendment
made by this section (amending this section) shall take effect on July
1, 1984.''
Section 903(b) of Pub. L. 98-369 provided that: ''The amendments
made by subsection (a) (amending this section) shall take effect as if
included in the amendments made by section 513 of the Highway Revenue
Act of 1982 (Pub. L. 97-424, see section 513(f) of Pub. L. 97-424, set
out as an Effective Date of 1983 Amendment note under section 4481 of
this title).''
Amendment by section 513(b) of Pub. L. 97-424 effective July 1,
1984, see section 513(f) of Pub. L. 97-424, set out as a note under
section 4481 of this title.
Amendment by Pub. L. 95-618 effective on first day of first calendar
month which begins more than 10 days after Nov. 9, 1978, see section
233(d) of Pub. L. 95-618, set out as a note under section 34 of this
title.
Amendment by section 513(b) of Pub. L. 97-424 effective July 1,
1984, in the case of a small owner-operator, notwithstanding section
513(f)(2) of Pub. L. 97-424, see section 901(b)(2) of Pub. L. 98-369,
set out as a note under section 4481 of this title.
26 USC 4484. Cross references
TITLE 26 -- INTERNAL REVENUE CODE
(1) For penalties and administrative provisions applicable to this
subchapter, see subtitle F.
(2) For exemption for uses by Indian tribal governments (or their
subdivisions), see section 7871.
(Added June 29, 1956, ch. 462, title II, 206(a), 70 Stat. 391;
amended Jan. 14, 1983, Pub. L. 97-473, title II, 202(b)(10), 96 Stat.
2610.)
1983 -- Pub. L. 97-473 designated existing provisions as par. (1)
and added par. (2).
For effective date of amendment by Pub. L. 97-473, see section
204(5) of Pub. L. 97-473, set out as an Effective Date note under
section 7871 of this title.
Section effective June 29, 1956, see section 211 of act June 29,
1956, set out as an Effective Date of 1956 Amendment note under section
4041 of this title.
26 USC (Subchapter E -- Repealed)
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 4491 to 4494. Repealed. Pub. L. 97-248, title II, 280(c)(1),
Sept. 3, 1982, 96 Stat. 564)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4491, added Pub. L. 91-258, title II, 206(a), May 21, 1970,
84 Stat. 243; amended Pub. L. 91-614, title III, 305(a), Dec. 31,
1970, 84 Stat. 1846; Pub. L. 96-298, 1(c)(1), July 1, 1980, 94 Stat.
829, provided for imposition of a tax on use of civil aircraft.
Section 4492, added Pub. L. 91-258, title II, 206(a), May 21, 1970,
84 Stat. 243; amended Pub. L. 94-530, 2(a), Oct. 17, 1976, 90 Stat.
2488; Pub. L. 95-163, 17(b)(1), Nov. 9, 1977, 91 Stat. 1286; Pub.
L. 95-504, 2(b), Oct. 24, 1978, 92 Stat. 1705, provided definitions
to be used for purposes of this subchapter.
Section 4493, added Pub. L. 91-258, title II, 206(a), May 21, 1970,
84 Stat. 244; amended Pub. L. 94-455, title XIX, 1904(a)(13),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1814, 1834, enumerated special
rules for payment of tax by lessees and certain persons engaged in
foreign air commerce.
Section 4494, added Pub. L. 91-258, title II, 206(a), May 21, 1970,
84 Stat. 245, provided a cross reference to subtitle F of this title
for penalties and administrative provisions applicable to this
subchapter.
Repeal applicable with respect to transportation beginning after Aug.
31, 1982, but inapplicable to amounts paid on or before such date, see
section 280(d) of Pub. L. 97-248, set out as an Effective Date of 1982
Amendment note under section 4261 of this title.
Pub. L. 96-298, 1(c)(2), (3), July 1, 1980, 94 Stat. 829, set out
various changes in the amount and rate of tax under former section 4491
of this title for period beginning on July 1, 1980, and ending on Oct.
1, 1980, and provided that due date for filing any tax return of tax
imposed by such section 4491, with respect to any use after June 30,
1980, would not be earlier than Oct. 31, 1980.
26 USC Subchapter F -- Tax on Removal of Hard Mineral Resources From
Deep Seabed
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4495. Imposition of tax.
4496. Definitions.
4497. Imputed value.
4498. Termination.
1980 -- Pub. L. 96-283, title IV, 402(a), June 28, 1980, 94 Stat.
582, added subchapter heading and analysis of sections.
26 USC 4495. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
There is hereby imposed a tax on any removal of a hard mineral
resource from the deep seabed pursuant to a deep seabed permit.
(b) Amount of tax
The amount of the tax imposed by subsection (a) on any removal shall
be 3.75 percent of the imputed value of the resource so removed.
(c) Liability for tax
The tax imposed by subsection (a) shall be paid by the person to whom
the deep seabed permit is issued.
(d) Time for paying tax
The time for paying the tax imposed by subsection (a) shall be the
time prescribed by the Secretary by regulations. The time so prescribed
with respect to any removal shall be not earlier than the earlier of --
(1) the commercial use of, or the sale or disposition of, any portion
of the resource so removed, or
(2) the day which is 12 months after the date of the removal of the
resource.
(Added Pub. L. 96-283, title IV, 402(a), June 28, 1980, 94 Stat.
582.)
Section 402(c) of Pub. L. 96-283 provided that: ''The amendments
made by this section (enacting this subchapter) shall take effect on
January 1, 1980.''
26 USC 4496. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Deep seabed permit
For purposes of this subchapter, the term ''deep seabed permit''
means a permit issued under title I of the Deep Seabed Hard Minerals
Resources Act.
(b) Hard mineral resource
For purposes of this subchapter, the term ''hard mineral resource''
means any deposit or accretion on, or just below, the surface of the
deep seabed of nodules which contain one or more minerals, at least one
of which is manganese, nickel, cobalt, or copper.
(c) Deep seabed
For purposes of this subchapter, the term ''deep seabed'' means the
seabed, and the subsoil thereof to a depth of 10 meters, lying seaward
of, and outside --
(1) the Continental Shelf of any nation; and
(2) any area of national resource jurisdiction of any foreign nation,
if such area extends beyond the Continental Shelf of such nation and
such jurisdiction is recognized by the United States.
(d) Continental Shelf
For purposes of this subchapter, the term ''Continental Shelf'' means
--
(1) the seabed and subsoil of the submarine areas adjacent to the
coast but outside the area of the territorial sea, to a depth of 200
meters or, beyond that limit, to where the depth of the superjacent
waters admits of the exploitation of the natural resources of such
areas; and
(2) the seabed and subsoil of similar submarine areas adjacent to the
coasts of islands.
(Added Pub. L. 96-283, title IV, 402(a), June 28, 1980, 94 Stat.
583.)
The Deep Seabed Hard Minerals Resources Act, referred to in subsec.
(a), is Pub. L. 96-283, June 28, 1980, 94 Stat. 553, as amended.
Title I of the Deep Seabed Hard Minerals Resources Act is classified
generally to subchapter I ( 1411 et seq.) of chapter 26 of Title 30,
Mineral Lands and Mining. For complete classification of this Act to
the Code see Short Title note set out under section 1401 of Title 30 and
Tables.
For extension of territorial sea of United States, see Proc. No.
5928, set out as a note under section 1331 of Title 43, Public Lands.
26 USC 4497. Imputed value
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
For purposes of this subchapter, the term ''imputed value'' means,
with respect to any hard mineral resource, 20 percent of the fair market
value of the commercially recoverable metals and minerals contained in
such resource. Such fair market value shall be determined --
(1) as of the date of the removal of the hard mineral resource from
the deep seabed; and
(2) as if the metals and minerals contained in such resource were
separated from such resource and were in the most basic form for which
there is a readily ascertainable market price.
(b) Commercial recoverability
(1) Manganese, nickel, cobalt, and copper
For purposes of subsection (a), manganese, nickel, cobalt, and copper
shall be treated as commercially recoverable.
(2) Minimum quantities and percentages
The Secretary may by regulations prescribe for each metal or mineral
quantities or percentages below which the metal or mineral shall be
treated as not commercially recoverable.
(c) Suspension of tax with respect to certain metals and minerals
held for later processing
(1) Election
The permittee may, in such manner and at such time as may be
prescribed by regulations, elect to have the application of the tax
suspended with respect to one or more commercially recoverable metals or
minerals in the resource which the permittee does not intend to process
within one year of the date of extraction. Any metal or mineral
affected by such election shall not be taken into account in determining
the imputed value of the resource at the time of its removal from the
deep seabed. Any suspension under this paragraph with respect to a
metal or mineral shall be permanent unless there is a redetermination
affecting such metal or mineral under paragraph (2).
(2) Later computation of tax
If the permittee processes any metal or mineral affected by the
election under paragraph (1), or if he sells any portion of the resource
containing such a metal or mineral, then the amount of the tax under
section 4495 shall be redetermined as if there had been no suspension
under paragraph (1) with respect to such metal or mineral. In any such
case there shall be added to the increase in tax determined under the
preceding sentence an amount equal to the interest (at the underpayment
rate established under section 6621) on such increase for the period
from the date prescribed for paying the tax on the resources (determined
under section 4495(d)) to the date of the processing or sale.
(d) Determinations of value
All determinations of value necessary for the application of this
subchapter shall be made by the Secretary (after consultation with other
appropriate Federal officials) on the basis of the best available
information. Such determinations shall be made under procedures
established by the Secretary by regulations.
(Added Pub. L. 96-283, title IV, 402(a), June 28, 1980, 94 Stat.
583; amended Pub. L. 99-514, title XV, 1511(c)(7), Oct. 22, 1986, 100
Stat. 2745.)
1986 -- Subsec. (c)(2). Pub. L. 99-514 substituted ''the
underpayment rate established under section 6621'' for ''rates
determined under section 6621''.
Amendment by Pub. L. 99-514 applicable for purposes of determining
interest for periods after Dec. 31, 1986, see section 1511(d) of Pub.
L. 99-514, set out as a note under section 47 of this title.
26 USC 4498. Termination
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
The tax imposed by section 4495 shall not apply to any removal from
the deep seabed after the earlier of --
(1) the date on which an international deep seabed treaty takes
effect with respect to the United States, or
(2) the date 10 years after the date of the enactment of this
subchapter.
(b) International deep seabed treaty
For purposes of subsection (a), the term ''international deep seabed
treaty'' means any treaty which --
(1) is adopted by a United Nations Conference on the Law of the Sea,
and
(2) requires contributions to an international fund for the sharing
of revenues from deep seabed mining.
(Added Pub. L. 96-283, title IV, 402(a), June 28, 1980, 94 Stat.
584.)
The date of the enactment of this subchapter, referred to in subsec.
(a)(2), probably means the date of enactment of Pub. L. 96-283, which
was approved June 28, 1980.
26 USC (CHAPTER 37 -- REPEALED)
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 4501 to 4503. Repealed. Pub. L. 101-508, title XI,
11801(a)(48), Nov. 5, 1990, 104 Stat. 1388-522)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4501, acts Aug. 16, 1954, ch. 736, 68A Stat. 533; May 29,
1956, ch. 342, 19, 70 Stat. 221; Sept. 2, 1958, Pub. L. 85-859,
title I, 162(b), 72 Stat. 1306; July 6, 1960, Pub. L. 86-592, 2,
74 Stat. 330; Mar. 31, 1961, Pub. L. 87-15, 2(a), 75 Stat. 40; May
24, 1962, Pub. L. 87-456, title III, 302(a), (b), 76 Stat. 77; July
13, 1962, Pub. L. 87-535, 18(a), 76 Stat. 166; Nov. 8, 1965, Pub.
L. 89-331, 13, 79 Stat. 1280; Oct. 14, 1971, Pub. L. 92-138, 18(b),
85 Stat. 390, related to imposition of tax upon sugar manufactured in
United States.
Section 4502, acts Aug. 16, 1954, ch. 736, 68A Stat. 534; May 29,
1956, ch. 342, 20, 70 Stat. 221; June 25, 1959, Pub. L. 86-70,
22(c), 73 Stat. 146; July 12, 1960, Pub. L. 86-624, 18(f), 74 Stat.
416, provided for applicable definitions.
Section 4503, act Aug. 16, 1954, ch. 736, 68A Stat. 534, related
to exemption for sugar manufactured for home consumption.
Prior sections 4504 and 4511 to 4514 were repealed by Pub. L.
87-456, title III, 302(d), May 24, 1962, 76 Stat. 77, effective with
respect to articles entered or withdrawn from warehouse, for consumption
on or after Aug. 31, 1963, as provided by section 501(a) of Pub. L.
87-456.
Section 4504, acts Aug. 16, 1954, ch. 736, 68A Stat. 535; May 29,
1956, ch. 342, 21(a), 70 Stat. 221, required the tax imposed by
section 4501(b) to be levied, assessed, collected and paid in the same
manner as a duty imposed by the Tariff Act of 1930.
Section 4511, act Aug. 16, 1954, ch. 736, 68A Stat. 536, imposed a
tax upon the processing of coconut oil, etc.
Section 4512, act Aug. 16, 1954, ch. 736, 68A Stat. 536, defined
''first domestic processing''.
Section 4513, act Aug. 16, 1954, ch. 736, 68A Stat. 536, related
to exemptions from the tax imposed.
Section 4514, act Aug. 16, 1954, ch. 736, 68A Stat. 536, set forth
a cross-reference to subtitle F for administrative provisions.
For provisions that nothing in repeal by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit taken
into account prior to Nov. 5, 1990, for purposes of determining
liability for tax for periods ending after Nov. 5, 1990, see section
11821(b) of Pub. L. 101-508, set out as a note under section 29 of this
title.
26 USC (CHAPTER 38 -- REPEALED) /1/
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 4521. Repealed. Pub. L. 87-456, title III, 302(d), May 24,
1962, 76 Stat. 77)
TITLE 26 -- INTERNAL REVENUE CODE
Section, act Aug. 16, 1954, ch. 736, 68A Stat. 539, imposed a tax
on petroleum products imported into the United States.
Repeal effective with respect to articles entered, or withdrawn from
warehouse, for consumption on or after Aug. 31, 1963, see section
501(a) of Pub. L. 87-456.
/1/ A new chapter 38 ( 4611 et seq.) follows.
26 USC ( 4531, 4532. Repealed. Pub. L. 87-456, title III, 302(d), May
24, 1962, 76 Stat. 77)
TITLE 26 -- INTERNAL REVENUE CODE
Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 540, imposed a tax
on coal imported into the United States.
Repeal effective with respect to articles entered, or withdrawn from
warehouse, for consumption on or after Aug. 31, 1963, see section
501(a) of Pub. L. 87-456.
26 USC ( 4541, 4542. Repealed. Pub. L. 87-456, title III, 302(d), May
24, 1962, 76 Stat. 77)
TITLE 26 -- INTERNAL REVENUE CODE
Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 541, imposed a tax
on copper imported into the United States.
Repeal effective with respect to articles entered, or withdrawn from
warehouse, for consumption on or after Aug. 31, 1963, see section
501(a) of Pub. L. 87-456.
26 USC ( 4551 to 4553. Repealed. Pub. L. 87-456, title III, 302(d),
May 24, 1962, 76 Stat. 77)
TITLE 26 -- INTERNAL REVENUE CODE
Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 542, imposed a tax
on lumber imported into the United States.
Repeal effective with respect to articles entered, or withdrawn from
warehouse, for consumption on or after Aug. 31, 1963, see section
501(a) of Pub. L. 87-456.
26 USC ( 4561, 4562. Repealed. Pub. L. 87-456, title III, 302(d), May
24, 1962, 76 Stat. 77)
TITLE 26 -- INTERNAL REVENUE CODE
Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 543, imposed a tax
on animal oils imported into the United States.
Repeal effective with respect to articles entered, or withdrawn from
warehouse, for consumption on or after Aug. 31, 1963, see section
501(a) of Pub. L. 87-456.
26 USC ( 4571, 4572. Repealed. Pub. L. 87-456, title III, 302(d), May
24, 1962, 76 Stat. 77)
TITLE 26 -- INTERNAL REVENUE CODE
Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 543, 544, imposed
a tax on seeds and seed oil imported into the United States.
Repeal effective with respect to articles entered, or withdrawn from
warehouse, for consumption on or after Aug. 31, 1963, see section
501(a) of Pub. L. 87-456.
26 USC ( 4581, 4582. Repealed. Pub. L. 87-456, title III, 302(d), May
24, 1962, 76 Stat. 77)
TITLE 26 -- INTERNAL REVENUE CODE
Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 544, imposed a tax
on imports of any article, merchandise, or combination (except oils
specified in section 4511), 10 percent or more of the quantity by weight
of which consists of, or is derived directly or indirectly from, one or
more of the products specified in sections 4561 and 4571, or of the
oils, fatty acids, or salts specified in section 4511.
Repeal effective with respect to articles entered, or withdrawn from
warehouse, for consumption on or after Aug. 31, 1963, see section
501(a) of Pub. L. 87-456.
26 USC ( 4591 to 4597. Repealed. Pub. L. 94-455, title XIX,
1904(a)(15), Oct. 4, 1976, 90 Stat. 1814)
TITLE 26 -- INTERNAL REVENUE CODE
Sections, comprising subchapter F, ''Oleomargarine'', were struck out
in the repeal of this chapter by Pub. L. 94-455.
Section 4591, act Aug. 16, 1954, ch. 736, 68A Stat. 545, related
to imposition of a tax on all oleomargarine imported from foreign
countries.
Section 4592, act Aug. 16, 1954, ch. 736, 68A Stat. 545, related
to definitions of oleomargarine, manufacturer, wholesale dealer, and
retail sales.
Section 4593, act Aug. 16, 1954, ch. 736, 68A Stat. 546, related
to exemptions to tax imposed by section 4591.
Section 4594, act Aug. 16, 1954, ch. 736, 68A Stat. 546, related
to packing requirements for manufacturers of oleomargarine.
Section 4595, act Aug. 16, 1954, ch. 736, 68A Stat. 546, related
to wholesale and retail selling requirements for oleomargarine.
Section 4596, act Aug. 16, 1954, ch. 736, 68A Stat. 547, related
to filing of bonds by manufacturers of oleomargarine.
Section 4597, act Aug. 16, 1954, ch. 736, 68A Stat. 547, related
to books and returns of wholesale dealers and manufacturers.
Repeal effective on first day of first month which begins more than
90 days after Oct. 4, 1976, see section 1904(d) of Pub. L. 94-455 set
out as an Effective Date of 1976 Amendment note under section 4041 of
this title.
26 USC ( 4601 to 4603. Repealed. Pub. L. 87-456, title III, 302(d),
May 24, 1962, 76 Stat. 77)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4601, acts Aug. 16, 1954, ch. 736, 68A Stat. 548; Sept.
2, 1958, Pub. L. 85-859, title I, 119(b)(4), 72 Stat. 1286, related
to applicability of certain tariff provisions.
Sections 4602, 4603, act Aug. 16, 1954, ch. 736, 68A Stat. 548,
related to contravention of trade agreements by certain taxes.
Repeal effective with respect to articles entered, or withdrawn from
warehouse, for consumption on or after Aug. 31, 1963, see section
501(a) of Pub. L. 87-456.
26 USC CHAPTER 38 -- ENVIRONMENTAL TAXES
TITLE 26 -- INTERNAL REVENUE CODE
Subchapter Sec. /1/
A.
Tax on petroleum 4611
B.
Tax on certain chemicals 4661
C.
Tax on certain imported substances 4671
D.
Ozone-depleting chemicals, etc. 4681
A prior chapter 38, consisting of sections 4521 to 4603 and relating
to import taxes, was repealed by Pub. L. 87-456, title III, 302(d),
May 24, 1962, 76 Stat. 77, and Pub. L. 94-455, title XIX,
1904(a)(15), Oct. 4, 1976, 90 Stat. 1814.
1989 -- Pub. L. 101-239, title VII, 7506(b), Dec. 19, 1989, 103
Stat. 2369, added item for subchapter D.
1986 -- Pub. L. 99-499, title V, 515(b), Oct. 17, 1986, 100 Stat.
1769, added item for subchapter C.
Pub. L. 99-499, title V, 514(a)(2), Oct. 17, 1986, 100 Stat. 1767,
struck out item for subchapter C.
1980 -- Pub. L. 96-510, title II, 231(b), Dec. 11, 1980, 94 Stat.
2804, added item for subchapter C.
Pub. L. 96-510, title II, 211(a), Dec. 11, 1980, 94 Stat. 2797,
added chapter 38 and analysis of subchapters consisting of items A and
B.
/1/ Section numbers editorially supplied.
26 USC Subchapter A -- Tax on Petroleum
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4611. Imposition of tax.
4612. Definitions and special rules.
26 USC 4611. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General Rule
There is hereby imposed a tax at the rate specified in subsection (c)
on --
(1) crude oil received at a United States refinery, and
(2) petroleum products entered into the United States for
consumption, use, or warehousing.
(b) Tax on certain uses and exportation
(1) In general
If --
(A) any domestic crude oil is used in or exported from the United
States, and
(B) before such use or exportation, no tax was imposed on such crude
oil under subsection (a),
then a tax at the rate specified in subsection (c) is hereby imposed
on such crude oil.
(2) Exception for use on premises where produced
Paragraph (1) shall not apply to any use of crude oil for extracting
oil or natural gas on the premises where such crude oil was produced.
(c) Rate of tax
(1) In general
The rate of the taxes imposed by this section is the sum of --
(A) the Hazardous Substance Superfund financing rate, and
(B) the Oil Spill Liability Trust Fund financing rate.
(2) Rates
For purposes of paragraph (1) --
(A) the Hazardous Substance Superfund financing rate is 9.7 cents a
barrel, and
(B) the Oil Spill Liability Trust Fund financing rate is 5 cents a
barrel.
(d) Persons liable for tax
(1) Crude oil received at refinery
The tax imposed by subsection (a)(1) shall be paid by the operator of
the United States refinery.
(2) Imported petroleum product
The tax imposed by subsection (a)(2) shall be paid by the person
entering the product for consumption, use, or warehousing.
(3) Tax on certain uses or exports
The tax imposed by subsection (b) shall be paid by the person using
or exporting the crude oil, as the case may be.
(e) Application of Hazardous Substance Superfund financing rate
(1) In general
Except as provided in paragraphs (2) and (3), the Hazardous Substance
Superfund financing rate under this section shall apply after December
31, 1986, and before January 1, 1996.
(2) No tax if unobligated balance in Fund exceeds $3,500,000,000
If on December 31, 1993, or December 31, 1994 --
(A) the unobligated balance in the Hazardous Substance Superfund
exceeds $3,500,000,000, and
(B) the Secretary, after consultation with the Administrator of the
Environmental Protection Agency, determines that the unobligated balance
in the Hazardous Substance Superfund will exceed $3,500,000,000 on
December 31 of 1994 or 1995, respectively, if no tax is imposed under
section 59A, this section, and sections 4661 and 4671,
then no tax shall be imposed under this section (to the extent
attributable to the Hazardous Substance Superfund financing rate) during
1994 or 1995, as the case may be.
(3) No tax if amounts collected exceed $11,970,000,000
(A) Estimates by Secretary
The Secretary as of the close of each calendar quarter (and at such
other times as the Secretary determines appropriate) shall make an
estimate of the amount of taxes which will be collected under section
59A, this section (to the extent attributable to the Hazardous Substance
Superfund financing rate), and sections 4661 and 4671 and credited to
the Hazardous Substance Superfund during the period beginning January 1,
1987, and ending December 31, 1995.
(B) Termination if $11,970,000,000 credited before January 1, 1996
If the Secretary estimates under subparagraph (A) that more than
$11,970,000,000 will be credited to the Fund before January 1, 1996, the
Hazardous Substance Superfund financing rate under this section shall
not apply after the date on which (as estimated by the Secretary)
$11,970,000,000 will be so credited to the Fund.
(f) Application of Oil Spill Liability Trust Fund financing rate
(1) In general
Except as provided in paragraph (2), the Oil Spill Liability Trust
Fund financing rate under subsection (c) shall apply after December 31,
1989, and before January 1, 1995.
(2) No tax if unobligated balance in fund exceeds $1,000,000,000
The Oil Spill Liability Trust Fund financing rate shall not apply
during any calendar quarter if the Secretary estimates that as of the
close of the preceding calendar quarter the unobligated balance in the
Oil Spill Liability Trust Fund exceeds $1,000,000,000.
(Added Pub. L. 96-510, title II, 211(a), Dec. 11, 1980, 94 Stat.
2797; amended Pub. L. 99-499, title V, 511(a), 512(a), (b), Oct. 17,
1986, 100 Stat. 1760, 1761; Pub. L. 99-509, title VIII, 8032(a),
(c)(1), (2), Oct. 21, 1986, 100 Stat. 1957, 1958; Pub. L. 100-647,
title VI, 6108, Nov. 10, 1988, 102 Stat. 3712; Pub. L. 101-221, 8(a),
Dec. 12, 1989, 103 Stat. 1891; Pub. L. 101-239, title VII, 7505(a),
(b), Dec. 19, 1989, 103 Stat. 2363; Pub. L. 101-508, title XI,
11231(a)(1)(B), (2), (b), Nov. 5, 1990, 104 Stat. 1388-445.)
Amendments by Pub. L. 99-509, title VIII, 8031(a), (b), and (d)(1),
Oct. 21, 1986, 100 Stat. 1955, to subsecs. (a) to (e) of this section
were not executed to text pursuant to Pub. L. 99-509, title VIII,
8031(e)(2), which provided that the amendments made by section 8031
shall not take effect if the Superfund Amendments and Reauthorization
Act of 1986 is enacted. The Superfund Amendments and Reauthorization
Act of 1986 was enacted as Pub. L. 99-499, approved Oct. 17, 1986.
1990 -- Subsec. (e)(1). Pub. L. 101-508, 11231(a)(1)(B),
substituted ''January 1, 1996'' for ''January 1, 1992''.
Subsec. (e)(2). Pub. L. 101-508, 11231(a)(2), substituted ''1993''
for ''1989'' and ''1994'' for ''1990'' in introductory provisions and
''1994'' for ''1990'' and ''1995'' for ''1991'' in subpar. (B) and
concluding provisions.
Subsec. (e)(3). Pub. L. 101-508, 11231(b), substituted
''$11,970,000,000'' for ''$6,650,000,000'' in heading.
Subsec. (e)(3)(A). Pub. L. 101-508, 11231(b), substituted ''December
31, 1995'' for ''December 31, 1991''.
Subsec. (e)(3)(B). Pub. L. 101-508, 11231(a)(1)(B), (b), substituted
''January 1, 1996'' for ''January 1, 1992'' in heading and text and
''$11,970,000,000'' for ''$6,650,000,000'' in heading and twice in text.
1989 -- Subsec. (c)(2)(A). Pub. L. 101-221 amended subpar. (A)
generally. Prior to amendment, subpar. (A) read as follows: ''the
Hazardous Substance Superfund financing rate is --
''(i) except as provided in clause (ii), 8.2 cents a barrel, and
''(ii) 11.7 cents a barrel in the case of the tax imposed by
subsection (a)(2), and''.
Subsec. (c)(2)(B). Pub. L. 101-239, 7505(b), substituted ''5 cents''
for ''1.3 cents''.
Subsec. (f). Pub. L. 101-239, 7505(a)(1), amended subsec. (f)
generally, substituting pars. (1) and (2) for former pars. (1) general
applicability, (2) commencement date, and (3) limit on tax of
$300,000,000.
1988 -- Subsec. (f)(2)(B). Pub. L. 100-647 substituted ''December
31, 1990'' for ''September 1, 1987''.
1986 -- Subsecs. (a), (b)(1). Pub. L. 99-499, 512(a), substituted
''at the rate specified in subsection (c)'' for ''of 0.79 cent a
barrel''.
Subsec. (c). Pub. L. 99-509, 8032(a), amended subsec. (c)
generally. Prior to amendment, subsec. (c) read as follows:
''(1) In general. -- Except as provided in paragraph (2), the rate of
the taxes imposed by this section is 8.2 cents a barrel.
''(2) Imported petroleum products. -- The rate of the tax imposed by
subsection (a)(2) shall be 11.7 cents a barrel.''
Pub. L. 99-499, 512(b), added subsec. (c) and redesignated former
subsec. (c) as (d).
Subsec. (d). Pub. L. 99-499, 512(b), redesignated subsec. (c) as
(d). Former subsec. (d) redesignated (e).
Subsec. (e). Pub. L. 99-509, 8032(c)(1), substituted ''Hazardous
Substance Superfund financing rate'' for ''taxes'' in heading,
substituted ''the Hazardous Substance Superfund financing rate under
this section'' for ''the taxes imposed by this section'' in par. (1),
inserted ''(to the extent attributable to the Hazardous Substance
Superfund financing rate)'' after ''this section'' in pars. (2) and
(3)(A), and substituted ''the Hazardous Substance Superfund financing
rate under this section shall not apply'' for ''no tax shall be imposed
under this section'' in par. (3)(B).
Pub. L. 99-499, 511(a), 512(b), amended subsec. (d) generally and
redesignated it as (e). Prior to amendment and redesignation, subsec.
(d), termination, read as follows: ''The taxes imposed by this section
shall not apply after September 30, 1985, except that if on September
30, 1983, or September 30, 1984 --
''(1) the unobligated balance in the Hazardous Substance Response
Trust Fund as of such date exceeds $900,000,000, and
''(2) the Secretary, after consultation with the Administrator of the
Environmental Protection Agency, determines that such unobligated
balance will exceed $500,000,000 on September 30 of the following year
if no tax is imposed under section 4611 or 4661 during the calendar year
following the date referred to above,
then no tax shall be imposed by this section during the first
calendar year beginning after the date referred to in paragraph (1).''
Subsec. (f). Pub. L. 99-509, 8032(c)(2), added subsec. (f).
Section 8(b) of Pub. L. 101-221 provided that: ''The amendment made
by subsection (a) (amending this section) shall take effect on the date
of enactment of this Act (Dec. 12, 1989).''
Section 8032(d) of Pub. L. 99-509, as amended by Pub. L. 99-514,
2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) In general. -- Except as provided in paragraph (2), the
amendments made by this section (amending this section and sections
4612, 4661, 4671, and 9507 of this title) shall take effect on the
commencement date (as defined in section 4611(f)(2) of the Internal
Revenue Code of 1986 (formerly I.R.C. 1954), as added by this section).
''(2) Coordination with superfund reauthorization. -- The amendments
made by this section shall take effect only if the Superfund Amendments
and Reauthorization Act of 1986 (Pub. L. 99-499, approved Oct. 17, 1986)
is enacted.''
(Section 7505(d)(1) of Pub. L. 101-239 provided that: ''For purposes
of sections 8032(d) and 8033(c) of the Omnibus Budget Reconciliation Act
of 1986 (Pub. L. 99-509, set out as notes above and under section 9509
of this title), the commencement date is January 1, 1990.'')
Section 511(c) of Pub. L. 99-499 provided that: ''The amendments
made by this section (amending this section and repealing section 9653
of Title 42, The Public Health and Welfare) shall take effect on January
1, 1987.''
Section 512(d) of Pub. L. 99-499 provided that: ''The amendments
made by this section (amending this section and section 4612 of this
title) shall take effect on January 1, 1987.''
Section 211(c) of Pub. L. 96-510 provided that: ''The amendments
made by this section (enacting subchapters A and B of this chapter)
shall take effect on April 1, 1981.''
For short title of title II of Pub. L. 96-510 as the ''Hazardous
Substance Response Revenue Act of 1980'', see Short Title of 1980
Amendment note, set out under section 1 of this title.
26 USC 4612. Definitions and special rules
TITLE 26 -- INTERNAL REVENUE CODE
(a) Definitions
For purposes of this subchapter --
(1) Crude oil
The term ''crude oil'' includes crude oil condensates and natural
gasoline.
(2) Domestic crude oil
The term ''domestic crude oil'' means any crude oil produced from a
well located in the United States.
(3) Petroleum product
The term ''petroleum product'' includes crude oil.
(4) United States
(A) In general
The term ''United States'' means the 50 States, the District of
Columbia, the Commonwealth of Puerto Rico, any possession of the United
States, the Commonwealth of the Northern Mariana Islands, and the Trust
Territory of the Pacific Islands.
(B) United States includes continental shelf areas
The principles of section 638 shall apply for purposes of the term
''United States''.
(C) United States includes foreign trade zones
The term ''United States'' includes any foreign trade zone of the
United States.
(5) United States refinery
The term ''United States refinery'' means any facility in the United
States at which crude oil is refined.
(6) Refineries which produce natural gasoline
In the case of any United States refinery which produces natural
gasoline from natural gas, the gasoline so produced shall be treated as
received at such refinery at the time so produced.
(7) Premises
The term ''premises'' has the same meaning as when used for purposes
of determining gross income from the property under section 613.
(8) Barrel
The term ''barrel'' means 42 United States gallons.
(9) Fractional part of barrel
In the case of a fraction of a barrel, the tax imposed by section
4611 shall be the same fraction of the amount of such tax imposed on a
whole barrel.
(b) Only 1 tax imposed with respect to any product
No tax shall be imposed by section 4611 with respect to any petroleum
product if the person who would be liable for such tax establishes that
a prior tax imposed by such section has been imposed with respect to
such product.
(c) Credit where crude oil returned to pipeline
Under regulations prescribed by the Secretary, if an operator of a
United States refinery --
(1) removes crude oil from a pipeline, and
(2) returns a portion of such crude oil into a stream of other crude
oil in the same pipeline,
there shall be allowed as a credit against the tax imposed by section
4611 to such operator an amount equal to the product of the rate of tax
imposed by section 4611 on the crude oil so removed by such operator and
the number of barrels of crude oil returned by such operator to such
pipeline. Any crude oil so returned shall be treated for purposes of
this subchapter as crude oil on which no tax has been imposed by section
4611.
(d) Credit against portion of tax attributable to oil spill rate
There shall be allowed as a credit against so much of the tax imposed
by section 4611 as is attributable to the Oil Spill Liability Trust Fund
financing rate for any period an amount equal to the excess of --
(1) the sum of --
(A) the aggregate amounts paid by the taxpayer before January 1,
1987, into the Deepwater Port Liability Trust Fund and the Offshore Oil
Pollution Compensation Fund, and
(B) the interest accrued on such amounts before such date, over
(2) the amount of such payments taken into account under this
subsection for all prior periods.
The preceding sentence shall also apply to amounts paid by the
taxpayer into the Trans-Alaska Pipeline Liability Fund to the extent of
amounts transferred from such Fund into the Oil Spill Liability Trust
Fund. For purposes of this subsection, all taxpayers which would be
members of the same affiliated group (as defined in section 1504(a)) if
section 1504(a)(2) were applied by substituting ''100 percent'' for ''80
percent'' shall be treated as 1 taxpayer.
(e) Income tax credit for unused payments into Trans-Alaska Pipeline
Liability Fund
(1) In general
For purposes of section 38, the current year business credit shall
include the credit determined under this subsection.
(2) Determination of credit
(A) In general
The credit determined under this subsection for any taxable year is
an amount equal to the aggregate credit which would be allowed to the
taxpayer under subsection (d) for amounts paid into the Trans-Alaska
Pipeline Liability Fund had the Oil Spill Liability Trust Fund financing
rate not ceased to apply.
(B) Limitation
(i) In general
The amount of the credit determined under this subsection for any
taxable year with respect to any taxpayer shall not exceed the excess of
--
(I) the amount determined under clause (ii), over
(II) the aggregate amount of the credit determined under this
subsection for prior taxable years with respect to such taxpayer.
(ii) Overall limitation
The amount determined under this clause with respect to any taxpayer
is the excess of --
(I) the aggregate amount of credit which would have been allowed
under subsection (d) to the taxpayer for periods before the termination
date specified in section 4611(f)(1), if amounts in the Trans-Alaska
Pipeline Liability Fund which are actually transferred into the Oil
Spill Liability Fund were tranferred on January 1, 1990, and the Oil
Spill Liability Trust Fund financing rate did not terminate before such
termination date, over
(II) the aggregate amount of the credit allowed under subsection (d)
to the taxpayer.
(3) Cost of income tax credit borne by Trust Fund
(A) In general
The Secretary shall from time to time transfer from the Oil Spill
Liability Trust Fund to the general fund of the Treasury amounts equal
to the credits allowed by reason of this subsection.
(B) Trust Fund balance may not be reduced below $1,000,000,000
Transfers may be made under subparagraph (A) only to the extent that
the unobligated balance of the Oil Spill Liability Trust Fund exceeds
$1,000,000,000. If any transfer is not made by reason of the preceding
sentence, such transfer shall be made as soon as permitted under such
sentence.
(4) No carryback
No portion of the unused business credit for any taxable year which
is attributable to the credit determined under this subsection may be
carried to a taxable year beginning on or before the date of the
enactment of this paragraph.
(f) Disposition of revenues from Puerto Rico and the Virgin Islands
The provisions of subsections (a)(3) and (b)(3) of section 7652 shall
not apply to any tax imposed by section 4611.
(Added Pub. L. 96-510, title II, 211(a), Dec. 11, 1980, 94 Stat.
2798; amended Pub. L. 99-499, title V, 512(c), Oct. 17, 1986, 100
Stat. 1761; Pub. L. 99-509, title VIII, 8032(b), Oct. 21, 1986, 100
Stat. 1957; Pub. L. 101-239, title VII, 7505(c), Dec. 19, 1989, 103
Stat. 2363; Pub. L. 101-380, title IX, 9002, Aug. 18, 1990, 104 Stat.
574; Pub. L. 102-486, title XIX, 1922(a), Oct. 24, 1992, 106 Stat.
3028.)
The date of the enactment of this paragraph, referred to in subsec.
(e)(4), is the date of the enactment of Pub. L. 102-486, which was
approved Oct. 24, 1992.
Amendments by Pub. L. 99-509, title VIII, 8031(c), Oct. 21, 1986,
100 Stat. 1955, to subsecs. (c) and (d) of this section were not
executed to text pursuant to Pub. L. 99-509, title VIII, 8031(e)(2),
which provided that the amendments made by section 8031 shall not take
effect if the Superfund Amendments and Reauthorization Act of 1986 is
enacted. The Superfund Amendments and Reauthorization Act of 1986 was
enacted as Pub. L. 99-499, approved Oct. 17, 1986.
1992 -- Subsecs. (e), (f). Pub. L. 102-486 added subsec. (e) and
redesignated former subsec. (e) as (f).
1990 -- Subsec. (d). Pub. L. 101-380 substituted at end ''For
purposes of this subsection, all taxpayers which would be members of the
same affiliated group (as defined in section 1504(a)) if section
1504(a)(2) were applied by substituting '100 percent' for '80 percent'
shall be treated as 1 taxpayer.'' for ''Amounts may be transferred from
the Trans-Alaska Pipeline Liability Fund into the Oil Spill Liability
Trust Fund only to the extent the administrators of the Trans-Alaska
Pipeline Liability Fund determine that such amounts are not needed to
satisfy claims against such Fund.''
1989 -- Subsec. (d). Pub. L. 101-239 inserted at end ''The preceding
sentence shall also apply to amounts paid by the taxpayer into the
Trans-Alaska Pipeline Liability Fund to the extent of amounts
transferred from such Fund into the Oil Spill Liability Trust Fund.
Amounts may be transferred from the Trans-Alaska Pipeline Liability Fund
into the Oil Spill Liability Trust Fund only to the extent the
administrators of the Trans-Alaska Pipeline Liability Fund determine
that such amounts are not needed to satisfy claims against such Fund.''
1986 -- Subsec. (c). Pub. L. 99-499 added subsec. (c) and
redesignated former subsec. (c) as (d).
Subsec. (d). Pub. L. 99-509 added subsec. (d) and redesignated
former subsec. (d) as (e).
Pub. L. 99-499 redesignated former subsec. (c) as (d).
Subsec. (e). Pub. L. 99-509 redesignated former subsec. (d) as (e).
Section 1922(b) of Pub. L. 102-486 provided that: ''The amendments
made by this section (amending this section) shall apply to taxable
years beginning after the date of the enactment of this Act (Oct. 24,
1992).''
Amendment by Pub. L. 101-380 applicable to incidents occurring after
Aug. 18, 1990, see section 1020 of Pub. L. 101-380, set out as an
Effective Date note under section 2701 of Title 33, Navigation and
Navigable Waters.
Amendment by Pub. L. 99-509 effective on commencement date as
defined in section 4611(f)(2), see section 8032(d) of Pub. L. 99-509,
set out as a note under section 4611 of this title.
Amendment by Pub. L. 99-499 effective Jan. 1, 1987, see section
512(d) of Pub. L. 99-499, set out as a note under section 4611 of this
title.
26 USC Subchapter B -- Tax on Certain Chemicals
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4661. Imposition of tax.
4662. Definitions and special rules.
26 USC 4661. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
There is hereby imposed a tax on any taxable chemical sold by the
manufacturer, producer, or importer thereof.
(b) Amount of tax
The amount of the tax imposed by subsection (a) shall be determined
in accordance with the following table:
The tax is the following In the case of: amount per ton
Acetylene $4.87
Benzene 4.87
Butane 4.87
Butylene 4.87
Butadiene 4.87
Ethylene 4.87
Methane 3.44
Naphthalene 4.87
Propylene 4.87
Toluene 4.87
Xylene 4.87
Ammonia 2.64
Antimony 4.45
Antimony trioxide 3.75
Arsenic 4.45
Arsenic trioxide 3.41
Barium sulfide 2.30
Bromine 4.45
Cadmium 4.45
Chlorine 2.70
Chromium 4.45
Chromite 1.52
Potassium dichromate 1.69
Sodium dichromate 1.87
Cobalt 4.45
Cupric sulfate 1.87
Cupric oxide 3.59
Cuprous oxide 3.97
Hydrochloric acid 0.29
Hydrogen fluoride 4.23
Lead oxide 4.14
Mercury 4.45
Nickel 4.45
Phosphorus 4.45
Stannous chloride 2.85
Stannic chloride 2.12
Zinc chloride 2.22
Zinc sulfate 1.90
Potassium hydroxide 0.22
Sodium hydroxide 0.28
Sulfuric acid 0.26
Nitric acid 0.24
For periods before 1992, the item relating to xylene in the preceding
table shall be applied by substituting ''10.13'' for ''4.87''.
(c) Termination
No tax shall be imposed under this section during any period during
which the Hazardous Substance Superfund financing rate under section
4611 does not apply.
(Added Pub. L. 96-510, title II, 211(a), Dec. 11, 1980, 94 Stat.
2798; amended Pub. L. 99-499, title V, 513(a), Oct. 17, 1986, 100
Stat. 1761; Pub. L. 99-509, title VIII, 8032(c)(3), Oct. 21, 1986, 100
Stat. 1958.)
Amendment by Pub. L. 99-509, title VIII, 8031(d)(2), Oct. 21,
1986, 100 Stat. 1956, to subsec. (c) of this section was not executed
to text pursuant to Pub. L. 99-509, title VIII, 8031(e)(2), which
provided that the amendments made by section 8031 shall not take effect
if the Superfund Amendments and Reauthorization Act of 1986 is enacted.
The Superfund Amendments and Reauthorization Act of 1986 was enacted as
Pub. L. 99-499, approved Oct. 17, 1986.
1986 -- Subsec. (b). Pub. L. 99-499 inserted at end ''For periods
before 1992, the item relating to xylene in the preceding table shall be
applied by substituting '10.13' for '4.87'.''
Subsec. (c). Pub. L. 99-509 substituted ''the Hazardous Substance
Superfund financing rate under section 4611 does not apply'' for ''no
tax is imposed under section 4611(a)''.
Amendment by Pub. L. 99-509 effective on commencement date as
defined in section 4611(f)(2), see section 8032(d) of Pub. L. 99-509,
set out as a note under section 4611 of this title.
Section 513(h) of Pub. L. 99-499, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) In general. -- Except as otherwise provided in this subsection,
the amendments made by this section (amending sections 4661 and 4662 of
this title) shall take effect on January 1, 1987.
''(2) Repeal of tax on xylene for periods before october 1, 1985. --
''(A) Refund of tax previously imposed. --
''(i) In general. -- In the case of any tax imposed by section 4661
of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) on the sale
or use of xylene before October 1, 1985, such tax (including interest,
additions to tax, and additional amounts) shall not be assessed, and if
assessed, the assessment shall be abated, and if collected shall be
credited or refunded (with interest) as an overpayment.
''(ii) Condition to allowance. -- Clause (i) shall not apply to a
sale of xylene unless the person who (but for clause (i)) would be
liable for the tax imposed by section 4661 on such sale meets
requirements similar to the requirements of paragraph (1) of section
6416(a) of such Code. For purposes of the preceding sentence,
subparagraph (A) of section 6416(a)(1) of such Code shall be applied
without regard to the material preceding 'has not collected'.
''(B) Waiver of statute of limitations. -- If on the date of the
enactment of this Act (Oct. 17, 1986) (or at any time within 1 year
after such date of enactment) refund or credit of any overpayment of tax
resulting from the application of subparagraph (A) is barred by any law
or rule of law, refund or credit of such overpayment shall,
nevertheless, be made or allowed if claim therefor is filed before the
date 1 year after the date of the enactment of this Act.
''(C) Xylene to include isomers. -- For purposes of this paragraph,
the term 'xylene' shall include any isomer of xylene whether or not
separated.
''(3) Inventory exchanges. --
''(A) In general. -- Except as otherwise provided in this paragraph,
the amendment made by subsection (f) (amending section 4662 of this
title) shall apply as if included in the amendments made by section 211
of the Hazardous Substance Response Revenue Act of 1980 (Pub. L. 96-510,
enacting this chapter).
''(B) Recipient must agree to treatment as manufacturer. -- In the
case of any inventory exchange before January 1, 1987, the amendment
made by subsection (f) shall apply only if the person receiving the
chemical from the manufacturer, producer, or importer in the exchange
agrees to be treated as the manufacturer, producer, or importer of such
chemical for purposes of subchapter B of chapter 38 of the Internal
Revenue Code of 1986.
''(C) Exception where manufacturer paid tax. -- In the case of any
inventory exchange before January 1, 1987, the amendment made by
subsection (f) shall not apply if the manufacturer, producer, or
importer treated such exchange as a sale for purposes of section 4661 of
such Code and paid the tax imposed by such section.
''(D) Registration requirements. -- Section 4662(c)(2)(B) of such
Code (as added by subsection (f)) shall apply to exchanges made after
December 31, 1986.
''(4) Exports of taxable substances. -- Subclause (II) of section
4662(e)(2)(A)(ii) of such Code (as added by this section) shall not
apply to the export of any taxable substance (as defined in section
4672(a) of such Code) before January 1, 1989.
''(5) Sales of intermediate hydrocarbon streams. --
''(A) In general. -- Except as otherwise provided in this paragraph,
the amendment made by subsection (g) (amending section 4662 of this
title) shall apply as if included in the amendments made by section 211
of the Hazardous Substances Response Revenue Act of 1980.
''(B) Purchaser must agree to treatment as manufacturer. -- In the
case of any sale before January 1, 1987, of any intermediate hydrocarbon
stream, the amendment made by subsection (g) shall apply only if the
purchaser agrees to be treated as the manufacturer, producer, or
importer for purposes of subchapter B of chapter 38 of such Code.
''(C) Exception where manufacturer paid tax. -- In the case of any
sale before January 1, 1987, of any intermediate hydrocarbon stream, the
amendment made by subsection (g) shall not apply if the manufacturer,
producer, or importer of such stream paid the tax imposed by section
4661 with respect to such sale on all taxable chemicals contained in
such stream.
''(D) Registration requirements. -- Section 4662(b)(10)(C) of such
Code (as added by subsection (g)) shall apply to exchanges made after
December 31, 1986.''
Subchapter effective Apr. 1, 1981, see section 211(c) of Pub. L.
96-510, set out as a note under section 4611 of this title.
26 USC 4662. Definitions and special rules
TITLE 26 -- INTERNAL REVENUE CODE
(a) Definitions
For purposes of this subchapter --
(1) Taxable chemical
Except as provided in subsection (b), the term ''taxable chemical''
means any substance --
(A) which is listed in the table under section 4661(b), and
(B) which is manufactured or produced in the United States or entered
into the United States for consumption, use, or warehousing.
(2) United States
The term ''United States'' has the meaning given such term by section
4612(a)(4).
(3) Importer
The term ''importer'' means the person entering the taxable chemical
for consumption, use, or warehousing.
(4) Ton
The term ''ton'' means 2,000 pounds. In the case of any taxable
chemical which is a gas, the term ''ton'' means the amount of such gas
in cubic feet which is the equivalent of 2,000 pounds on a molecular
weight basis.
(5) Fractional part of ton
In the case of a fraction of a ton, the tax imposed by section 4661
shall be the same fraction of the amount of such tax imposed on a whole
ton.
(b) Exceptions; other special rules
For purposes of this subchapter --
(1) Methane or butane used as a fuel
Under regulations prescribed by the Secretary, methane or butane
shall be treated as a taxable chemical only if it is used otherwise than
as a fuel or in the manufacture or production of any motor fuel, diesel
fuel, aviation fuel, or jet fuel (and, for purposes of section 4661(a),
the person so using it shall be treated as the manufacturer thereof).
(2) Substances used in the production of fertilizer
(A) In general
In the case of nitric acid, sulfuric acid, ammonia, or methane used
to produce ammonia which is a qualified fertilizer substance, no tax
shall be imposed under section 4661(a).
(B) Qualified fertilizer substance
For purposes of this section, the term ''qualified fertilizer
substance'' means any substance --
(i) used in a qualified fertilizer use by the manufacturer, producer,
or importer,
(ii) sold for use by any purchaser in a qualified fertilizer use, or
(iii) sold for resale by any purchaser for use, or resale for
ultimate use, in a qualified fertilizer use.
(C) Qualified fertilizer use
The term ''qualified fertilizer use'' means any use in the
manufacture or production of fertilizer or for direct application as a
fertilizer.
(D) Taxation of nonqualified sale or use
For purposes of section 4661(a), if no tax was imposed by such
section on the sale or use of any chemical by reason of subparagraph
(A), the first person who sells or uses such chemical other than in a
sale or use described in subparagraph (A) shall be treated as the
manufacturer of such chemical.
(3) Sulfuric acid produced as a byproduct of air pollution control
In the case of sulfuric acid produced solely as a byproduct of and on
the same site as air pollution control equipment, no tax shall be
imposed under section 4661.
(4) Substances derived from coal
For purposes of this subchapter, the term ''taxable chemical'' shall
not include any substance to the extent derived from coal.
(5) Substances used in the production of motor fuel, etc.
(A) In general
In the case of any chemical described in subparagraph (D) which is a
qualified fuel substance, no tax shall be imposed under section 4661(a).
(B) Qualified fuel substance
For purposes of this section, the term ''qualified fuel substance''
means any substance --
(i) used in a qualified fuel use by the manufacturer, producer, or
importer,
(ii) sold for use by any purchaser in a qualified fuel use, or
(iii) sold for resale by any purchaser for use, or resale for
ultimate use, in a qualified fuel use.
(C) Qualified fuel use
For purposes of this subsection, the term ''qualified fuel use''
means --
(i) any use in the manufacture or production of any motor fuel,
diesel fuel, aviation fuel, or jet fuel, or
(ii) any use as such a fuel.
(D) Chemicals to which paragraph applies
For purposes of this subsection, the chemicals described in this
subparagraph are acetylene, benzene, butylene, butadiene, ethylene,
naphthalene, propylene, toluene, and xylene.
(E) Taxation of nonqualified sale or use
For purposes of section 4661(a), if no tax was imposed by such
section on the sale or use of any chemical by reason of subparagraph
(A), the first person who sells or uses such chemical other than in a
sale or use described in subparagraph (A) shall be treated as the
manufacturer of such chemical.
(6) Substance having transitory presence during refining process,
etc.
(A) In general
No tax shall be imposed under section 4661(a) on any taxable chemical
described in subparagraph (B) by reason of the transitory presence of
such chemical during any process of smelting, refining, or otherwise
extracting any substance not subject to tax under section 4661(a).
(B) Chemicals to which subparagraph (A) applies
The chemicals described in this subparagraph are --
(i) barium sulfide, cupric sulfate, cupric oxide, cuprous oxide, lead
oxide, zinc chloride, and zinc sulfate, and
(ii) any solution or mixture containing any chemical described in
clause (i).
(C) Removal treated as use
Nothing in subparagraph (A) shall be construed to apply to any
chemical which is removed from or ceases to be part of any smelting,
refining, or other extraction process.
(7) Special rule for xylene
Except in the case of any substance imported into the United States
or exported from the United States, the term ''xylene'' does not include
any separated isomer of xylene.
(8) Recycled chromium, cobalt, and nickel
(A) In general
No tax shall be imposed under section 4661(a) on any chromium,
cobalt, or nickel which is diverted or recovered in the United States
from any solid waste as part of a recycling process (and not as part of
the original manufacturing or production process).
(B) Exemption not to apply while corrective action uncompleted
Subparagraph (A) shall not apply during any period that required
corrective action by the taxpayer at the unit at which the recycling
occurs is uncompleted.
(C) Required corrective action
For purposes of subparagraph (B), required corrective action shall be
treated as uncompleted during the period --
(i) beginning on the date that the corrective action is required by
the Administrator or an authorized State pursuant to --
(I) a final permit under section 3005 of the Solid Waste Disposal Act
or a final order under section 3004 or 3008 of such Act, or
(II) a final order under section 106 of the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, and
(ii) ending on the date the Administrator or such State (as the case
may be) certifies to the Secretary that such corrective action has been
completed.
(D) Special rule for groundwater treatment
In the case of corrective action requiring groundwater treatment,
such action shall be treated as completed as of the close of the 10-year
period beginning on the date such action is required if such treatment
complies with the permit or order applicable under subparagraph (C)(i)
throughout such period. The preceding sentence shall cease to apply
beginning on the date such treatment ceases to comply with such permit
or order.
(E) Solid waste
For purposes of this paragraph, the term ''solid waste'' has the
meaning given such term by section 1004 of the Solid Waste Disposal Act,
except that such term shall not include any byproduct, coproduct, or
other waste from any process of smelting, refining, or otherwise
extracting any metal.
(9) Substances used in the production of animal feed
(A) In general
In the case of --
(i) nitric acid,
(ii) sulfuric acid,
(iii) ammonia, or
(iv) methane used to produce ammonia,
which is a qualified animal feed substance, no tax shall be imposed
under section 4661(a).
(B) Qualified animal feed substance
For purposes of this section, the term ''qualified animal feed
substance'' means any substance --
(i) used in a qualified animal feed use by the manufacturer,
producer, or importer,
(ii) sold for use by any purchaser in a qualified animal feed use, or
(iii) sold for resale by any purchaser for use, or resale for
ultimate use, in a qualified animal feed use.
(C) Qualified animal feed use
The term ''qualified animal feed use'' means any use in the
manufacture or production of animal feed or animal feed supplements, or
of ingredients used in animal feed or animal feed supplements.
(D) Taxation of nonqualified sale or use
For purposes of section 4661(a), if no tax was imposed by such
section on the sale or use of any chemical by reason of subparagraph
(A), the 1st person who sells or uses such chemical other than in a sale
or use described in subparagraph (A) shall be treated as the
manufacturer of such chemical.
(10) Hydrocarbon streams containing mixtures of organic taxable
chemicals
(A) In general
No tax shall be imposed under section 4661(a) on any organic taxable
chemical while such chemical is part of an intermediate hydrocarbon
stream containing one or more organic taxable chemicals.
(B) Removal, etc., treated as use
For purposes of this part, if any organic taxable chemical on which
no tax was imposed by reason of subparagraph (A) is isolated, extracted,
or otherwise removed from, or ceases to be part of, an intermediate
hydrocarbon stream --
(i) such isolation, extraction, removal, or cessation shall be
treated as use by the person causing such event, and
(ii) such person shall be treated as the manufacturer of such
chemical.
(C) Registration requirement
Subparagraph (A) shall not apply to any sale of any intermediate
hydrocarbon stream unless the registration requirements of clauses (i)
and (ii) of subsection (c)(2)(B) are satisfied.
(D) Organic taxable chemical
For purposes of this paragraph, the term ''organic taxable chemical''
means any taxable chemical which is an organic substance.
(c) Use and certain exchanges by manufacturer, etc.
(1) Use treated as sale
Except as provided in subsections (b) and (e), if any person
manufactures, produces, or imports any taxable chemical and uses such
chemical, then such person shall be liable for tax under section 4661 in
the same manner as if such chemical were sold by such person.
(2) Special rules for inventory exchanges
(A) In general
Except as provided in this paragraph, in any case in which a
manufacturer, producer, or importer of a taxable chemical exchanges such
chemical as part of an inventory exchange with another person --
(i) such exchange shall not be treated as a sale, and
(ii) such other person shall, for purposes of section 4661, be
treated as the manufacturer, producer, or importer of such chemical.
(B) Registration requirement
Subparagraph (A) shall not apply to any inventory exchange unless --
(i) both parties are registered with the Secretary as manufacturers,
producers, or importers of taxable chemicals, and
(ii) the person receiving the taxable chemical has, at such time as
the Secretary may prescribe, notified the manufacturer, producer, or
importer of such person's registration number and the internal revenue
district in which such person is registered.
(C) Inventory exchange
For purposes of this paragraph, the term ''inventory exchange'' means
any exchange in which 2 persons exchange property which is, in the hands
of each person, property described in section 1221(1).
(d) Refund or credit for certain uses
(1) In general
Under regulations prescribed by the Secretary, if --
(A) a tax under section 4661 was paid with respect to any taxable
chemical, and
(B) such chemical was used by any person in the manufacture or
production of any other substance which is a taxable chemical,
then an amount equal to the tax so paid shall be allowed as a credit
or refund (without interest) to such person in the same manner as if it
were an overpayment of tax imposed by such section. In any case to
which this paragraph applies, the amount of any such credit or refund
shall not exceed the amount of tax imposed by such section on the other
substance manufactured or produced (or which would have been imposed by
such section on such other substance but for subsection (b) or (e) of
this section).
(2) Use as fertilizer
Under regulations prescribed by the Secretary, if --
(A) a tax under section 4661 was paid with respect to nitric acid,
sulfuric acid, ammonia, or methane used to make ammonia without regard
to subsection (b)(2), and
(B) any person uses such substance as a qualified fertilizer
substance,
then an amount equal to the excess of the tax so paid over the tax
determined with regard to subsection (b)(2) shall be allowed as a credit
or refund (without interest) to such person in the same manner as if it
were an overpayment of tax imposed by this section.
(3) Use as qualified fuel
Under regulations prescribed by the Secretary, if --
(A) a tax under section 4661 was paid with respect to any chemical
described in subparagraph (D) of subsection (b)(5) without regard to
subsection (b)(5), and
(B) any person uses such chemical as a qualified fuel substance,
then an amount equal to the excess of the tax so paid over the tax
determined with regard to subsection (b)(5) shall be allowed as a credit
or refund (without interest) to such person in the same manner as if it
were an overpayment of tax imposed by this section.
(4) Use in the production of animal feed
Under regulations prescribed by the Secretary, if --
(A) a tax under section 4661 was paid with respect to nitric acid,
sulfuric acid, ammonia, or methane used to produce ammonia, without
regard to subsection (b)(9), and
(B) any person uses such substance as a qualified animal feed
substance,
then an amount equal to the excess of the tax so paid over the tax
determined with regard to subsection (b)(9) shall be allowed as a credit
or refund (without interest) to such person in the same manner as if it
were an overpayment of tax imposed by this section.
(e) Exemption for exports of taxable chemicals
(1) Tax-free sales
(A) In general
No tax shall be imposed under section 4661 on the sale by the
manufacturer or producer of any taxable chemical for export, or for
resale by the purchaser to a second purchaser for export.
(B) Proof of export required
Rules similar to the rules of section 4221(b) shall apply for
purposes of subparagraph (A).
(2) Credit or refund where tax paid
(A) In general
Except as provided in subparagraph (B), if --
(i) tax under section 4661 was paid with respect to any taxable
chemical, and
(ii)(I) such chemical was exported by any person, or
(II) such chemical was used as a material in the manufacture or
production of a substance which was exported by any person and which, at
the time of export, was a taxable substance (as defined in section
4672(a)),
credit or refund (without interest) of such tax shall be allowed or
made to the person who paid such tax.
(B) Condition to allowance
No credit or refund shall be allowed or made under subparagraph (A)
unless the person who paid the tax establishes that he --
(i) has repaid or agreed to repay the amount of the tax to the person
who exported the taxable chemical or taxable substance (as so defined),
or
(ii) has obtained the written consent of such exporter to the
allowance of the credit or the making of the refund.
(3) Refunds directly to exporter
The Secretary shall provide, in regulations, the circumstances under
which a credit or refund (without interest) of the tax under section
4661 shall be allowed or made to the person who exported the taxable
chemical or taxable substance, where --
(A) the person who paid the tax waives his claim to the amount of
such credit or refund, and
(B) the person exporting the taxable chemical or taxable substance
provides such information as the Secretary may require in such
regulations.
(4) Regulations
The Secretary shall prescribe such regulations as may be necessary to
carry out the purposes of this subsection.
(f) Disposition of revenues from Puerto Rico and the Virgin Islands
The provisions of subsections (a)(3) and (b)(3) of section 7652 shall
not apply to any tax imposed by section 4661.
(Added Pub. L. 96-510, title II, 211(a), Dec. 11, 1980, 94 Stat.
2799; amended Pub. L. 98-369, div. A, title X, 1019(a)-(c), July 18,
1984, 98 Stat. 1022-1024; Pub. L. 99-499, title V, 513(b)-(g), Oct.
17, 1986, 100 Stat. 1762-1765; Pub. L. 100-647, title II, 2001(a),
Nov. 10, 1988, 102 Stat. 3593.)
Sections 3005, 3004, and 3008 of the Solid Waste Disposal Act,
referred to in subsec. (b)(8)(C)(i)(I), and section 1004 of that Act,
referred to in subsec. (b)(8)(E), are classified to sections 6925,
6924, 6928, and 6903, respectively, of Title 42, The Public Health and
Welfare.
Section 106 of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, referred to in subsec.
(b)(8)(C)(i)(II), is classified to section 9606 of Title 42.
1988 -- Subsec. (b)(10)(A). Pub. L. 100-647, 2001(a)(2),
substituted ''one or more'' for ''a mixture of''.
Subsec. (e)(3), (4). Pub. L. 100-647, 2001(a)(1), added par. (3)
and redesignated former par. (3) as (4).
1986 -- Subsec. (b)(7). Pub. L. 99-499, 513(c), added par. (7).
Subsec. (b)(8). Pub. L. 99-499, 513(d), added par. (8).
Subsec. (b)(9). Pub. L. 99-499, 513(e)(1), added par. (9).
Subsec. (b)(10). Pub. L. 99-499, 513(g), added par. (10).
Subsec. (c). Pub. L. 99-499, 513(f), amended subsec. (c) generally.
Prior to amendment, subsec. (c) read as follows: ''Except as provided
in subsection (b), if any person manufactures, produces, or imports a
taxable chemical and uses such chemical, then such person shall be
liable for tax under section 4661 in the same manner as if such chemical
were sold by such person.''
Subsec. (d)(1). Pub. L. 99-499, 513(b)(2), substituted ''which is a
taxable chemical'' for ''the sale of which by such person would be
taxable under such section'', in subpar. (B), and substituted ''imposed
by such section on the other substance manufactured or produced (or
which would have been imposed by such section on such other substance
but for subsection (b) or (e) of this section)'' for ''imposed by such
section on the other substance manufactured or produced'' in last
sentence.
Subsec. (d)(4). Pub. L. 99-499, 513(e)(2), added par. (4).
Subsecs. (e), (f). Pub. L. 99-499, 513(b)(1), added subsec. (e)
and redesignated former subsec. (e) as (f).
1984 -- Subsec. (b)(1). Pub. L. 98-369, 1019(a)(3), inserted ''or
in the manufacture or production of any motor fuel, diesel fuel,
aviation fuel, or jet fuel''.
Subsec. (b)(2)(A). Pub. L. 98-369, 1019(b)(2)(A), substituted
''qualified fertilizer substance'' for ''qualified substance''.
Subsec. (b)(2)(B) to (D). Pub. L. 98-369, 1019(b)(1), inserted
''fertilizer'' after ''qualified'' wherever appearing in subpar. (B),
inserted ''fertilizer'' after ''Qualified'' in subpar. (C) heading and
in text substituted ''The term 'qualified fertilizer use' means any use
in the manufacture or production of fertilizer or for direct application
as a fertilizer'' for ''For purposes of this subsection, the term
'qualified use' means any use in the manufacture or production of a
fertilizer'', and added subpar. (D).
Subsec. (b)(5), (6). Pub. L. 98-369, 1019(a)(1), added pars. (5)
and (6).
Subsec. (c). Pub. L. 98-369, 1019(c), substituted ''Except as
provided in subsection (b), if'' for ''If''.
Subsec. (d)(2)(B). Pub. L. 98-369, 1019(b)(2)(B), inserted
''fertilizer'' after ''qualified'' and struck out '', or sells such
substance for use,'' after ''such substance''.
Subsec. (d)(3). Pub. L. 98-369, 1019(a)(2), added par. (3).
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Superfund Revenue Act
of 1986, Pub. L. 99-499, title V, to which it relates, see section
2001(e) of Pub. L. 100-647, set out as a note under section 56 of this
title.
Amendment by Pub. L. 99-499 effective Jan. 1, 1987, except as
otherwise provided, see section 513(h) of Pub. L. 99-499, set out as a
note under section 4661 of this title.
Section 1019(d) of Pub. L. 98-369 provided that:
''(1) In general. -- The amendments made by this section (amending
this section) shall take effect as if included in the amendments made by
section 211(a) of the Hazardous Substance Response Revenue Act of 1980
(Pub. L. 96-510, which enacted this section).
''(2) Waiver of limitation. -- If refund or credit of any overpayment
of tax resulting from the application of the amendments made by this
section is prevented at any time before the date which for one year
after the date of the enactment of this Act (July 18, 1984) by the
operation of any law or rule of law (including res judicata), refund or
credit of such overpayment (to the extent attributable to the
application of such amendments) may, nevertheless, be made or allowed if
claim therefor is filed on or before the date which for one year after
the date of the enactment of this Act.''
26 USC Subchapter C -- Tax on Certain Imported Substances
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4671. Imposition of tax.
4672. Definitions and special rules.
A prior subchapter C relating to tax on hazardous wastes, consisting
of sections 4681 and 4682, was repealed by Pub. L. 99-499, title V,
514(a)(1), Oct. 17, 1986, 100 Stat. 1767.
26 USC 4671. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
There is hereby imposed a tax on any taxable substance sold or used
by the importer thereof.
(b) Amount of tax
(1) In general
Except as provided in paragraph (2), the amount of the tax imposed by
subsection (a) with respect to any taxable substance shall be the amount
of the tax which would have been imposed by section 4661 on the taxable
chemicals used as materials in the manufacture or production of such
substance if such taxable chemicals had been sold in the United States
for use in the manufacture or production of such taxable substance.
(2) Rate where importer does not furnish information to Secretary
If the importer does not furnish to the Secretary (at such time and
in such manner as the Secretary shall prescribe) sufficient information
to determine under paragraph (1) the amount of the tax imposed by
subsection (a) on any taxable substance, the amount of the tax imposed
on such taxable substance shall be 5 percent of the appraised value of
such substance as of the time such substance was entered into the United
States for consumption, use, or warehousing.
(3) Authority to prescribe rate in lieu of paragraph (2) rate
The Secretary may prescribe for each taxable substance a tax which,
if prescribed, shall apply in lieu of the tax specified in paragraph (2)
with respect to such substance. The tax prescribed by the Secretary
shall be equal to the amount of tax which would be imposed by subsection
(a) with respect to the taxable substance if such substance were
produced using the predominant method of production of such substance.
(c) Exemptions for substances taxed under sections 4611 and 4661
No tax shall be imposed by this section on the sale or use of any
substance if tax is imposed on such sale or use under section 4611 or
4661.
(d) Tax-free sales, etc. for substances used as certain fuels or in
the production of fertilizer or animal feed
Rules similar to the following rules shall apply for purposes of
applying this section with respect to taxable substances used or sold
for use as described in such rules:
(1) Paragraphs (2), (5), and (9) of section 4662(b) (relating to
tax-free sales of chemicals used as fuel or in the production of
fertilizer or animal feed).
(2) Paragraphs (2), (3), and (4) of section 4662(d) (relating to
refund or credit of tax on certain chemicals used as fuel or in the
production of fertilizer or animal feed).
(e) Termination
No tax shall be imposed under this section during any period during
which the Hazardous Substance Superfund financing rate under section
4611 does not apply.
(Added Pub. L. 99-499, title V, 515(a), Oct. 17, 1986, 100 Stat.
1767; amended Pub. L. 99-509, title VIII, 8032(c)(3), Oct. 21, 1986,
100 Stat. 1958.)
1986 -- Subsec. (e). Pub. L. 99-509 substituted ''the Hazardous
Substance Superfund financing rate under section 4611 does not apply''
for ''no tax is imposed under section 4611(a)''.
Amendment by Pub. L. 99-509 effective on commencement date as
defined in section 4611(f)(2), see section 8032(d) of Pub. L. 99-509,
set out as a note under section 4611 of this title.
Section 515(c) of Pub. L. 99-499 provided that: ''The amendments
made by this section (enacting this subchapter) shall take effect on
January 1, 1989.''
Section 515(d) of Pub. L. 99-499 provided that:
''(1) In general. -- The Secretary of the Treasury or his delegate
shall conduct a study of issues relating to the implementation of --
''(A) the tax imposed by the section 4671 of the Internal Revenue
Code of 1986 (as added by this section), and
''(B) the credit for exports of taxable substances under section
4661(e)(2)(A)(ii)(II) of such Code.
In conducting such study, the Secretary of the Treasury or his
delegate shall consult with the Environmental Protection Agency and the
International Trade Commission.
''(2) Report. -- The report of the study under paragraph (1) shall be
submitted not later than January 1, 1988, to the Committee on Ways and
Means of the House of Representatives and the Committee on Finance of
the Senate.''
26 USC 4672. Definitions and special rules
TITLE 26 -- INTERNAL REVENUE CODE
(a) Taxable substance
For purposes of this subchapter --
(1) In general
The term ''taxable substance'' means any substance which, at the time
of sale or use by the importer, is listed as a taxable substance by the
Secretary for purposes of this subchapter.
(2) Determination of substances on list
A substance shall be listed under paragraph (1) if --
(A) the substance is contained in the list under paragraph (3), or
(B) the Secretary determines, in consultation with the Administrator
of the Environmental Protection Agency and the Commissioner of Customs,
that taxable chemicals constitute more than 50 percent of the weight (or
more than 50 percent of the value) of the materials used to produce such
substance (determined on the basis of the predominant method of
production).
If an importer or exporter of any substance requests that the
Secretary determine whether such substance be listed as a taxable
substance under paragraph (1) or be removed from such listing, the
Secretary shall make such determination within 180 days after the date
the request was filed.
(3) Initial list of taxable substances
(4) Modifications to list
The Secretary shall add to the list under paragraph (3) substances
which meet either the weight or value tests of paragraph (2)(B) and may
remove from such list only substances which meet neither of such tests.
(b) Other definitions
For purposes of this subchapter --
(1) Importer
The term ''importer'' means the person entering the taxable substance
for consumption, use, or warehousing.
(2) Taxable chemicals; United States
The terms ''taxable chemical'' and ''United States'' have the
respective meanings given such terms by section 4662(a).
(c) Disposition of revenues from Puerto Rico and the Virgin Islands
The provisions of subsections (a)(3) and (b)(3) of section 7652 shall
not apply to any tax imposed by section 4671.
(Added Pub. L. 99-499, title V, 515(a), Oct. 17, 1986, 100 Stat.
1768; amended Pub. L. 100-647, title II, 2001(b), Nov. 10, 1988, 102
Stat. 3594.)
1988 -- Subsec. (a)(2). Pub. L. 100-647, 2001(b)(2), inserted at
end ''If an importer or exporter of any substance requests that the
Secretary determine whether such substance be listed as a taxable
substance under paragraph (1) or be removed from such listing, the
Secretary shall make such determination within 180 days after the date
the request was filed.''
Subsec. (a)(2)(B). Pub. L. 100-647, 2001(b)(1), inserted ''(or more
than 50 percent of the value)'' after ''weight''.
Subsec. (a)(4). Pub. L. 100-647, 2001(b)(3), amended par. (4)
generally. Prior to amendment, par. (4) read as follows:
''(A) In general. -- The Secretary may add substances to or remove
substances from the list under paragraph (3) (including items listed by
reason of paragraph (2)) as necessary to carry out the purposes of this
subchapter.
''(B) Authority to add substances to list based on value. -- The
Secretary may, to the extent necessary to carry out the purposes of this
subchapter, add any substance to the list under paragraph (3) if such
substance would be described in paragraph (2)(B) if 'value' were
substituted for 'weight' therein.''
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Superfund Revenue Act
of 1986, Pub. L. 99-499, title V, to which it relates, see section
2001(e) of Pub. L. 100-647, set out as a note under section 56 of this
title.
Section effective Jan. 1, 1989, see section 515(c) of Pub. L.
99-499, set out as a note under section 4671 of this title.
26 USC Subchapter D -- Ozone-Depleting Chemicals, Etc.
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4681. Imposition of tax.
4682. Definitions and special rules.
26 USC 4681. Imposition of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
There is hereby imposed a tax on --
(1) any ozone-depleting chemical sold or used by the manufacturer,
producer, or importer thereof, and
(2) any imported taxable product sold or used by the importer
thereof.
(b) Amount of tax
(1) Ozone-depleting chemicals
(A) In general
The amount of the tax imposed by subsection (a) on each pound of
ozone-depleting chemical shall be an amount equal to --
(i) the base tax amount, multiplied by
(ii) the ozone-depletion factor for such chemical.
(B) Base tax amount
The base tax amount for purposes of subparagraph (A) with respect to
any sale or use during a calendar year before 1996 with respect to any
ozone-depleting chemical is the amount determined under the following
table for such calendar year:
Base tax Calendar year: amount:
1993 3.35
1994 4.35
1995 5.35.
(C) Base tax amount for later years
The base tax amount for purposes of subparagraph (A) with respect to
any sale or use of an ozone-depleting chemical during a calendar year
after the last year specified in the table under subparagraph (B)
applicable to such chemical shall be the base tax amount for such last
year increased by 45 cents for each year after such last year.
(2) Imported taxable product
(A) In general
The amount of the tax imposed by subsection (a) on any imported
taxable product shall be the amount of tax which would have been imposed
by subsection (a) on the ozone-depleting chemicals used as materials in
the manufacture or production of such product if such ozone-depleting
chemicals had been sold in the United States on the date of the sale of
such imported taxable product.
(B) Certain rules to apply
Rules similar to the rules of paragraphs (2) and (3) of section
4671(b) shall apply.
(Added Pub. L. 101-239, title VII, 7506(a), Dec. 19, 1989, 103 Stat.
2364; amended Pub. L. 101-508, title XI, 11203(c), Nov. 5, 1990, 104
Stat. 1388-422; Pub. L. 102-486, title XIX, 1931(a), Oct. 24, 1992,
106 Stat. 3029.)
A prior section 4681, added Pub. L. 96-510, title II, 231(a), Dec.
11, 1980, 94 Stat. 2804, was contained in subchapter C of this chapter
prior to repeal by Pub. L. 99-499, title V, 514(a)(1), (c), Oct. 17,
1986, 100 Stat. 1767, effective Oct. 1, 1983, with provision for
waiver of statute of limitations on claims for overpayment.
1992 -- Subsec. (b)(1)(B). Pub. L. 102-486 amended subpar. (B)
generally, substituting present provisions for former provisions which
provided for base tax amounts in cl. (i) of initially listed chemicals
for 1990 to 1994 and in cl. (ii) of newly listed chemicals for 1991 to
1995.
1990 -- Subsec. (b)(1)(B). Pub. L. 101-508 amended subpar. (B)
generally, designating existing provision as cl. (i), inserting ''with
respect to any ozone-depleting chemical other than a newly listed
chemical (as defined in section 4682(d)(3)(C))'', and adding cl. (ii).
Subsec. (b)(1)(C). Pub. L. 101-508 amended subpar. (C) generally.
Prior to amendment, subpar. (C) read as follows: ''The base tax amount
for purposes of subparagraph (A) with respect to any sale or use during
a calendar year after 1994 shall be the base tax amount for 1994
increased by 45 cents for each year after 1994.''
Section 1931(d) of Pub. L. 102-486 provided that: ''The amendments
made by this section (amending this section and section 4682 of this
title) shall apply to taxable chemicals sold or used on or after January
1, 1993.''
Section 11203(e) of Pub. L. 101-508 provided that: ''The amendments
made by this section (amending this section and section 4682 of this
title) shall take effect on January 1, 1991.''
Section 7506(c) of Pub. L. 101-239 provided that:
''(1) In general. -- The amendments made by this section (enacting
this subchapter) shall take effect on January 1, 1990.
''(2) No deposits required before april 1, 1990. -- No deposit of any
tax imposed by subchapter D of chapter 38 of the Internal Revenue Code
of 1986, as added by this section, shall be required to be made before
April 1, 1990.
''(3) Notification of changes in international agreements. -- The
Secretary of the Treasury or his delegate shall notify the Committee on
Ways and Means of the House of Representatives and the Committee on
Finance of the Senate of changes in the Montreal Protocol and of other
international agreements to which the United States is a signatory
relating to ozone-depleting chemicals.''
26 USC 4682. Definitions and special rules
TITLE 26 -- INTERNAL REVENUE CODE
(a) Ozone-depleting chemical
For purposes of this subchapter --
(1) In general
The term ''ozone-depleting chemical'' means any substance --
(A) which, at the time of the sale or use by the manufacturer,
producer, or importer, is listed as an ozone-depleting chemical in the
table contained in paragraph (2), and
(B) which is manufactured or produced in the United States or entered
into the United States for consumption, use, or warehousing.
(2) Ozone-depleting chemicals
(b) Ozone-depletion factor
For purposes of this subchapter, the term ''ozone-depletion factor''
means, with respect to an ozone-depleting chemical, the factor assigned
to such chemical under the following table:
lOzone-depleting chemical: Ozone-depletion factor:
CFC-11 1.0
CFC-12 1.0
CFC-113 0.8
CFC-114 1.0
CFC-115 0.6
Halon-1211 3.0
Halon-1301 10.0
Halon-2402 6.0
Carbon tetrachloride 1.1
Methyl chloroform 0.1
CFC-13. 1.0
CFC-111 1.0
CFC-112 1.0
CFC-211 1.0
CFC-212 1.0
CFC-213 1.0
CFC-214 1.0
CFC-215 1.0
CFC-216 1.0
CFC-217 1.0.
(c) Imported taxable product
For purposes of this subchapter --
(1) In general
The term ''imported taxable product'' means any product (other than
an ozone-depleting chemical) entered into the United States for
consumption, use, or warehousing if any ozone-depleting chemical was
used as material in the manufacture or production of such product.
(2) De minimis exception
The term ''imported taxable product'' shall not include any product
specified in regulations prescribed by the Secretary as using a de
minimis amount of ozone-depleting chemicals as materials in the
manufacture or production thereof. The preceding sentence shall not
apply to any product in which any ozone-depleting chemical (other than
methyl chloroform) is used for purposes of refrigeration or air
conditioning, creating an aerosol or foam, or manufacturing electronic
components.
(d) Exceptions
(1) Recycling
No tax shall be imposed by section 4681 on any ozone-depleting
chemical which is diverted or recovered in the United States as part of
a recycling process (and not as part of the original manufacturing or
production process).
(2) Use in further manufacture
(A) In general
No tax shall be imposed by section 4681 --
(i) on the use of any ozone-depleting chemical in the manufacture or
production of any other chemical if the ozone-depleting chemical is
entirely consumed in such use,
(ii) on the sale by the manufacturer, producer, or importer of any
ozone-depleting chemical --
(I) for a use by the purchaser which meets the requirements of clause
(i), or
(II) for resale by the purchaser to a second purchaser for a use by
the second purchaser which meets the requirements of clause (i).
Clause (ii) shall apply only if the manufacturer, producer, and
importer, and the 1st and 2d purchasers (if any), meet such registration
requirements as may be prescribed by the Secretary.
(B) Credit or refund
Under regulations prescribed by the Secretary, if --
(i) a tax under this subchapter was paid with respect to any
ozone-depleting chemical, and
(ii) such chemical was used (and entirely consumed) by any person in
the manufacture or production of any other chemical,
then an amount equal to the tax so paid shall be allowed as a credit
or refund (without interest) to such person in the same manner as if it
were an overpayment of tax imposed by section 4681.
(3) Exports
(A) In general
Except as provided in subparagraph (B), rules similar to the rules of
section 4662(e) (other than section 4662(e)(2)(A)(ii)(II)) shall apply
for purposes of this subchapter.
(B) Limit on benefit
(i) In general
The aggregate tax benefit allowable under subparagraph (A) with
respect to ozone-depleting chemicals manufactured, produced, or imported
by any person during a calendar year shall not exceed the sum of --
(I) the amount equal to the 1986 export percentage of the aggregate
tax which would (but for this subsection and subsection (g)) be imposed
by this subchapter with respect to the maximum quantity of
ozone-depleting chemicals permitted to be manufactured or produced by
such person during such calendar year under regulations prescribed by
the Environmental Protection Agency (other than chemicals with respect
to which subclause (II) applies),
(II) the aggregate tax which would (but for this subsection and
subsection (g)) be imposed by this subchapter with respect to any
additional production allowance granted to such person with respect to
ozone-depleting chemicals manufactured or produced by such person during
such calendar year by the Environmental Protection Agency under 40 CFR
Part 82 (as in effect on September 14, 1989), and
(III) the aggregate tax which was imposed by this subchapter with
respect to ozone-depleting chemicals imported by such person during the
calendar year.
(ii) 1986 export percentage
A person's 1986 export percentage is the percentage equal to the
ozone-depletion factor adjusted pounds of ozone-depleting chemicals
manufactured or produced by such person during 1986 which were exported
during 1986, divided by the ozone-depletion factor adjusted pounds of
all ozone-depleting chemicals manufactured or produced by such person
during 1986. The percentage determined under the preceding sentence
shall be computed by taking into account the sum of such person's direct
1986 exports (as determined by the Environmental Protection Agency) and
such person's indirect 1986 exports (as allocated to such person by such
Agency in determining such person's consumption and production rights
for ozone-depleting chemicals).
(C) Separate application of limit for newly listed chemicals
(i) In general
Subparagraph (B) shall be applied separately with respect to newly
listed chemicals and other chemicals.
(ii) Application to newly listed chemicals
In applying subparagraph (B) to newly listed chemicals --
(I) subparagraph (B) shall be applied by substituting ''1989'' for
''1986'' each place it appears, and
(II) clause (i)(II) thereof shall be applied by substituting for the
regulations referred to therein any regulations (whether or not
prescribed by the Secretary) which the Secretary determines are
comparable to the regulations referred to in such clause with respect to
newly listed chemicals.
(iii) Newly listed chemical
For purposes of this subparagraph, the term ''newly listed chemical''
means any substance which appears in the table contained in subsection
(a)(2) below Halon-2402.
(e) Other definitions
For purposes of this subchapter --
(1) Importer
The term ''importer'' means the person entering the article for
consumption, use, or warehousing.
(2) United States
The term ''United States'' has the meaning given such term by section
4612(a)(4).
(f) Special rules
(1) Fractional parts of a pound
In the case of a fraction of a pound, the tax imposed by this
subchapter shall be the same fraction of the amount of such tax imposed
on a whole pound.
(2) Disposition of revenues from Puerto Rico and the Virgin Islands
The provisions of subsections (a)(3) and (b)(3) of section 7652 shall
not apply to any tax imposed by this subchapter.
(g) Phase-in of tax on certain substances
(1) Treatment for 1990
(A) Halons
The term ''ozone-depleting chemical'' shall not include halon-1211,
halon-1301, or halon-2402 with respect to any sale or use during 1990.
(B) Chemicals used in rigid foam insulation
No tax shall be imposed by section 4681 --
(i) on the use during 1990 of any substance in the manufacture of
rigid foam insulation,
(ii) on the sale during 1990 by the manufacturer, producer, or
importer of any substance --
(I) for use by the purchaser in the manufacture of rigid foam
insulation, or
(II) for resale by the purchaser to a second purchaser for such use
by the second purchaser, or
(iii) on the sale or use during 1990 by the importer of any rigid
foam insulation.
Clause (ii) shall apply only if the manufacturer, producer, and
importer, and the 1st and 2d purchasers (if any) meet such registration
requirements as may be prescribed by the Secretary.
(2) Treatment for 1991, 1992, and 1993
(A) Halons
The tax imposed by section 4681 during 1991, 1992, or 1993 by reason
of the treatment of halon-1211, halon-1301, and halon-2402 as
ozone-depleting chemicals shall be the applicable percentage (determined
under the following table) of the amount of such tax which would (but
for this subparagraph) be imposed.
The applicable percentage in the case of sales or use In the case
of: during 1993 is:
Halon-1211 2.49
Halon-1301 0.75
Halon-2402 1.24.
(B) Chemicals used in rigid foam insulation
In the case of a sale or use during 1991, 1992, or 1993 on which no
tax would have been imposed by reason of paragraph (1)(B) had such sale
or use occurred during 1990, the tax imposed by section 4681 shall be
the applicable percentage (determined in accordance with the following
table) of the amount of such tax which would (but for this subparagraph)
be imposed.
In the case of sales or The applicable use during: percentage is:
1991 18
1992 15
1993 7.46.
(3) Overpayments with respect to chemicals used in rigid foam
insulation
If any substance on which tax was paid under this subchapter is used
during 1990, 1991, 1992, or 1993 by any person in the manufacture of
rigid foam insulation, credit or refund (without interest) shall be
allowed to such person an amount equal to the excess of --
(A) the tax paid under this subchapter on such substance, over
(B) the tax (if any) which would be imposed by section 4681 if such
substance were used for such use by the manufacturer, producer, or
importer thereof on the date of its use by such person.
Amounts payable under the preceding sentence with respect to uses
during the taxable year shall be treated as described in section 34(a)
for such year unless claim therefor has been timely filed under this
paragraph.
(4) Chemicals used for sterilizing medical instruments and as
propellants in metered-dose inhalers
(A) Rate of tax
(i) In general
In the case of --
(I) any use during the applicable period of any substance to
sterilize medical instruments or as propellants in metered-dose
inhalers, or
(II) any qualified sale during such period by the manufacturer,
producer, or importer of any substance,
the tax imposed by section 4681 shall be equal to $1.67 per
pound.
(ii) Qualified sale
For purposes of clause (i), the term ''qualified sale'' means any
sale by the manufacturer, producer, or importer of any substance --
(I) for use by the purchaser to sterilize medical instruments or as
propellants in metered-dose inhalers, or
(II) for resale by the purchaser to a 2d purchaser for such use by
the 2d purchaser.
The preceding sentence shall apply only if the manufacturer,
producer, and importer, and the 1st and 2d purchasers (if any) meet such
registration requirements as may be prescribed by the Secretary.
(B) Overpayments
If any substance on which tax was paid under this subchapter is used
during the applicable period by any person to sterilize medical
instruments or as propellants in metered-dose inhalers, credit or refund
without interest shall be allowed to such person in an amount equal to
the excess of --
(i) the tax paid under this subchapter on such substance, or
(ii) the tax (if any) which would be imposed by section 4681 if such
substance were used for such use by the manufacture, producer, or
importer thereof on the date of its use by such person.
Amounts payable under the preceding sentence with respect to uses
during the taxable year shall be treated as described in section 34(a)
for such year unless claim thereof has been timely filed under this
subparagraph.
(C) Applicable period
For purposes of this paragraph, the term ''applicable period'' means
--
(i) 1993 in the case of substances to sterilize medical instruments,
and
(ii) any period after 1992 in the case of propellants in metered-dose
inhalers.
(5) Treatment of methyl chloroform
The tax imposed by section 4681 during 1993 by reason of the
treatment of methyl chloroform as an ozone-depleting chemical shall be
63.02 percent of the amount of such tax which would (but for this
paragraph) be imposed.
(h) Imposition of floor stocks taxes
(1) January 1, 1990, tax
On any ozone-depleting chemical which on January 1, 1990, is held by
any person (other than the manufacturer, producer, or importer thereof)
for sale or for use in further manufacture, there is hereby imposed a
floor stocks tax in an amount equal to the tax which would be imposed by
section 4681 on such chemical if the sale of such chemical by the
manufacturer, producer, or importer thereof had occurred during 1990.
(2) Other tax-increase dates
(A) In general
If, on any tax-increase date, any ozone-depleting chemical is held by
any person (other than the manufacturer, producer, or importer thereof)
for sale or for use in further manufacture, there is hereby imposed a
floor stocks tax.
(B) Amount of tax
The amount of the tax imposed by subparagraph (A) shall be the excess
(if any) of --
(i) the tax which would be imposed under section 4681 on such
substance if the sale of such chemical by the manufacturer, producer, or
importer thereof had occurred on the tax-increase date, over
(ii) the prior tax (if any) imposed by this subchapter on such
substance.
(C) Tax-increase date
For purposes of this paragraph, the term ''tax-increase date'' means
January 1 of any calendar year after 1991.
(3) Due date
The taxes imposed by this subsection on January 1 of any calendar
year shall be paid on or before June 30 of such year.
(4) Application of other laws
All other provisions of law, including penalties, applicable with
respect to the taxes imposed by section 4681 shall apply to the floor
stocks taxes imposed by this subsection.
(Added Pub. L. 101-239, title VII, 7506(a), Dec. 19, 1989, 103 Stat.
2365; amended Pub. L. 101-508, title XI, 11203(a), (b), (d),
11701(g), Nov. 5, 1990, 104 Stat. 1388-421, 1388-422, 1388-508; Pub.
L. 102-486, title XIX, 1931(b), (c), 1932(a)-(c), Oct. 24, 1992, 106
Stat. 3029-3031.)
A prior section 4682, added Pub. L. 96-510, title II, 231(a), Dec.
11, 1980, 94 Stat. 2804, was contained in subchapter C of this chapter
prior to repeal by Pub. L. 99-499, title V, 514(a)(1), (c), Oct. 17,
1986, 100 Stat. 1767, effective Oct. 1, 1983, with provision for
waiver of statute of limitations on claims for overpayment.
1992 -- Subsec. (g)(2)(A). Pub. L. 102-486, 1932(a), in table, for
sales or use during 1993, decreased applicable percentages from 3.3,
1.0, and 1.6 to 2.49, 0.75, and 1.24 in the case of Halon-1211,
Halon-1301, and Halon-2402, respectively, and struck out applicable
percentages for sales or use during 1991 and 1992.
Subsec. (g)(2)(B). Pub. L. 102-486, 1931(b), in table decreased
applicable percentage in the case of sales or use in 1993 from 10 to
7.46.
Subsec. (g)(4), (5). Pub. L. 102-486, 1932(b), (c), added pars.
(4) and (5).
Subsec. (h)(2)(C). Pub. L. 102-486, 1931(c), substituted ''any
calendar year after 1991'' for ''1991, 1992, 1993, and 1994''.
1990 -- Subsecs. (a)(2), (b). Pub. L. 101-508, 11203(a), inserted
items for ''Carbon tetrachloride'' through ''CFC-217'' in tables.
Subsec. (c)(2). Pub. L. 101-508, 11203(d)(1), inserted ''(other than
methyl chloroform)''.
Subsec. (d)(3)(B)(i). Pub. L. 101-508, 11701(g)(1), substituted '',
produced, or imported'' for ''or produced'' in introductory provisions.
Subsec. (d)(3)(B)(i)(I). Pub. L. 101-508, 11701(g)(2), amended
subcl. (I) generally. Prior to amendment, subcl. (I) read as follows:
''the amount equal to the 1986 export percentage of the aggregate tax
imposed by this subchapter with respect to ozone-depleting chemicals
manufactured or produced by such person during such calendar year (other
than chemicals with respect to which subclause (II) applies), and''.
Subsec. (d)(3)(B)(i)(II). Pub. L. 101-508, 11701(g)(3), substituted
''tax which would (but for this subsection and subsection (g)) be
imposed'' for ''tax imposed''.
Subsec. (d)(3)(B)(i)(III). Pub. L. 101-508, 11701(g)(4), added
subcl. (III).
Subsec. (d)(3)(B)(ii). Pub. L. 101-508, 11701(g)(5), substituted
last sentence for former last sentence which read as follows: ''The
percentage determined under the preceding sentence shall be based on
data published by the Environmental Protection Agency.''
Subsec. (d)(3)(C). Pub. L. 101-508, 11203(b), added subpar. (C).
Subsec. (h)(3). Pub. L. 101-508, 11203(d)(2), substituted ''June
30'' for ''April 1''.
Amendment by section 1931(b), (c) of Pub. L. 102-486 applicable to
taxable chemicals sold or used on or after Jan. 1, 1993, see section
1931(d) of Pub. L. 102-486, set out as a note under section 4681 of
this title.
Section 1932(d) of Pub. L. 102-486 provided that: ''The amendments
made by this section (amending this section) shall apply to sales and
uses on or after January 1, 1993.''
Amendment by section 11203(a), (b), and (d) of Pub. L. 101-508
effective Jan. 1, 1991, see section 11203(e) of Pub. L. 101-508, set
out as a note under section 4681 of this title.
Amendment by section 11701(g) of Pub. L. 101-508 effective, except
as otherwise provided, as if included in the provision of the Revenue
Reconciliation Act of 1989, Pub. L. 101-239, title VII, to which such
amendment relates, see section 11701(n) of Pub. L. 101-508, set out as
a note under section 42 of this title.
Section 11203(f) of Pub. L. 101-508 provided that: ''No deposit of
any tax imposed by subchapter D of chapter 38 of the Internal Revenue
Code of 1986 on any substance treated as an ozone-depleting chemical by
reason of the amendment made by subsection (a)(1) (amending this
section) shall be required to be made before April 1, 1991.''
26 USC CHAPTER 39 -- REGISTRATION-REQUIRED OBLIGATIONS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4701. Tax on issuer of registration-required obligation not in
registered form.
The provisions of a prior chapter 39, Regulatory Taxes, were set out
as:
Subchapter A, Narcotic Drugs and Marihuana, comprising sections 4701
to 4707, 4711 to 4716, 4721 to 4726, 4731 to 4736, 4741 to 4746, 4751 to
4757, 4761, 4762, and 4771 to 4776.
Subchapter B, White phosphorus matches, comprising sections 4801 to
4806.
Subchapter C, Adulterated butter and filled cheese, comprising
sections 4811 to 4819, 4821, 4822, 4826, 4831 to 4836, 4841, 4842, and
4846.
Subchapter D, Cotton futures, comprising sections 4851 to 4854, 4861
to 4865, and 4871 to 4877.
Subchapter E, Circulation other than of national banks, comprising
sections 4881 to 4886.
Subchapter F, Silver bullion, comprising sections 4891 to 4897.
Prior sections 4701 to 4897 were based on act Aug. 16, 1954, ch.
736, 68A Stat. 549-592, as amended.
Sections 4701-4776 were repealed by Pub. L. 91-513, title III,
1101(b)(3)(A), Oct. 27, 1970, 84 Stat. 1292. See section 801 et seq.
of Title 21, Food and Drugs.
Sections 4801-4826, 4851-4873, and 4875-4886 were repealed by Pub.
L. 94-455, title XIX, 1904(a)(16)-(18), 1952(b), Oct. 4, 1976, 90
Stat. 1814, 1841.
Sections 4831-4834 and 4836-4846 were repealed by Pub. L. 93-490,
3(a)(1), Oct. 26, 1974, 88 Stat. 1466.
Section 4835 was repealed by Pub. L. 85-881, 1(b)(1), Sept. 2,
1958, 72 Stat. 1704.
Section 4874 was repealed by Pub. L. 91-452, title II, 231(a), Oct.
15, 1970, 84 Stat. 930.
Sections 4891-4897 were repealed by Pub. L. 88-36, title II,
201(a), June 4, 1963, 77 Stat. 54.
1982 -- Pub. L. 97-248, title III, 310(b)(4)(A), Sept. 3, 1982, 96
Stat. 597, added chapter heading and section analysis.
26 USC 4701. Tax on issuer of registration-required obligation not in
registered form
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
In the case of any person who issues a registration-required
obligation which is not in registered form, there is hereby imposed on
such person on the issuance of such obligation a tax in an amount equal
to the product of --
(1) 1 percent of the principal amount of such obligation, multiplied
by
(2) the number of calendar years (or portions thereof) during the
period beginning on the date of issuance of such obligation and ending
on the date of maturity.
(b) Definitions
For purposes of this section --
(1) Registration-required obligation
The term ''registration-required obligation'' has the same meaning as
when used in section 163(f), except that such term shall not include any
obligation required to be registered under section 149(a).
(2) Registered form
The term ''registered form'' has the same meaning as when used in
section 163(f).
(Added Pub. L. 97-248, title III, 310(b)(4)(A), Sept. 3, 1982, 96
Stat. 598; amended Pub. L. 99-514, title XIII, 1301(j)(5), Oct. 22,
1986, 100 Stat. 2657.)
1986 -- Subsec. (b)(1). Pub. L. 99-514 substituted ''section
149(a)'' for ''section 103(j)''.
Amendment by Pub. L. 99-514 applicable to bonds issued after Aug.
15, 1986, except as otherwise provided, see sections 1311 to 1318 of
Pub. L. 99-514, set out as an Effective Date; Transitional Rules note
under section 141 of this title.
Section applicable to obligations issued after Dec. 31, 1982, with
an exception for certain warrants, see section 310(d)(1), (3) of Pub.
L. 97-248, set out as an Effective Date of 1982 Amendment note under
section 103 of this title.
26 USC CHAPTER 40 -- GENERAL PROVISIONS RELATING TO OCCUPATIONAL TAXES
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4901. Payment of tax.
4902. Liability of partners.
4903. Liability in case of business in more than one location.
4904. Liability in case of different businesses of same ownership
and location.
4905. Liability in case of death or change of location.
4906. Application of State laws.
4907. Federal agencies or instrumentalities.
26 USC 4901. Payment of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Condition precedent to carrying on certain business
No person shall be engaged in or carry on any trade or business
subject to the tax imposed by section 4411 (wagering) until he has paid
the special tax therefor.
(b) Computation
All special taxes shall be imposed as of on the first day of July in
each year, or on commencing any trade or business on which such tax is
imposed. In the former case the tax shall be reckoned for 1 year, and
in the latter case it shall be reckoned proportionately, from the first
day of the month in which the liability to a special tax commenced, to
and including the 30th day of June following.
(Aug. 16, 1954, ch. 736, 68A Stat. 593; June 21, 1965, Pub. L.
89-44, title IV, 405(b), 79 Stat. 149; Oct. 27, 1970, Pub. L. 91-513,
title III, 1102(a), 84 Stat. 1292; Oct. 4, 1976, Pub. L. 94-455,
title XIX, 1904(a)(19), 90 Stat. 1814; Nov. 6, 1978, Pub. L. 95-600,
title V, 521(c)(2), 92 Stat. 2884.)
1978 -- Subsec. (a). Pub. L. 95-600 struck out ''or 4461(a)(1)
(coin-operated gaming devices)'' after ''(wagering)''.
1976 -- Subsec. (c). Pub. L. 94-455 struck out subsec. (c) which
provided that all special taxes should be paid by stamp and made
reference to subtitle F for authority of the Secretary to make
assessments where special taxes have not been duly paid by stamp.
1970 -- Subsec. (a). Pub. L. 91-513 struck out references to tax
imposed by sections 4721 (narcotic drugs) and 4751 (marihuana).
1965 -- Subsec. (a). Pub. L. 89-44 substituted ''4461(a)(1)'' for
''4461(2)''.
Amendment by Pub. L. 95-600 applicable with respect to years
beginning after June 30, 1980, see section 521(d)(2) of Pub. L.
95-600, set out as a note under section 4402 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1904(d)
of Pub. L. 94-455, set out as a note under section 4041 of this title.
Amendment by Pub. L. 91-513 effective on first day of seventh
calendar month that begins after Oct. 26, 1970, see section 1105(a) of
Pub. L. 91-513, set out as an Effective Date note under section 951 of
Title 21, Food and Drugs.
Amendment by Pub. L. 89-44 applicable on and after July 1, 1965, see
section 701(c)(2) of Pub. L. 89-44, set out in part as a note under
section 4402 of this title.
Prosecution for any violation of law occurring, and civil seizures or
forfeitures and injunctive proceedings commenced, prior to the effective
date of amendment of this section by section 1102 of Pub. L. 91-513 not
to be affected or abated by reason thereof, see section 1103 of Pub. L.
91-513, set out as a note under section 171 of Title 21, Food and Drugs.
Person on Dec. 1, 1974, engaging in an activity making him liable
for payment of tax imposed by section 4411 of this title (as in effect
on such date) to be treated as commencing such activity on such date for
purposes of this section and section 4411 of this title, see section
3(d)(2) of Pub. L. 93-499, set out as a note under section 4411 of this
title.
Wagering, occupational tax, section as applicable to, see section
4413 of this title.
26 USC 4902. Liability of partners
TITLE 26 -- INTERNAL REVENUE CODE
Any number of persons doing business in copartnership at any one
place shall be required to pay but one special tax.
(Aug. 16, 1954, ch. 736, 68A Stat. 593.)
Wagering, occupational tax, section as applicable to, see section
4413 of this title.
26 USC 4903. Liability in case of business in more than one location
TITLE 26 -- INTERNAL REVENUE CODE
The payment of the special tax imposed, other than the tax imposed by
section 4411, shall not exempt from an additional special tax the person
carrying on a trade or business in any other place than that stated in
the register kept in the office of the official in charge of the
internal revenue district; but nothing herein contained shall require a
special tax for the storage of goods, wares, or merchandise in other
places than the place of business, nor, except as provided in this
subtitle, for the sale by manufacturers or producers of their own goods,
wares, and merchandise, at the place of production or manufacture, and
at their principal office or place of business, provided no goods,
wares, or merchandise shall be kept except as samples at said office or
place of business.
(Aug. 16, 1954, ch. 736, 68A Stat. 593.)
List of special taxpayers for public inspection, see section 6107 of
this title.
Registration of persons paying special tax, see section 7011 of this
title.
Wagering, occupational tax, section as inapplicable to, see section
4413 of this title.
26 USC 4904. Liability in case of different businesses of same
ownership and location
TITLE 26 -- INTERNAL REVENUE CODE
Whenever more than one of the pursuits or occupations described in
this subtitle are carried on in the same place by the same person at the
same time, except as otherwise provided in this subtitle, the tax shall
be paid for each according to the rates severally prescribed.
(Aug. 16, 1954, ch. 736, 68A Stat. 594.)
Wagering, occupational tax, section as applicable to, see section
4413 of this title.
26 USC 4905. Liability in case of death or change of location
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirements
When any person who has paid the special tax for any trade or
business dies, his spouse or child, or executors or administrators or
other legal representatives, may occupy the house or premises, and in
like manner carry on, for the residue of the term for which the tax is
paid, the same trade or business as the deceased before carried on, in
the same house and upon the same premises, without the payment of any
additional tax. When any person removes from the house or premises for
which any trade or business was taxed to any other place, he may carry
on the trade or business specified in the register kept in the office of
the official in charge of the internal revenue district at the place to
which he removes, without the payment of any additional tax: Provided,
That all cases of death, change, or removal, as aforesaid, with the name
of the successor to any person deceased, or of the person making such
change or removal, shall be registered with the Secretary, under
regulations to be prescribed by the Secretary.
(b) Registration
For registration in case of wagering, see section 4412.
(Aug. 16, 1954, ch. 736, 68A Stat. 594; June 21, 1965, Pub. L.
89-44, title IV, 405(c), 79 Stat. 149; Oct. 27, 1970, Pub. L. 91-513,
title III, 1102(b), 84 Stat. 1292; Oct. 4, 1976, Pub. L. 94-455,
title XIX, 1904(a)(20), (b)(8)(A), 1906(b)(13)(A), 90 Stat. 1814,
1816, 1834.)
1976 -- Subsec. (a). Pub. L. 94-455, 1904(a)(20), 1906(b)(13)(A),
substituted ''spouse or child'' for ''wife or child'' and struck out
''or his delegate'' after ''Secretary'' wherever appearing.
Subsec. (b). Pub. L. 94-455, 1904(b)(8)(A), among other changes,
struck out reference to section 4804(d) for registration in case of
white phosphorous matches and references to subtitle F for other
provisions relating to registration.
1970 -- Subsec. (b)(1). Pub. L. 91-513 struck out references to
narcotics and marihuana and to sections 4722 and 4753.
1965 -- Subsec. (b)(1). Pub. L. 89-44 struck out ''playing cards,''
after ''wagering,'' and ''4455,'' after ''4412,''.
Amendment by Pub. L. 91-513 effective on first day of seventh
calendar month that begins after Oct. 26, 1970, see section 1105(a) of
Pub. L. 91-513, set out as an Effective Date note under section 951 of
Title 21, Food and Drugs.
Section 701(c)(2) of Pub. L. 89-44 provided in part that: ''The
amendments made by section 402 (repealing sections 4451 to 4457 of this
title) (relating to playing cards) and by subsections (c) of section 405
(amending this section) shall apply on and after the day after the date
of the enactment of this Act (June 21, 1965).''
Prosecutions for any violation of law occurring, and civil seizures
or forfeitures and injunctive proceedings commenced, prior to the
effective date of amendment of this section by section 1102 of Pub. L.
91-513 not to be affected or abated by reason thereof, see section 1103
of Pub. L. 91-513, set out as a note under section 171 of Title 21,
Food and Drugs.
List of special taxpayers for public inspection, see section 6107 of
this title.
Registration of persons paying special tax, see section 7011 of this
title.
Wagering occupational tax, section as applicable to, see section 4413
of this title.
26 USC 4906. Application of State laws
TITLE 26 -- INTERNAL REVENUE CODE
The payment of any special tax imposed by this subtitle for carrying
on any trade or business shall not be held to exempt any person from any
penalty or punishment provided by the laws of any State for carrying on
the same within such State, or in any manner to authorize the
commencement or continuance of such trade or business contrary to the
laws of such State or in places prohibited by municipal law; nor shall
the payment of any such tax be held to prohibit any State from placing a
duty or tax on the same trade or business, for State or other purposes.
(Aug. 16, 1954, ch. 736, 68A Stat. 594.)
Wagering, occupational tax, section as applicable to, see section
4413 of this title.
26 USC 4907. Federal agencies or instrumentalities
TITLE 26 -- INTERNAL REVENUE CODE
Any special tax imposed by this subtitle, except the tax imposed by
section 4411, shall apply to any agency or instrumentality of the United
States unless such agency or instrumentality is granted by statute a
specific exemption from such tax.
(Aug. 16, 1954, ch. 736, 68A Stat. 594.)
Wagering, occupational tax, section as inapplicable to, see section
4413 of this title.
26 USC CHAPTER 41 -- PUBLIC CHARITIES
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4911. Tax on excess expenditures to influence legislation.
4912. Tax on disqualifying lobbying expenditures of certain
organizations.
1987 -- Pub. L. 100-203, title X, 10714(d), Dec. 22, 1987, 101
Stat. 1330-471, added item 4912.
The provisions of a prior chapter 41, Interest Equalization Tax, were
set out as follows:
Subchapter A, Acquisitions of foreign stock and debt obligations,
comprising sections 4911 to 4920.
Subchapter B, Acquisition by commercial banks, comprising section
4931.
Prior sections 4911 to 4922 and 4931 were repealed by Pub. L.
94-455, 1904(a)(21)(A), Oct. 4, 1976, 90 Stat. 1814, effective with
respect to acquisitions of stock and debt obligations made after June
30, 1974. See section 1904(a)(21)(B), set out as an Effective Date of
Repeal of Prior Provisions note below.
The subject matter of the prior provisions is as follows:
Section 4911, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat.
809; amended Pub. L. 89-243, 2, 3(a)(1), (b), Oct. 9, 1965, 79
Stat. 954; Pub. L. 90-59, 2, 3(a), July 31, 1967, 81 Stat. 145;
Pub. L. 91-50, Aug. 2, 1969, 83 Stat. 86; Pub. L. 91-65, 2, Aug.
25, 1969, 83 Stat. 105; Pub. L. 91-128, 2, 3, Nov. 26, 1969, 83
Stat. 261, 262; Pub. L. 92-9, 2, Apr. 1, 1971, 85 Stat. 13; Pub.
L. 93-17, 2, Apr. 10, 1973, 87 Stat. 12, imposed a tax on each
acquisition by a United States person of stock of a foreign issuer or a
debt obligation of a foreign obligor, if such obligation had a period
remaining to maturity of 1 year or more and provided for modification of
tax rate by executive order, rate tables, rates during interim period,
rules and regulations, persons liable for tax, and termination date,
that no tax shall be imposed on any acquisition made after June 30,
1974.
Section 4912, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat.
810; amended Pub. L. 89-243, 4(m)(3), Oct. 9, 1965, 79 Stat. 963;
Pub. L. 90-59, 5(a)(1), July 31, 1967, 81 Stat. 157; Pub. L. 91-128,
4(a)(1), Nov. 26, 1969, 83 Stat. 263; Pub. L. 92-9, 3(a)(1), Apr.
1, 1971, 85 Stat. 14; Pub. L. 93-17, 3(e), Apr. 10, 1973, 87 Stat.
17, defined term ''acquisition'' and provided special rules to be
applied to certain transfers to foreign trusts, foreign corporations and
partnerships, foreign branches, acquisitions from domestic corporations
or partnerships formed or availed of to obtain funds for foreign issuer
or obligor, and reorganization exchanges.
Section 4913, added Pub. L. 88-563, 2(a), Sept. 12, 1964, 78 Stat.
812, imposed general and special limitations on tax on certain
acquisitions relating to stock or debt obligations acquired by
surrender, extensions, renewals, and exercises, transfers which are
deemed acquisitions and acquisitions by certain domestic corporations
and partnerships.
Section 4914, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat.
813; amended Pub. L. 89-44, title IV, 405(d), June 21, 1965, 79 Stat.
149; Pub. L. 89-243, 3(a)(2), (3), 4(a)(1)-(3), (b)-(f)(2), (g),
(h)(1), Oct. 9, 1965, 79 Stat. 954, 956-960; Pub. L. 89-809, title
II, 213(a), (b)(1), 214(a), Nov. 13, 1966, 80 Stat. 1585; Pub. L.
90-59, 5(b)(1), (c)(1), (2), (d)(1), (e)(1), (f)(1), July 31, 1967, 81
Stat. 157, 158; Pub. L. 91-128, 4(b)(1), (c)(1), (2), (i)(1), (2),
Nov. 26, 1969, 83 Stat. 263, 264, 268; Pub. L. 92-9, 3(b)(1), (2),
(c)(1), (d)(1), (2), Apr. 1, 1971, 85 Stat. 15-17; Pub. L. 93-17,
3(f), Apr. 10, 1973, 87 Stat. 17, provided exclusions for certain
acquisitions including: transactions not considered acquisitions;
export credit, etc., transactions; loans to assure raw materials
sources; acquisitions by insurance companies doing business in foreign
countries; acquisitions by certain tax-exempt organizations such as
labor, fraternal, and similar organizations having foreign branches or
chapters; sale or liquidation of foreign subsidiary or sale of foreign
branch; certain debt obligations secured by United States mortgages,
etc.; acquisitions of stock of foreign issuers investing exclusively in
the United States, and loss of entitlement to exclusion in case of
certain subsequent transfers or acquisitions of stock or debt
obligations in connection with nationalization, expropriation, etc.
Section 4915, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat.
824; amended Pub. L. 90-59, 5(h)(3), July 31, 1967, 81 Stat. 163;
Pub. L. 91-128, 4(e)(3), Nov. 26, 1969, 83 Stat. 267; Pub. L. 92-9,
3(e)(1), Apr. 1, 1971, 85 Stat. 17; Pub. L. 93-17, 3(g)(1), Apr.
10, 1973, 87 Stat. 18, related to exclusions for direct investments and
provided for excluded acquisitions, overpayment with respect to certain
taxable acquisitions, special rule for government-controlled
enterprises, exception for foreign corporations or partnerships formed
or availed of for tax avoidance, exception for acquisitions made with
intent to sell to United States persons, and special rule for
investments in certain lending and financial corporations.
Section 4916, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat.
827; amended Pub. L. 89-243, 4(i), Oct 9, 1965, 79 Stat. 960; Pub.
L. 90-59, 5(g)(1), July 31, 1967, 81 Stat. 159; Pub. L. 92-9,
3(b)(3), Apr. 1, 1971, 85 Stat. 16; Pub. L. 93-17, 3(b), Apr. 10,
1973, 87 Stat. 13, related to exclusion for investment in less
developed countries, provided special rules applicable to such
investments, subsequent tax liability in certain cases, the repeal of
exclusion for issues after Jan. 29, 1973, in the case of less developed
country shipping companies, and defined term ''less developed country''.
Section 4917, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat.
830; amended Pub. L. 89-243, 4(j), (k), Oct. 9, 1965, 79 Stat. 960;
Pub. L. 90-59, 5(h)(1), July 31, 1967, 81 Stat. 159, related to
exclusion for original or new issues where required for international
monetary stability.
Section 4918, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat.
831; amended Pub. L. 89-809, title II, 213(b)(2), Nov. 13, 1966, 80
Stat. 1585; Pub. L. 90-59, 4(a), July 31, 1967, 81 Stat. 148; Pub.
L. 90-73, 2(a)-(c), Aug. 29, 1967, 81 Stat. 175, 176; Pub. L. 93-17,
3(h)(1), Apr. 10, 1973, 87 Stat. 18, related to exemption for prior
American ownership and compliance, proof of such ownership or
compliance, issuance of IET clean confirmation by participating firm,
sales effected by participating firms in connection with exempt
acquisitions, filing of transition inventory, transfer of custody
certificate, certain debt obligations arising out of loans to assure raw
material sources, regulations, and definitions of ''participating
firm,'' and ''participating custodian''.
Section 4919, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat.
833; amended Pub. L. 89-243, 4(1), Oct. 9, 1965, 79 Stat. 961;
Pub. L. 90-59, 5(i)(1), (2), July 31, 1967, 81 Stat. 159, 160; Pub.
L. 91-128, 4(d)(1), Nov. 26, 1969, 83 Stat. 264; Pub. L. 92-9,
3(f)(1), (2), Apr. 1, 1971, 85 Stat. 20; Pub. L. 93-17, 3(i)(1),
Apr. 10, 1973, 87 Stat. 19, related to credit or refund on sales by
underwriters and dealers to foreign persons, evidence needed to support
such credit or refund, and defined terms ''underwriter'', ''dealer'',
and ''persons other than United States persons''.
Section 4920, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat.
835; amended Pub. L. 89-243, 3(a)(4), 4(m)(1), (2)(A), (n), Oct. 9,
1965, 79 Stat. 954, 961-963; Pub. L. 90-59, 4(f), 5(j)-(k)(2), July
31, 1967, 81 Stat. 156, 160-163; Pub. L. 91-128, 4(e)(1), (2),
(i)(3), Nov. 26, 1969, 83 Stat. 264, 269; Pub. L. 92-9, 3(e)(2),
(3), (g)(1), (h)(1), Apr. 1, 1971, 85 Stat. 18, 20, 21; Pub. L.
93-17, 3(g)(2)(j), Apr. 10, 1973, 87 Stat. 18, 19, related to
definitions and special rules.
Section 4921, added Pub. L. 92-9, 3(i)(1), Apr. 1, 1971, 85 Stat.
21, related to standby authority of the President to impose tax on debt
obligations of foreign obligors having a period remaining to maturity of
less than 1 year and provided that such authority may be extended by
Executive order.
Section 4922, added Pub. L. 93-17, 3(d)(1), Apr. 10, 1973, 87
Stat. 15, related to exclusion for certain issues to finance new or
additional direct investment in the United States, qualification for
exclusion, and loss of entitlement to exclusion by subsequent
noncompliance.
Section 4931, added Pub. L 88-563, 2(a), Sept. 2, 1964, 78 Stat.
839; amended Pub. L. 89-243, 3(e)(1), 4(a)(4), (o), Oct. 9, 1965,
79 Stat. 955, 956, 964; Pub. L. 89-809, title II, 215(a), Nov. 13,
1966, 80 Stat. 1587, Pub. L. 90-59, 3(b)(1), July 31, 1967, 81 Stat.
145, related to the standby authority of the President to impose, by
Executive order, tax on acquisitions by commercial banks of debt
obligations of foreign obligors, made provision for exclusions
concerning export loans, foreign currency loans by foreign branches,
preexisting commitments, and provided for prescription of regulations by
the Secretary.
Section 1904(a)(21)(B) of Pub. L. 94-455 provided that: ''The
repeal made by subparagraph (A) (repealing sections 4911 through 4922
and section 4931 of this title) shall apply with respect to acquisitions
of stock and debt obligations made after June 30, 1974.''
26 USC 4911. Tax on excess expenditures to influence legislation
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax imposed
(1) In general
There is hereby imposed on the excess lobbying expenditures of any
organization to which this section applies a tax equal to 25 percent of
the amount of the excess lobbying expenditures for the taxable year.
(2) Organizations to which this section applies
This section applies to any organization with respect to which an
election under section 501(h) (relating to lobbying expenditures by
public charities) is in effect for the taxable year.
(b) Excess lobbying expenditures
For purposes of this section, the term ''excess lobbying
expenditures'' means, for a taxable year, the greater of --
(1) the amount by which the lobbying expenditures made by the
organization during the taxable year exceed the lobbying nontaxable
amount for such organization for such taxable year, or
(2) the amount by which the grass roots expenditures made by the
organization during the taxable year exceed the grass roots nontaxable
amount for such organization for such taxable year.
(c) Definitions
For purposes of this section --
(1) Lobbying expenditures
The term ''lobbying expenditures'' means expenditures for the purpose
of influencing legislation (as defined in subsection (d)).
(2) Lobbying nontaxable amount
The lobbying nontaxable amount for any organization for any taxable
year is the lesser of (A) $1,000,000 or (B) the amount determined under
the following table:
(3) Grass roots expenditures
The term ''grass roots expenditures'' means expenditures for the
purpose of influencing legislation (as defined in subsection (d) without
regard to paragraph (1)(B) thereof).
(4) Grass roots nontaxable amount
The grass roots nontaxable amount for any organization for any
taxable year is 25 percent of the lobbying nontaxable amount (determined
under paragraph (2)) for such organization for such taxable year.
(d) Influencing legislation
(1) General rule
Except as otherwise provided in paragraph (2), for purposes of this
section, the term ''influencing legislation'' means --
(A) any attempt to influence any legislation through an attempt to
affect the opinions of the general public or any segment thereof, and
(B) any attempt to influence any legislation through communication
with any member or employee of a legislative body, or with any
government official or employee who may participate in the formulation
of the legislation.
(2) Exceptions
For purposes of this section, the term ''influencing legislation'',
with respect to an organization, does not include --
(A) making available the results of nonpartisan analysis, study, or
research;
(B) providing of technical advice or assistance (where such advice
would otherwise constitute the influencing of legislation) to a
governmental body or to a committee or other subdivision thereof in
response to a written request by such body or subdivision, as the case
may be;
(C) appearances before, or communications to, any legislative body
with respect to a possible decision of such body which might affect the
existence of the organization, its powers and duties, tax-exempt status,
or the deduction of contributions to the organization;
(D) communications between the organization and its bona fide members
with respect to legislation or proposed legislation of direct interest
to the organization and such members, other than communications
described in paragraph (3); and
(E) any communication with a governmental official or employee, other
than --
(i) a communication with a member or employee of a legislative body
(where such communication would otherwise constitute the influencing of
legislation), or
(ii) a communication the principal purpose of which is to influence
legislation.
(3) Communications with members
(A) A communication between an organization and any bona fide member
of such organization to directly encourage such member to communicate as
provided in paragraph (1)(B) shall be treated as a communication
described in paragraph (1)(B).
(B) A communication between an organization and any bona fide member
of such organization to directly encourage such member to urge persons
other than members to communicate as provided in either subparagraph (A)
or subparagraph (B) of paragraph (1) shall be treated as a communication
described in paragraph (1)(A).
(e) Other definitions and special rules
For purposes of this section --
(1) Exempt purpose expenditures
(A) In general
The term ''exempt purpose expenditures'' means, with respect to any
organization for any taxable year, the total of the amounts paid or
incurred by such organization to accomplish purposes described in
section 170(c)(2)(B) (relating to religious, charitable, educational,
etc., purposes).
(B) Certain amounts included
The term ''exempt purpose expenditures'' includes --
(i) administrative expenses paid or incurred for purposes described
in section 170(c)(2)(B), and
(ii) amounts paid or incurred for the purpose of influencing
legislation (whether or not for purposes described in section
170(c)(2)(B)).
(C) Certain amounts excluded
The term ''exempt purpose expenditures'' does not include amounts
paid or incurred to or for --
(i) a separate fundraising unit of such organization, or
(ii) one or more other organizations, if such amounts are paid or
incurred primarily for fundraising.
(2) Legislation
The term ''legislation'' includes action with respect to Acts, bills,
resolutions, or similar items by the Congress, any State legislature,
any local council, or similar governing body, or by the public in a
referendum, initiative, constitutional amendment, or similar procedure.
(3) Action
The term ''action'' is limited to the introduction, amendment,
enactment, defeat, or repeal of Acts, bills, resolutions, or similar
items.
(4) Depreciation, etc., treated as expenditures
In computing expenditures paid or incurred for the purpose of
influencing legislation (within the meaning of subsection (b)(1) or
(b)(2)) or exempt purpose expenditures (as defined in paragraph (1)),
amounts properly chargeable to capital account shall not be taken into
account. There shall be taken into account a reasonable allowance for
exhaustion, wear and tear, obsolescence, or amortization. Such
allowance shall be computed only on the basis of the straight-line
method of depreciation. For purposes of this section, a determination
of whether an amount is properly chargeable to capital account shall be
made on the basis of the principles that apply under subtitle A to
amounts which are paid or incurred in a trade or business.
(f) Affiliated organizations
(1) In general
Except as otherwise provided in paragraph (4), if for a taxable year
two or more organizations described in section 501(c)(3) are members of
an affiliated group of organizations as defined in paragraph (2), and an
election under section 501(h) is effective for at least one such
organization for such year, then --
(A) the determination as to whether excess lobbying expenditures have
been made and the determination as to whether the expenditure limits of
section 501(h)(1) have been exceeded shall be made as though such
affiliated group is one organization,
(B) if such group has excess lobbying expenditures, each such
organization as to which an election under section 501(h) is effective
for such year shall be treated as an organization which has excess
lobbying expenditures in an amount which equals such organization's
proportionate share of such group's excess lobbying expenditures,
(C) if the expenditure limits of section 501(h)(1) are exceeded, each
such organization as to which an election under section 501(h) is
effective for such year shall be treated as an organization which is not
described in section 501(c)(3) by reason of the application of 501(h),
and
(D) subparagraphs (C) and (D) of subsection (d)(2), paragraph (3) or
subsection (d), and clause (i) of subsection (e)(1)(C) shall be applied
as if such affiliated group were one organization.
(2) Definition of affiliation
For purposes of paragraph (1), two organizations are members of an
affiliated group of organizations but only if --
(A) the governing instrument of one such organization requires it to
be bound by decisions of the other organization on legislative issues,
or
(B) the governing board of one such organization includes persons who
--
(i) are specifically designated representatives of another such
organization or are members of the governing board, officers, or paid
executive staff members of such other organization, and
(ii) by aggregating their votes, have sufficient voting power to
cause or prevent action on legislative issues by the first such
organization.
(3) Different taxable years
If members of an affiliated group of organizations have different
taxable years, their expenditures shall be computed for purposes of this
section in a manner to be prescribed by regulations promulgated by the
Secretary.
(4) Limited control
If two or more organizations are members of an affiliated group of
organizations (as defined in paragraph (2) without regard to
subparagraph (B) thereof), no two members of such affiliated group are
affiliated (as defined in paragraph (2) without regard to subparagraph
(A) thereof), and the governing instrument of no such organization
requires it to be bound by decisions of any of the other such
organizations on legislative issues other than as to action with respect
to Acts, bills, resolutions, or similar items by the Congress, then --
(A) in the case of any organization whose decisions bind one or more
members of such affiliated group, directly or indirectly, the
determination as to whether such organization has paid or incurred
excess lobbying expenditures and the determination as to whether such
organization has exceeded the expenditure limits of section 501(h)(1)
shall be made as though such organization has paid or incurred those
amounts paid or incurred by such members of such affiliated group to
influence legislation with respect to Acts, bills, resolutions, or
similar items by the Congress, and
(B) in the case of any organization to which subparagraph (A) does
not apply, but which is a member of such affiliated group, the
determination as to whether such organization has paid or incurred
excess lobbying expenditures and the determination as to whether such
organization has exceeded the expenditure limits of section 501(h)(1)
shall be made as though such organization is not a member of such
affiliated group.
(Added Pub. L. 94-455, title XIII, 1307(b), Oct. 4, 1976, 90 Stat.
1723; amended Pub. L. 95-600, title VII, 703(g)(1), Nov. 6, 1978, 92
Stat. 2940.)
1978 -- Subsec. (c)(2). Pub. L. 95-600 substituted ''exempt purpose
expenditures'' for ''proposed expenditures'' in heading of table.
Amendment by Pub. L. 95-600 effective Oct. 4, 1976, see section
703(r) of Pub. L. 95-600, set out as a note under section 46 of this
title.
title; title 7 section 4809.
26 USC 4912. Tax on disqualifying lobbying expenditures of certain
organizations
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax on organization
If an organization to which this section applies is not described in
section 501(c)(3) for any taxable year by reason of making lobbying
expenditures, there is hereby imposed a tax on the lobbying expenditures
of such organization for such taxable year equal to 5 percent of the
amount of such expenditures. The tax imposed by this subsection shall
be paid by the organization.
(b) On management
If tax is imposed under subsection (a) on the lobbying expenditures
of any organization, there is hereby imposed on the agreement of any
organization manager to the making of any such expenditures, knowing
that such expenditures are likely to result in the organization not
being described in section 501(c)(3), a tax equal to 5 percent of the
amount of such expenditures, unless such agreement is not willful and is
due to reasonable cause. The tax imposed by this subsection shall be
paid by any manager who agreed to the making of the expenditures.
(c) Organizations to which section applies
(1) In general
Except as provided in paragraph (2), this section shall apply to any
organization which was exempt (or was determined by the Secretary to be
exempt) from taxation under section 501(a) by reason of being an
organization described in section 501(c)(3).
(2) Exceptions
This section shall not apply to any organization --
(A) to which an election under section 501(h) applies,
(B) which is a disqualified organization (within the meaning of
section 501(h)(5)), or
(C) which is a private foundation.
(d) Definitions
(1) Lobbying expenditures
The term ''lobbying expenditure'' means any amount paid or incurred
by the organization in carrying on propaganda, or otherwise attempting
to influence legislation.
(2) Organization manager
The term ''organization manager'' has the meaning given to such term
by section 4955(f)(2).
(3) Joint and several liability
If more than 1 person is liable under subsection (b), all such
persons shall be jointly and severally liable under such subsection.
(Added Pub. L. 100-203, title X, 10714(a), Dec. 22, 1987, 101 Stat.
1330-470.)
Section 10714(e) of Pub. L. 100-203 provided that: ''The amendments
made by this section (enacting this section and amending sections 6501
and 7454 of this title) shall apply to taxable years beginning after the
date of the enactment of this Act (Dec. 22, 1987).''
26 USC CHAPTER 42 -- PRIVATE FOUNDATIONS; AND CERTAIN OTHER TAX-EXEMPT
ORGANIZATIONS
TITLE 26 -- INTERNAL REVENUE CODE
Subchapter Sec. /1/
A.
Private foundations 4940
B.
Black lung benefit trusts 4951
C.
Political expenditures of section 501(c)(3) organizations 4955
D.
Abatement of first and second-tier taxes in certain cases /2/ 4961
1987 -- Pub. L. 100-203, title X, 10712(c)(7), (9), Dec. 22, 1987,
101 Stat. 1330-467, substituted in chapter heading ''AND CERTAIN OTHER
TAX-EXEMPT ORGANIZATIONS'' for ''BLACK LUNG BENEFIT TRUSTS'', struck out
item for subchapter C ''Abatement of first and second tier taxes in
certain cases'', and added items for subchapters C and D.
1984 -- Pub. L. 98-369, div. A, title III, 305(b)(3), July 18,
1984, 98 Stat. 784, substituted ''Abatement of first and second tier
taxes in certain cases'' for ''Abatement of second tier taxes where
there is correction during correction period'' in item for subchapter C.
1980 -- Pub. L. 96-596, 2(c)(3), Dec. 24, 1980, 94 Stat. 3474,
added item for subchapter C.
1978 -- Pub. L. 95-227, 4(c)(2)(A), Feb. 10, 1978, 92 Stat. 22,
in chapter heading inserted ''; BLACK LUNG BENEFIT TRUSTS'' after
''FOUNDATIONS'', and added items for subchapters A and B.
1969 -- Pub. L. 91-172, title I, 101(b), Dec. 30, 1969, 83 Stat.
498, added chapter heading ''PRIVATE FOUNDATIONS''.
/1/ Section numbers editorially supplied.
/2/ So in original. Does not conform to subchapter heading.
26 USC Subchapter A -- Private Foundations
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4940. Excise tax based on investment income.
4941. Taxes on self-dealing.
4942. Taxes on failure to distribute income.
4943. Taxes on excess business holdings.
4944. Taxes on investments which jeopardize charitable purpose.
4945. Taxes on taxable expenditures.
4946. Definitions and special rules.
4947. Application of taxes to certain nonexempt trusts.
4948. Application of taxes and denial of exemption with respect to
certain foreign organizations.
1978 -- Pub. L. 95-227, 4(c)(2)(A), Feb. 10, 1978, 92 Stat. 22,
added subchapter A heading and designated sections 4940 to 4948 as
subchapter A.
1969 -- Pub. L. 91-172, title I, 101(b), Dec. 30, 1969, 83 Stat.
498, added analysis of sections.
26 USC 4940. Excise tax based on investment income
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax-exempt foundations
There is hereby imposed on each private foundation which is exempt
from taxation under section 501(a) for the taxable year, with respect to
the carrying on its activities, a tax equal to 2 percent of the net
investment income of such foundation for the taxable year.
(b) Taxable foundations
There is hereby imposed on each private foundation which is not
exempt from taxation under section 501(a) for the taxable year, with
respect to the carrying on of its activities, a tax equal to --
(1) the amount (if any) by which the sum of (A) the tax imposed under
subsection (a) (computed as if such subsection applied to such private
foundation for the taxable year), plus (B) the amount of the tax which
would have been imposed under section 511 for the taxable year if such
private foundation had been exempt from taxation under section 501(a),
exceeds
(2) the tax imposed under subtitle A on such private foundation for
the taxable year.
(c) Net investment income defined
(1) In general
For purposes of subsection (a), the net investment income is the
amount by which (A) the sum of the gross investment income and the
capital gain net income exceeds (B) the deductions allowed by paragraph
(3). Except to the extent inconsistent with the provisions of this
section, net investment income shall be determined under the principles
of subtitle A.
(2) Gross investment income
For purposes of paragraph (1), the term ''gross investment income''
means the gross amount of income from interest, dividends, rents,
payments with respect to securities loans (as defined in section
512(a)(5)), and royalties, but not including any such income to the
extent included in computing the tax imposed by section 511.
(3) Deductions
(A) In general
For purposes of paragraph (1), there shall be allowed as a deduction
all the ordinary and necessary expenses paid or incurred for the
production or collection of gross investment income or for the
management, conservation, or maintenance of property held for the
production of such income, determined with the modifications set forth
in subparagraph (B).
(B) Modifications
For purposes of subparagraph (A) --
(i) The deduction provided by section 167 shall be allowed, but only
on the basis of the straight line method of depreciation.
(ii) The deduction for depletion provided by section 611 shall be
allowed, but such deduction shall be determined without regard to
section 613 (relating to percentage depletion).
(4) Capital gains and losses
For purposes of paragraph (1) in determining capital gain net income
--
(A) There shall be taken into account only gains and losses from the
sale or other disposition of property used for the production of
interest, dividends, rents, and royalties, and property used for the
production of income included in computing the tax imposed by section
511 (except to the extent gain or loss from the sale or other
disposition of such property is taken into account for purposes of such
tax).
(B) The basis for determining gain in the case of property held by
the private foundation on December 31, 1969, and continuously thereafter
to the date of its disposition shall be deemed to be not less than the
fair market value of such property on December 31, 1969.
(C) Losses from sales or other dispositions of property shall be
allowed only to the extent of gains from such sales or other
dispositions, and there shall be no capital loss carryovers.
(5) Tax-exempt income
For purposes of this section, net investment income shall be
determined by applying section 103 (relating to State and local bonds)
and section 265 (relating to expenses and interest relating to
tax-exempt income).
(d) Exemption for certain operating foundations
(1) In general
No tax shall be imposed by this section on any private foundation
which is an exempt operating foundation for the taxable year.
(2) Exempt operating foundation
For purposes of this subsection, the term ''exempt operating
foundation'' means, with respect to any taxable year, any private
foundation if --
(A) such foundation is an operating foundation (as defined in section
4942(j)(3)),
(B) such foundation has been publicly supported for at least 10
taxable years,
(C) at all times during the taxable year, the governing body of such
foundation --
(i) consists of individuals at least 75 percent of whom are not
disqualified individuals, and
(ii) is broadly representative of the general public, and
(D) at no time during the taxable year does such foundation have an
officer who is a disqualified individual.
(3) Definitions
For purposes of this subsection --
(A) Publicly supported
A private foundation is publicly supported for a taxable year if it
meets the requirements of section 170(b)(1)(A)(vi) or 509(a)(2) for such
taxable year.
(B) Disqualified individual
The term ''disqualified individual'' means, with respect to any
private foundation, an individual who is --
(i) a substantial contributor to the foundation,
(ii) an owner of more than 20 percent of --
(I) the total combined voting power of a corporation,
(II) the profits interest of a partnership, or
(III) the beneficial interest of a trust or unincorporated
enterprise,
which is a substantial contributor to the foundation, or
(iii) a member of the family of any individual described in clause
(i) or (ii).
(C) Substantial contributor
The term ''substantial contributor'' means a person who is described
in section 507(d)(2).
(D) Family
The term ''family'' has the meaning given to such term by section
4946(d).
(E) Constructive ownership
The rules of paragraphs (3) and (4) of section 4946(a) shall apply
for purposes of subparagraph (B)(ii).
(e) Reduction in tax where private foundation meets certain
distribution requirements
(1) In general
In the case of any private foundation which meets the requirements of
paragraph (2) for any taxable year, subsection (a) shall be applied with
respect to such taxable year by substituting ''1 percent'' for ''2
percent''.
(2) Requirements
A private foundation meets the requirements of this paragraph for any
taxable year if --
(A) the amount of the qualifying distributions made by the private
foundation during such taxable year equals or exceeds the sum of --
(i) an amount equal to the assets of such foundation for such taxable
year multiplied by the average percentage payout for the base period,
plus
(ii) 1 percent of the net investment income of such foundation for
such taxable year, and
(B) such private foundation was not liable for tax under section 4942
with respect to any year in the base period.
(3) Average percentage payout for base period
For purposes of this subsection --
(A) In general
The average percentage payout for the base period is the average of
the percentage payouts for taxable years in the base period.
(B) Percentage payout
The term ''percentage payout'' means, with respect to any taxable
year, the percentage determined by dividing --
(i) the amount of the qualifying distributions made by the private
foundation during the taxable year, by
(ii) the assets of the private foundation for the taxable year.
(C) Special rule where tax reduced under this subsection
For purposes of this paragraph, if the amount of the tax imposed by
this section for any taxable year in the base period is reduced by
reason of this subsection, the amount of the qualifying distributions
made by the private foundation during such year shall be reduced by the
amount of such reduction in tax.
(4) Base period
For purposes of this subsection --
(A) In general
The term ''base period'' means, with respect to any taxable year, the
5 taxable years preceding such taxable year.
(B) New private foundations, etc.
If an organization has not been a private foundation throughout the
base period referred to in subparagraph (A), the base period shall
consist of the taxable years during which such foundation has been in
existence.
(5) Other definitions
For purposes of this subsection --
(A) Qualifying distribution
The term ''qualifying distribution'' has the meaning given such term
by section 4942(g).
(B) Assets
The assets of a private foundation for any taxable year shall be
treated as equal to the excess determined under section 4942(e)(1).
(6) Treatment of successor organizations, etc.
In the case of --
(A) a private foundation which is a successor to another private
foundation, this subsection shall be applied with respect to such
successor by taking into account the experience of such other
foundation, and
(B) a merger, reorganization, or division of a private foundation,
this subsection shall be applied under regulations prescribed by the
Secretary.
(Added Pub. L. 91-172, title I, 101(b), Dec. 30, 1969, 83 Stat.
498; amended Pub. L. 94-455, title XIX, 1901(b)(33)(N), Oct. 4, 1976,
90 Stat. 1802; Pub. L. 95-345, 2(a)(4), Aug. 15, 1978, 92 Stat. 481;
Pub. L. 95-600, title V, 520(a), Nov. 6, 1978, 92 Stat. 2884; Pub. L.
98-369, div. A, title III, 302(a), 303(a), July 18, 1984, 98 Stat.
779, 781; Pub. L. 99-514, title XIII, 1301(j)(6), title XVIII, 1832,
Oct. 22, 1986, 100 Stat. 2658, 2851.)
1986 -- Subsec. (c)(5). Pub. L. 99-514, 1301(j), substituted
''(relating to State and local bonds)'' for ''(relating to interest on
certain governmental obligations)''.
Subsec. (e)(2). Pub. L. 99-514, 1832, added subpar. (B) and struck
out former subpar. (B) and concluding provision which read as follows:
''(B) the average percentage payout for the base period equals or
exceeds 5 percent.
In the case of an operating foundation (as defined in section
4942(j)(3)), subparagraph (B) shall be applied by substituting '3 1/3
percent' for '5 percent'.''
1984 -- Subsec. (d). Pub. L. 98-369, 302(a), added subsec. (d).
Subsec. (e). Pub. L. 98-369, 303(a), added subsec. (e).
1978 -- Subsec. (a). Pub. L. 95-600 substituted ''2 percent'' for
''4 percent''.
Subsec. (c)(2). Pub. L. 95-345 inserted provision relating to
payments with respect to securities loans.
1976 -- Subsec. (c). Pub. L. 94-455 substituted ''capital gain net
income'' for ''net capital gain'' in par. (1) after ''investment income
and the'', and in par. (4) after ''par. (1) in determining''.
Amendment by section 1301(j)(6) of Pub. L. 99-514 applicable to
bonds issued after Aug. 15, 1986, except as otherwise provided, see
sections 1311 to 1318 of Pub. L. 99-514, set out as an Effective Date;
Transitional Rules note under section 141 of this title.
Amendment by section 1832 of Pub. L. 99-514 effective, except as
otherwise provided, as if included in the provisions of the Tax Reform
Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates,
see section 1881 of Pub. L. 99-514, set out as a note under section 48
of this title.
Section 302(c)(1) of Pub. L. 98-369 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to taxable
years beginning after December 31, 1984.''
Section 303(b) of Pub. L. 98-369 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to taxable
years beginning after December 31, 1984.''
Section 520(b) of Pub. L. 95-600 provided that: ''The amendment
made by the first section of this Act (probably meaning section 520(a),
which amended this section) shall apply to taxable years beginning after
September 30, 1977.''
Amendment by Pub. L. 95-345 applicable with respect to amounts
received after Dec. 31, 1976, as payments with respect to securities
loans (as defined in section 512(a)(5) of this title), and transfers of
securities, under agreements described in section 1058 of this title,
occurring after such date, see section 2(e) of Pub. L. 95-345, set out
as a note under section 509 of this title.
Section 101(k) of Pub. L. 91-172, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided:
''(1) In general. -- Except as otherwise provided in this subsection
and subsection (l) (set out as a note below) the amendments made by this
section (enacting this section and sections 507 to 509, 4941 to 4848,
6056, 6684, and 6685 of this title, amending sections 101, 170, 501,
503, 542, 663, 681, 878, 884, 1443, 2039, 2517, 4057, 4221, 4253, 4294,
5214, 6033, 6034, 6043, 6104, 6161, 6201, 6211 to 6214, 6344, 6501,
6503, 6511, 6512, 6601, 6652, 6653, 6659, 6676, 6677, 6679, 6682, 7207,
7422, and 7454 of this title, repealing section 504 of this title, and
enacting provisions set out as notes under this section and section 1 of
this title) shall take effect on January 1, 1970.
''(2) Provisions effective for taxable years beginning after december
31, 1969. -- The following provisions shall apply to taxable years
beginning after December 31, 1969:
''(A) Sections 4940, 4942, 4943, and 4948 of the Internal Revenue
Code of 1986 (formerly I.R.C. 1954) (as added by this section), and
''(B) The amendments made by subsection (d) (enacting section 6056 of
this title, and amending sections 6033 and 6652 of this title) and
paragraphs (3), (15), (16), (20), (21), (30), (31), (32), (33), (34),
(35), and (61) of subsection (j) (amending sections 501, 542, 878, 884,
6033, 6034, and 6043 of this title and repealing section 504 of this
title).
''(3) Sections 508(a), (b), and (c). -- Sections 508 (a),(b), and (c)
of the Internal Revenue Code of 1986 (as added by this section) shall
take effect on October 9, 1969.''
Section 101(l) of Pub. L. 91-172, as amended by Pub. L. 93-490,
4(a), Oct. 26, 1974, 88 Stat. 1467; Pub. L. 94-455, title XIII,
1301(a), 1309(a), Oct. 4, 1976, 90 Stat. 1713, 1729; Pub. L. 95-600,
title VII, 703(f), Nov. 6, 1978, 92 Stat. 2940; Pub. L. 98-369,
div. A, title III, 314(b)(1), July 18, 1984, 98 Stat. 787; Pub. L.
99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) References to internal revenue code provisions. -- Except as
otherwise expressly provided, references in the following paragraphs of
this subsection are to sections of the Internal Revenue Code of 1986
(formerly I.R.C. 1954) as amended by this section.
''(2) Section 4941. -- Section 4941 shall not apply to --
''(A) any transaction between a private foundation and a corporation
which is a disqualified person (as defined in section 4946), pursuant to
the terms of securities of such corporation in existence at the time
acquired by the foundation, if such securities were acquired by the
foundation before May 27, 1969;
''(B) the sale, exchange, or other disposition of property which is
owned by a private foundation on May 26, 1969 (or which is acquired by a
private foundation under the terms of a trust which was irrevocable on
May 26, 1969, or under the terms of a will executed on or before such
date, which are in effect on such date and at all times thereafter), to
a disqualified person, if such foundation is required to dispose of such
property in order not to be liable for tax under section 4943 (relating
to taxes on excess business holdings) applied, in the case of a
disposition before January 1, 1977, without taking section 4943(c)(4)
into account and it receives in return an amount which equals or exceeds
the fair market value of such property at the time of such disposition
or at the time a contract for such disposition was previously executed
in a transaction which would not constitute a prohibited transaction
(within the meaning of section 503(b) or the corresponding provisions of
prior law);
''(C) the leasing of property or the lending of money or other
extension of credit between a disqualified person and a private
foundation pursuant to a binding contract in effect on October 9, 1969
(or pursuant to renewals of such a contract), until taxable years
beginning after December 31, 1979, if such leasing or lending (or other
extension of credit) remains at least as favorable as an arm's-length
transaction with an unrelated party and if the execution of such
contract was not at the time of such execution a prohibited transaction
(within the meaning of section 503(b) or the corresponding provisions of
prior law);
''(D) the use of goods, services, or facilities which are shared by a
private foundation and a disqualified person until taxable years
beginning after December 31, 1979, if such use is pursuant to an
arrangement in effect before October 9, 1969, and such arrangement was
not a prohibited transaction (within the meaning of section 503(b) or
the corresponding provisions of prior law) at the time it was made and
would not be a prohibited transaction if such section continued to
apply;
''(E) the use of property in which a private foundation and a
disqualified person have a joint or common interest, if the interests of
both in such property were acquired before October 9, 1969; and
''(F) the sale, exchange, or other disposition (other than by lease)
of property which is owned by a private foundation to a disqualified
person if --
''(i) such foundation is leasing substantially all of such property
under a lease to which subparagraph (C) applies,
''(ii) the disposition to such disqualified person occurs before
January 1, 1978, and
''(iii) such foundation receives in return for the disposition to
such disqualified person an amount which equals or exceeds the fair
market value of such property at the time of the disposition or at the
time (after June 30, 1976) a contract for the disposition was previously
executed in a transaction which would not constitute a prohibited
transaction (within the meaning of section 503(b) or any corresponding
provision of prior law).
''(3) Section 4942. -- In the case of organizations organized before
May 27, 1969, section 4942 shall --
''(A) for all purposes other than the determination of the minimum
investment return under section 4942(j)(3)(B)(ii), for taxable years
beginning before January 1, 1972, apply without regard to section
4942(e) (relating to minimum investment return), and for taxable years
beginning in 1972, 1973, and 1974, apply with an applicable percentage
(as prescribed in section 4942(e)(3)) which does not exceed 4 1/2
percent, 5 percent, and 5 1/2 percent, respectively;
''(B) not apply to an organization to the extent its income is
required to be accumulated pursuant to the mandatory terms (as in effect
on May 26, 1969, and at all times thereafter) of an instrument executed
before May 27, 1969, with respect to the transfer of income producing
property to such organization, except that section 4942 shall apply to
such organization if the organization would have been denied exemption
if section 504(a) had not been repealed by this Act, or would have had
its deductions under section 642(c) limited if section 681(c) had not
been repealed by this Act. In applying the preceding sentence, in
addition to the limitations contained in section 504(a) or 681(c) before
its repeal, section 504(a)(1) or 681(c)(1) shall be treated as not
applying to an organization to the extent its income is required to be
accumulated pursuant to the mandatory terms (as in effect on January 1,
1951, and at all times thereafter) of an instrument executed before
January 1, 1951, with respect to the transfer of income producing
property to such organization before such date, if such transfer was
irrevocable on such date;
''(C) apply to a grant to a private foundation described in section
4942(g)(1)(A)(ii) which is not described in section 4942(g)(1)(A)(i),
pursuant to a written commitment which was binding on May 26, 1969, and
at all times thereafter, as if such grant is a grant to an operating
foundation (as defined in section 4942(j)(3)), if such grant is made for
one or more of the purposes described in section 170(c)(2)(B) and is to
be paid out to such private foundation on or before December 31, 1974;
''(D) apply, for purposes of section 4942(f), in such a manner as to
treat any distribution made to a private foundation in redemption of
stock held by such private foundation in a business enterprise as not
essentially equivalent to a dividend under section 302(b)(1) if such
redemption is described in paragraph (2)(B) of this subsection;
''(E) not apply to an organization which is prohibited by its
governing instrument or other instrument from distributing capital or
corpus to the extent the requirements of section 4942 are inconsistent
with such prohibition; and
''(F) apply, in the case of an organization described in paragraph
(4)(A) of this subsection,
''(i) by applying section 4942(e) without regard to the stock to
which paragraph (4)(A)(ii) of this subsection applies,
''(ii) by applying section 4942(f) without regard to dividend income
for such stock, and
''(iii) by defining the distributable amount as the sum of the amount
determined under section 4942(d) (after the application of clauses (i)
and (ii)), and the amount of the dividend income from such stock.
With respect to taxable years beginning after December 31, 1971,
subparagraphs (B) and (E) shall apply only during the pendency of any
judicial proceeding by the private foundation which is necessary to
reform, or to excuse such foundation from compliance with, its governing
instrument or any other instrument (as in effect on May 26, 1969) in
order to comply with the provisions of section 4942, and in the case of
subparagraph (B) for all periods after the termination of such judicial
proceeding during which the governing instrument or any other instrument
does not permit compliance with such provisions.
''(4) Section 4943. --
''(A) In the case of a private foundation --
''(i) which was incorporated before January 1, 1951;
''(ii) substantially all of the assets of which on May 26, 1969,
consist of more than 90 percent of the stock of an incorporated business
enterprise which is licensed and regulated, the sales or contracts of
which are regulated, and the professional representatives of which are
licensed, by State regulatory agencies in at least 10 States; and
''(iii) which acquired such stock solely by gift, devise, or bequest,
section 4943(c)(4)(A)(i) shall be applied with respect to the holdings
of such foundation in such incorporated business enterprise as if it did
not contain the phrase ', but in no event shall the percentage so
substituted be more than 50 percent', and section 4943(c)(4)(D) shall
not apply with respect to such holdings. For purposes of the preceding
sentence, stock of such enterprise in a trust created before May 27,
1969, of which the foundation is the remainder beneficiary shall be
deemed to be held by such foundation on May 26, 1969, if such foundation
held (without regard to such trust) more than 20 percent of the stock of
such enterprise on May 26, 1969.
''(B) Subparagraph (A) shall apply to a private foundation only if --
''(i) the foundation does not purchase any stock or other interest in
the enterprise described in subparagraph (A) after May 26, 1969, and
does not acquire any stock or other interest in any other business
enterprise which constitutes excess business holdings under section
4943; and
''(ii) in the last 5 taxable years ending on or before December 31,
1970, the foundation expends substantially all of its adjusted net
income (as defined in section 4942(f)) for the purpose or function for
which it is organized and operated.
''(C) For purposes of section 4943(c)(6), the term 'purchase' does
not include an exchange which is described in paragraph (2)(B) of this
subsection and which is pursuant to a plan for disposition of excess
business holdings.
''(5) Section 4945. -- Section 4945(d)(4) and (h) shall not apply to
a grant which is described in paragraph (3)(C) of this subsection.
''(6) Section 508(e). -- Section 508(e) shall not apply to require
inclusion in governing instruments of any provisions inconsistent with
this subsection.
''(7) Section 509(a). -- In the case of any trust created under the
terms of a will or a codicil to a will executed on or before March 30,
1924, by which the testator bequeathed all of the outstanding common
stock of a corporation in trust, the income of which trust is to be used
principally for the benefit of those from time to time employed by the
corporation and their families, the trustees of which trust are elected
or selected from among the employees of such corporation, and which
trust does not own directly any stock in any other corporation, if the
trust makes an irrevocable election under this paragraph within one year
after the date of the enactment of this Act (Dec. 30, 1969), such trust
shall be treated as not being a private foundation for purposes of the
Internal Revenue Code of 1986 but shall be treated for purposes of such
Code as if it were not exempt from tax under section 501(a) for any
taxable year beginning after the date of the enactment of this Act (Dec.
30, 1969) and before the date (if any) on which such trust has complied
with the requirements of section 507 for termination of the status of an
organization as a private foundation.
''(8) Certain redemptions. -- For purposes of applying section
302(b)(1) to the determination of the amount of gross investment income
under sections 4940 and 4948(a), any distribution made to a private
foundation in redemption of stock held by such private foundation in a
business enterprise shall be treated as not essentially equivalent to a
dividend, if such redemption is described in paragraph (2)(B) of this
subsection.''
(Section 314(b)(2) of Pub. L. 98-369 provided that: ''The amendment
made by paragraph (1) (amending section 101(4)(A)(iii) of Pub. L.
91-172, set out above) shall apply as if included in section 101(l)(4)
of the Tax Reform Act of 1969 (Pub. L. 91-172).'')
(Section 1301(b) of Pub. L. 94-455 provided that: ''The amendments
made by subsection (a) (enacting subpar. (F) of section 101(2) of Pub.
L. 91-172, set out above) shall apply to dispositions after the date of
the enactment of this Act (Oct. 4, 1976) in taxable years ending after
such date.'')
(Section 1309(b) of Pub. L. 94-455 provided that: ''The amendment
made by this section (amending section 101(2)(B) of Pub. L. 91-172, set
out above) shall apply to dispositions made after the date of enactment
of this Act (Oct. 4, 1976).'')
(Section 4(b) of Pub. L. 93-490 provided that: ''The amendment made
by this section (enacting subpar. (F) of section 101(3) of Pub. L.
91-172, set out above) shall apply to taxable years beginning after
December 31, 1971.'')
Pub. L. 100-647, title VI, 6204, Nov. 10, 1988, 102 Stat. 3730,
provided that: ''For purposes of section 302(c)(3) of the Deficit
Reduction Act of 1984 (Pub. L. 98-369, set out below), a private
foundation which constituted an operating foundation (as defined in
section 4942(j)(3) of the Internal Revenue Code of 1986) for its last
taxable year ending before January 1, 1983, shall be treated as
constituting an operating foundation as of January 1, 1983.''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
Section 302(c)(3) of Pub. L. 98-369 provided that: ''A foundation
which was an operating foundation (as defined in section 4942(j)(3) of
the Internal Revenue Code of 1954) as of January 1, 1983, shall be
treated as meeting the requirements of section 4940(d)(2)(B) of such
Code (as added by subsection (a)).''
26 USC 4941. Taxes on self-dealing
TITLE 26 -- INTERNAL REVENUE CODE
(a) Initial taxes
(1) On self-dealer
There is hereby imposed a tax on each act of self-dealing between a
disqualified person and a private foundation. The rate of tax shall be
equal to 5 percent of the amount involved with respect to the act of
self-dealing for each year (or part thereof) in the taxable period. The
tax imposed by this paragraph shall be paid by any disqualified person
(other than a foundation manager acting only as such) who participates
in the act of self-dealing. In the case of a government official (as
defined in section 4946(c)), a tax shall be imposed by this paragraph
only if such disqualified person participates in the act of self-dealing
knowing that it is such an act.
(2) On foundation manager
In any case in which a tax is imposed by paragraph (1), there is
hereby imposed on the participation of any foundation manager in an act
of self-dealing between a disqualified person and a private foundation,
knowing that it is such an act, a tax equal to 2 1/2 percent of the
amount involved with respect to the act of self-dealing for each year
(or part thereof) in the taxable period, unless such participation is
not willful and is due to reasonable cause. The tax imposed by this
paragraph shall be paid by any foundation manager who participated in
the act of self-dealing.
(b) Additional taxes
(1) On self-dealer
In any case in which an initial tax is imposed by subsection (a)(1)
on an act of self-dealing by a disqualified person with a private
foundation and the act is not corrected within the taxable period, there
is hereby imposed a tax equal to 200 percent of the amount involved.
The tax imposed by this paragraph shall be paid by any disqualified
person (other than a foundation manager acting only as such) who
participated in the act of self-dealing.
(2) On foundation manager
In any case in which an additional tax is imposed by paragraph (1),
if a foundation manager refused to agree to part or all of the
correction, there is hereby imposed a tax equal to 50 percent of the
amount involved. The tax imposed by this paragraph shall be paid by any
foundation manager who refused to agree to part or all of the
correction.
(c) Special rules
For purposes of subsections (a) and (b) --
(1) Joint and several liability
If more than one person is liable under any paragraph of subsection
(a) or (b) with respect to any one act of self-dealing, all such persons
shall be jointly and severally liable under such paragraph with respect
to such act.
(2) $10,000 limit for management
With respect to any one act of self-dealing, the maximum amount of
the tax imposed by subsection (a)(2) shall not exceed $10,000, and the
maximum amount of the tax imposed by subsection (b)(2) shall not exceed
$10,000.
(d) Self-dealing
(1) In general
For purposes of this section, the term ''self-dealing'' means any
direct or indirect --
(A) sale or exchange, or leasing, of property between a private
foundation and a disqualified person;
(B) lending of money or other extension of credit between a private
foundation and a disqualified person;
(C) furnishing of goods, services, or facilities between a private
foundation and a disqualified person;
(D) payment of compensation (or payment or reimbursement of expenses)
by a private foundation to a disqualified person;
(E) transfer to, or use by or for the benefit of, a disqualified
person of the income or assets of a private foundation; and
(F) agreement by a private foundation to make any payment of money or
other property to a government official (as defined in section 4946(c)),
other than an agreement to employ such individual for any period after
the termination of his government service if such individual is
terminating his government service within a 90-day period.
(2) Special rules
For purposes of paragraph (1) --
(A) the transfer of real or personal property by a disqualified
person to a private foundation shall be treated as a sale or exchange if
the property is subject to a mortgage or similar lien which the
foundation assumes or if it is subject to a mortgage or similar lien
which a disqualified person placed on the property within the 10-year
period ending on the date of the transfer;
(B) the lending of money by a disqualified person to a private
foundation shall not be an act of self-dealing if the loan is without
interest or other charge (determined without regard to section 7872) and
if the proceeds of the loan are used exclusively for purposes specified
in section 501(c)(3);
(C) the furnishing of goods, services, or facilities by a
disqualified person to a private foundation shall not be an act of
self-dealing if the furnishing is without charge and if the goods,
services, or facilities so furnished are used exclusively for purposes
specified in section 501(c)(3);
(D) the furnishing of goods, services, or facilities by a private
foundation to a disqualified person shall not be an act of self-dealing
if such furnishing is made on a basis no more favorable than that on
which such goods, services, or facilities are made available to the
general public;
(E) except in the case of a government official (as defined in
section 4946(c)), the payment of compensation (and the payment or
reimbursement of expenses) by a private foundation to a disqualified
person for personal services which are reasonable and necessary to
carrying out the exempt purpose of the private foundation shall not be
an act of self-dealing if the compensation (or payment or reimbursement)
is not excessive;
(F) any transaction between a private foundation and a corporation
which is a disqualified person (as defined in section 4946(a)), pursuant
to any liquidation, merger, redemption, recapitalization, or other
corporate adjustment, organization, or reorganization, shall not be an
act of self-dealing if all of the securities of the same class as that
held by the foundation are subject to the same terms and such terms
provide for receipt by the foundation of no less than fair market value;
(G) in the case of a government official (as defined in section
4946(c)), paragraph (1) shall in addition not apply to --
(i) prizes and awards which are subject to the provisions of section
74(b) (without regard to paragraph (3) thereof), if the recipients of
such prizes and awards are selected from the general public,
(ii) scholarships and fellowship grants which would be subject to the
provisions of section 117(a) (as in effect on the day before the date of
the enactment of the Tax Reform Act of 1986) and are to be used for
study at an educational organization described in section
170(b)(1)(A)(ii),
(iii) any annuity or other payment (forming part of a stock-bonus,
pension, or profit-sharing plan) by a trust which is a qualified trust
under section 401,
(iv) any annuity or other payment under a plan which meets the
requirements of section 404(a)(2),
(v) any contribution or gift (other than a contribution or gift of
money) to, or services or facilities made available to, any such
individual, if the aggregate value of such contributions, gifts,
services, and facilities to, or made available to, such individual
during any calendar year does not exceed $25,
(vi) any payment made under chapter 41 of title 5, United States
Code, or
(vii) any payment or reimbursement of traveling expenses for travel
solely from one point in the United States to another point in the
United States, but only if such payment or reimbursement does not exceed
the actual cost of the transportation involved plus an amount for all
other traveling expenses not in excess of 125 percent of the maximum
amount payable under section 5702 of title 5, United States Code, for
like travel by employees of the United States; and
(H) the leasing by a disqualified person to a private foundation of
office space for use by the foundation in a building with other tenants
who are not disqualified persons shall not be treated as an act of
self-dealing if --
(i) such leasing of office space is pursuant to a binding lease which
was in effect on October 9, 1969, or pursuant to renewals of such a
lease;
(ii) the execution of such lease was not a prohibited transaction
(within the meaning of section 503(b) or any corresponding provision of
prior law) at the time of such execution; and
(iii) the terms of the lease (or any renewal) reflect an arm's-length
transaction.
(e) Other definitions
For purposes of this section --
(1) Taxable period
The term ''taxable period'' means, with respect to any act of
self-dealing, the period beginning with the date on which the act of
self-dealing occurs and ending on the earliest of --
(A) the date of mailing a notice of deficiency with respect to the
tax imposed by subsection (a)(1) under section 6212,
(B) the date on which the tax imposed by subsection (a)(1) is
assessed, or
(C) the date on which correction of the act of self-dealing is
completed.
(2) Amount involved
The term ''amount involved'' means, with respect to any act of
self-dealing, the greater of the amount of money and the fair market
value of the other property given or the amount of money and the fair
market value of the other property received; except that, in the case
of services described in subsection (d)(2)(E), the amount involved shall
be only the excess compensation. For purposes of the preceding
sentence, the fair market value --
(A) in the case of the taxes imposed by subsection (a), shall be
determined as of the date on which the act of self-dealing occurs; and
(B) in the case of the taxes imposed by subsection (b), shall be the
highest fair market value during the taxable period.
(3) Correction
The terms ''correction'' and ''correct'' mean, with respect to any
act of self-dealing, undoing the transaction to the extent possible, but
in any case placing the private foundation in a financial position not
worse than that in which it would be if the disqualified person were
dealing under the highest fiduciary standards.
(Added Pub. L. 91-172, title I, 101(b), Dec. 30, 1969, 83 Stat.
499; amended Pub. L. 94-455, title XIX, 1901(b)(8)(H),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1795, 1834; Pub. L. 96-596,
2(a)(1)(A), (B), (2)(A), (3)(A), Dec. 24, 1980, 94 Stat. 3469, 3471;
Pub. L. 96-608, 5, Dec. 28, 1980, 94 Stat. 3553; Pub. L. 99-234, title
I, 107(c), Jan. 2, 1986, 99 Stat. 1759; Pub. L. 99-514, title I,
122(a)(2)(A), title XVIII, 1812(b)(1), Oct. 22, 1986, 100 Stat. 2110,
2833; Pub. L. 100-647, title I, 1001(d)(1)(A), Nov. 10, 1988, 102
Stat. 3350.)
The date of the enactment of the Tax Reform Act of 1986, referred to
in subsec. (d)(2)(G)(ii), is the date of enactment of Pub. L. 99-514,
which was approved Oct. 22, 1986.
1988 -- Subsec. (d)(2)(G)(ii). Pub. L. 100-647 amended cl. (ii)
generally. Prior to amendment, cl. (ii) read as follows:
''scholarships and fellowship grants which are subject to the provisions
of section 117(a) and are to be used for study at an educational
organization described in section 170(b)(1)(A)(ii),''.
1986 -- Subsec. (d)(2)(B). Pub. L. 99-514, 1812(b)(1), inserted
''(determined without regard to section 7872)'' after ''without interest
or other charge''.
Subsec. (d)(2)(G)(i). Pub. L. 99-514, 122(a)(2)(A), inserted
''(without regard to paragraph (3) thereof)'' after ''section 74(b)''.
Subsec. (d)(2)(G)(vii). Pub. L. 99-234 substituted ''5702'' for
''5702(a)''.
1980 -- Subsec. (b)(1). Pub. L. 96-596, 2(a)(1)(A), substituted
''taxable period'' for ''correction period''.
Subsec. (d)(2)(H). Pub. L. 96-608 added subpar. (H).
Subsec. (e)(1)(B), (C). Pub. L. 96-596, 2(a)(2)(A), added subpar.
(B) and redesignated former subpar. (B) as (C).
Subsec. (e)(2)(B). Pub. L. 96-596, 2(a)(1)(B), substituted ''taxable
period'' for ''correction period''.
Subsec. (e)(4). Pub. L. 96-596, 2(a)(3)(A), struck out par. (4)
which defined correction period, with respect to any act of
self-dealing, as the period beginning with the date on which the act of
self-dealing occurs and ending 90 days after the date of mailing of a
notice of deficiency with respect to the tax imposed by subsec. (b)(1)
of this section under section 6212 of this title, extended by any period
in which the deficiency cannot be assessed under section 6213(a) of this
title and any other period which the Secretary determines is reasonable
and necessary to bring about correction of the act of self-dealing.
1976 -- Subsec. (d)(2)(G)(ii). Pub. L. 94-455, 1901(b)(8)(H),
substituted ''educational organization described in section
170(b)(1)(A)(ii)'' for ''educational institution described in section
151(e)(4)'' after ''study at an''.
Subsec. (e)(4). Pub. L. 94-455, 1906(b)(13)(A), struck out ''or his
delegate'' after ''Secretary''.
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Amendment by section 122(a)(2)(A) of Pub. L. 99-514 applicable to
prizes and awards granted after Dec. 31, 1986, see section 151(c) of
Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 1812(b)(1) of Pub. L. 99-514 effective, except
as otherwise provided, as if included in the provisions of the Tax
Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment
relates, see section 1881 of Pub. L. 99-514, set out as a note under
section 48 of this title.
Amendment by Pub. L. 99-234 effective (1) on effective date of
regulations to be promulgated not later than 150 days after Jan. 2,
1986, or (2) 180 days after Jan. 2, 1986, whichever occurs first, see
section 301(a) of Pub. L. 99-234, set out as a note under section 5701
of Title 5, Government Organization and Employees.
For effective date of amendment by Pub. L. 96-596 with respect to
any first tier tax and to any second tier tax, see section 2(d) of Pub.
L. 96-596, set out as an Effective Date note under section 4961 of this
title.
Exceptions to applicability of section, see section 101(l)(2) of Pub.
L. 91-172, set out as a note under section 4940 of this title.
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
Pub. L. 98-369, div. A, title III, 312, July 18, 1984, 98 Stat.
786, as amended by Pub. L. 99-514, 2, Oct. 22, 1986, 100 Stat. 2095,
provided that:
''(a) General Rule. -- Section 4941 of the Internal Revenue Code of
1986 (formerly I.R.C. 1954) (relating to taxes on self-dealing) shall
not apply to the purchase during 1978 of stock from a private foundation
(and to any note issued in connection with such purchase) if --
''(1) consideration for such purchase equaled or exceeded the fair
market value of such stock,
''(2) the purchaser of such stock did not make any contribution to
such foundation at any time during the 5-year period ending on the date
of such purchase,
''(3) the aggregate contributions to such foundation by the purchaser
before such date were less than $10,000 and less than 2 percent of the
total contributions received by the foundation as of such date, and
''(4) such purchase was pursuant to the settlement of litigation
involving the purchaser.
''(b) Statute of Limitations. -- If credit or refund of any
overpayment of tax resulting from subsection (a) is prevented at any
time before the close of the 1-year period beginning on the date of the
enactment of this Act (July 18, 1984) by the operation of any law or
rule of law, refund or credit of such overpayment may, nevertheless, be
made or allowed if claim therefor is filed before the close of such
1-year period.''
Determination of status as substantial contributor within section
507(d)(2) of this title for purposes of applying this section, see
section 3 of Pub. L. 95-170, set out as a note under section 507 of
this title.
26 USC 4942. Taxes on failure to distribute income
TITLE 26 -- INTERNAL REVENUE CODE
(a) Initial tax
There is hereby imposed on the undistributed income of a private
foundation for any taxable year, which has not been distributed before
the first day of the second (or any succeeding) taxable year following
such taxable year (if such first day falls within the taxable period), a
tax equal to 15 percent of the amount of such income remaining
undistributed at the beginning of such second (or succeeding) taxable
year. The tax imposed by this subsection shall not apply to the
undistributed income of a private foundation --
(1) for any taxable year for which it is an operating foundation (as
defined in subsection (j)(3)), or
(2) to the extent that the foundation failed to distribute any amount
solely because of an incorrect valuation of assets under subsection (e),
if --
(A) the failure to value the assets properly was not willful and was
due to reasonable cause,
(B) such amount is distributed as qualifying distributions (within
the meaning of subsection (g)) by the foundation during the allowable
distribution period (as defined in subsection (j)(2)),
(C) the foundation notifies the Secretary that such amount has been
distributed (within the meaning of subparagraph (B)) to correct such
failure, and
(D) such distribution is treated under subsection (h)(2) as made out
of the undistributed income for the taxable year for which a tax would
(except for this paragraph) have been imposed under this subsection.
(b) Additional tax
In any case in which an initial tax is imposed under subsection (a)
on the undistributed income of a private foundation for any taxable
year, if any portion of such income remains undistributed at the close
of the taxable period, there is hereby imposed a tax equal to 100
percent of the amount remaining undistributed at such time.
(c) Undistributed income
For purposes of this section, the term ''undistributed income''
means, with respect to any private foundation for any taxable year as of
any time, the amount by which --
(1) the distributable amount for such taxable year, exceeds
(2) the qualifying distributions made before such time out of such
distributable amount.
(d) Distributable amount
For purposes of this section, the term ''distributable amount''
means, with respect to any foundation for any taxable year, an amount
equal to --
(1) the sum of the minimum investment return plus the amounts
described in subsection (f)(2)(C), reduced by
(2) the sum of the taxes imposed on such private foundation for the
taxable year under subtitle A and section 4940.
(e) Minimum investment return
(1) In general
For purposes of subsection (d), the minimum investment return for any
private foundation for any taxable year is 5 percent of the excess of --
(A) the aggregate fair market value of all assets of the foundation
other than those which are used (or held for use) directly in carrying
out the foundation's exempt purpose, over
(B) the acquisition indebtedness with respect to such assets
(determined under section 514(c)(1) without regard to the taxable year
in which the indebtedness was incurred).
(2) Valuation
(A) In general
For purposes of paragraph (1)(A), the fair market value of securities
for which market quotations are readily available shall be determined on
a monthly basis. For all other assets, the fair market value shall be
determined at such times and in such manner as the Secretary shall by
regulations prescribe.
(B) Reductions in value for blockage or similar factors
In determining the value of any securities under this paragraph, the
fair market value of such securities (determined without regard to any
reduction in value) shall not be reduced unless, and only to the extent
that, the private foundation establishes that as a result of --
(i) the size of the block of such securities,
(ii) the fact that the securities held are securities in a closely
held corporation, or
(iii) the fact that the sale of such securities would result in a
forced or distress sale,
the securities could not be liquidated within a reasonable period of
time except at a price less than such fair market value. Any reduction
in value allowable under this subparagraph shall not exceed 10 percent
of such fair market value.
(f) Adjusted net income
(1) Defined
For purposes of subsection (j), the term ''adjusted net income''
means the excess (if any) of --
(A) the gross income for the taxable year (determined with the income
modifications provided by paragraph (2)), over
(B) the sum of the deductions (determined with the deduction
modifications provided by paragraph (3)) which would be allowed to a
corporation subject to the tax imposed by section 11 for the taxable
year.
(2) Income modifications
The income modifications referred to in paragraph (1)(A) are as
follows:
(A) section 103 (relating to State and local bonds) shall not apply,
(B) capital gains and losses from the sale or other disposition of
property shall be taken into account only in an amount equal to any net
short-term capital gain for the taxable year;
(C) there shall be taken into account --
(i) amounts received or accrued as repayments of amounts which were
taken into account as a qualifying distribution within the meaning of
subsection (g)(1)(A) for any taxable year;
(ii) notwithstanding subparagraph (B), amounts received or accrued
from the sale or other disposition of property to the extent that the
acquisition of such property was taken into account as a qualifying
distribution (within the meaning of subsection (g)(1)(B)) for any
taxable year; and
(iii) any amount set aside under subsection (g)(2) to the extent it
is determined that such amount is not necessary for the purposes for
which it was set aside; and
(D) section 483 (relating to imputed interest) shall not apply in the
case of a binding contract made in a taxable year beginning before
January 1, 1970.
(3) Deduction modifications
The deduction modifications referred to in paragraph (1)(B) are as
follows:
(A) no deduction shall be allowed other than all the ordinary and
necessary expenses paid or incurred for the production or collection of
gross income or for the management, conservation, or maintenance of
property held for the production of such income and the allowances for
depreciation and depletion determined under section 4940(c)(3)(B), and
(B) section 265 (relating to expenses and interest relating to
tax-exempt interest) shall not apply.
(4) Transitional rule
For purposes of paragraph (2)(B), the basis (for purposes of
determining gain) of property held by a private foundation on December
31, 1969, and continuously thereafter to the date of its disposition,
shall be deemed to be not less than the fair market value of such
property on December 31, 1969.
(g) Qualifying distributions defined
(1) In general
For purposes of this section, the term ''qualifying distribution''
means --
(A) any amount (including that portion of reasonable and necessary
administrative expenses) paid to accomplish one or more purposes
described in section 170(c)(2)(B), other than any contribution to (i) an
organization controlled (directly or indirectly) by the foundation or
one or more disqualified persons (as defined in section 4946) with
respect to the foundation, except as provided in paragraph (3), or (ii)
a private foundation which is not an operating foundation (as defined in
subsection (j)(3)), except as provided in paragraph (3), or
(B) any amount paid to acquire an asset used (or held for use)
directly in carrying out one or more purposes described in section
170(c)(2)(B).
(2) Certain set-asides
(A) In general
For all taxable years beginning on or after January 1, 1975, subject
to such terms and conditions as may be prescribed by the Secretary, an
amount set aside for a specific project which comes within one or more
purposes described in section 170(c)(2)(B) may be treated as a
qualifying distribution if it meets the requirements of subparagraph
(B).
(B) Requirements
An amount set aside for a specific project shall meet the
requirements of this subparagraph if at the time of the set-aside the
foundation establishes to the satisfaction of the Secretary that the
amount will be paid for the specific project within 5 years, and either
--
(i) at the time of the set-aside the private foundation establishes
to the satisfaction of the Secretary that the project is one which can
better be accomplished by such set-aside than by immediate payment of
funds, or
(ii)(I) the project will not be completed before the end of the
taxable year of the foundation in which the set-aside is made,
(II) the private foundation in each taxable year beginning after
December 31, 1975 (or after the end of the fourth taxable year following
the year of its creation, whichever is later), distributes amounts, in
cash or its equivalent, equal to not less than the distributable amount
determined under subsection (d) (without regard to subsection (i)) for
purposes described in section 170(c)(2)(B) (including but not limited to
payments with respect to set-asides which were treated as qualifying
distributions in one or more prior years), and
(III) the private foundation has distributed (including but not
limited to payments with respect to set-asides which were treated as
qualifying distributions in one or more prior years) during the four
taxable years immediately preceding its first taxable year beginning
after December 31, 1975, or the fifth taxable year following the year of
its creation, whichever is later, an aggregate amount, in cash or its
equivalent, of not less than the sum of the following: 80 percent of
the first preceding taxable year's distributable amount; 60 percent of
the second preceding taxable year's distributable amount; 40 percent of
the third preceding taxable year's distributable amount; and 20 percent
of the fourth preceding taxable year's distributable amount.
(C) Certain failures to distribute
If, for any taxable year to which clause (ii)(II) of subparagraph (B)
applies, the private foundation fails to distribute in cash or its
equivalent amounts not less than those required by such clause and --
(i) the failure to distribute such amounts was not willful and was
due to reasonable cause, and
(ii) the foundation distributes an amount in cash or its equivalent
which is not less than the difference between the amounts required to be
distributed under clause (ii)(II) of subparagraph (B) and the amounts
actually distributed in cash or its equivalent during that taxable year
within the correction period (as defined in section 4963(e)),
such distribution in cash or its equivalent shall be treated for the
purposes of this subparagraph as made during such year.
(D) Reduction in distribution amount
If, during the taxable years in the adjustment period for which the
organization is a private foundation, the foundation distributes amounts
in cash or its equivalent which exceed the amount required to be
distributed under clause (ii)(II) of subparagraph (B) (including but not
limited to payments with respect to set-asides which were treated as
qualifying distributions in prior years), then for purposes of this
subsection the distribution required under clause (ii)(II) of
subparagraph (B) for the taxable year shall be reduced by an amount
equal to such excess.
(E) Adjustment period
For purposes of subparagraph (D), with respect to any taxable year of
a private foundation, the taxable years in the adjustment period are the
taxable years (not exceeding 5) beginning after December 31, 1975, and
immediately preceding the taxable year.
In the case of a set-aside which satisfies the requirements of clause
(i) of subparagraph (B), for good cause shown, the period for paying the
amount set aside may be extended by the Secretary.
(3) Certain contributions to section 501(c)(3) organizations
For purposes of this section, the term ''qualifying distribution''
includes a contribution to a section 501(c)(3) organization described in
paragraph (1)(A)(i) or (ii) if --
(A) not later than the close of the first taxable year after its
taxable year in which such contribution is received, such organization
makes a distribution equal to the amount of such contribution and such
distribution is a qualifying distribution (within the meaning of
paragraph (1) or (2), without regard to this paragraph) which is treated
under subsection (h) as a distribution out of corpus (or would be so
treated if such section 501(c)(3) organization were a private foundation
which is not an operating foundation), and
(B) the private foundation making the contribution obtains adequate
records or other sufficient evidence from such organization showing that
the qualifying distribution described in subparagraph (A) has been made
by such organization.
(4) Limitation on administrative expenses allocable to making of
contributions, gifts, and grants
(A) In general
The amount of the grant administrative expenses paid during any
taxable year which may be taken into account as qualifying distributions
shall not exceed the excess (if any) of --
(i) .65 percent of the sum of the net assets of the private
foundation for such taxable year and the immediately preceding 2 taxable
years, over
(ii) the aggregate amount of grant administrative expenses paid
during the 2 preceding taxable years which were taken into account as
qualifying distributions.
(B) Grant administrative expenses
For purposes of this paragraph, the term ''grant administrative
expenses'' means any administrative expenses which are allocable to the
making of qualified grants.
(C) Qualified grants
For purposes of this paragraph, the term ''qualified grant'' means
any contribution, gift, or grant which is a qualifying distribution.
(D) Net asset
For purposes of this paragraph, the term ''net assets'' means, with
respect to any taxable year, the excess determined under subsection
(e)(1) for such taxable year.
(E) Transitional rule
In the case of any preceding taxable year which begins before January
1, 1985, the amount of the grant administrative expenses taken into
account under subparagraph (A)(ii) shall not exceed .65 percent of the
net assets of the private foundation for such taxable year.
(F) Termination
This paragraph shall not apply to taxable years beginning after
December 31, 1990.
(h) Treatment of qualifying distributions
(1) In general
Except as provided in paragraph (2), any qualifying distribution made
during a taxable year shall be treated as made --
(A) first out of the undistributed income of the immediately
preceding taxable year (if the private foundation was subject to the tax
imposed by this section for such preceding taxable year) to the extent
thereof,
(B) second out of the undistributed income for the taxable year to
the extent thereof, and
(C) then out of corpus.
For purposes of this paragraph, distributions shall be taken into
account in the order of time in which made.
(2) Correction of deficient distributions for prior taxable years,
etc.
In the case of any qualifying distribution which (under paragraph
(1)) is not treated as made out of the undistributed income of the
immediately preceding taxable year, the foundation may elect to treat
any portion of such distribution as made out of the undistributed income
of a designated prior taxable year or out of corpus. The election shall
be made by the foundation at such time and in such manner as the
Secretary shall by regulations prescribe.
(i) Adjustment of distributable amount where distributions during
prior years have exceeded income
(1) In general
If, for the taxable years in the adjustment period for which an
organization is a private foundation --
(A) the aggregate qualifying distributions treated (under subsection
(h)) as made out of the undistributed income for such taxable year or as
made out of corpus (except to the extent subsection (g)(3) with respect
to the recipient private foundation or section 170(b)(1)(E)(ii) applies)
during such taxable years, exceed
(B) the distributable amounts for such taxable years (determined
without regard to this subsection),
then, for purposes of this section (other than subsection (h)), the
distributable amount for the taxable year shall be reduced by an amount
equal to such excess.
(2) Taxable years in adjustment period
For purposes of paragraph (1), with respect to any taxable year of a
private foundation the taxable years in the adjustment period are the
taxable years (not exceeding 5) beginning after December 31, 1969, and
immediately preceding the taxable year.
(j) Other definitions
For purposes of this section --
(1) Taxable period
The term ''taxable period'' means, with respect to the undistributed
income for any taxable year, the period beginning with the first day of
the taxable year and ending on the earlier of --
(A) the date of mailing of a notice of deficiency with respect to the
tax imposed by subsection (a) under section 6212, or
(B) the date on which the tax imposed by subsection (a) is assessed.
(2) Allowable distribution period
The term ''allowable distribution period'' means, with respect to any
private foundation, the period beginning with the first day of the first
taxable year following the taxable year in which the incorrect valuation
(described in subsection (a)(2)) occurred and ending 90 days after the
date of mailing of a notice of deficiency (with respect to the tax
imposed by subsection (a)) under section 6212 extended by --
(A) any period in which a deficiency cannot be assessed under section
6213(a), and
(B) any other period which the Secretary determines is reasonable and
necessary to permit a distribution of undistributed income under this
section.
(3) Operating foundation
For purposes of this section, the term ''operating foundation'' means
any organization --
(A) which makes qualifying distributions (within the meaning of
paragraph (1) or (2) of subsection (g)) directly for the active conduct
of the activities constituting the purpose or function for which it is
organized and operated equal to substantially all of the lesser of --
(i) its adjusted net income (as defined in subsection (f)), or
(ii) its minimum investment return; and
(B)(i) substantially more than half of the assets of which are
devoted directly to such activities or to functionally related
businesses (as defined in paragraph (4)), or to both, or are stock of a
corporation which is controlled by the foundation and substantially all
of the assets of which are so devoted.
(ii) which normally makes qualifying distributions (within the
meaning of paragraph (1) or (2) of subsection (g)) directly for the
active conduct of the activities constituting the purpose or function
for which it is organized and operated in an amount not less than
two-thirds of its minimum investment return (as defined in subsection
(e)), or
(iii) substantially all of the support (other than gross investment
income as defined in section 509(e)) of which is normally received from
the general public and from 5 or more exempt organizations which are not
described in section 4946(a)(1)(H) with respect to each other or the
recipient foundation; not more than 25 percent of the support (other
than gross investment income) of which is normally received from any one
such exempt organization; and not more than half of the support of
which is normally received from gross investment income.
Notwithstanding the provisions of subparagraph (A), if the qualifying
distributions (within the meaning of paragraph (1) or (2) of subsection
(g)) of an organization for the taxable year exceed the minimum
investment return for the taxable year, clause (ii) of subparagraph (A)
shall not apply unless substantially all of such qualifying
distributions are made directly for the active conduct of the activities
constituting the purpose or function for which it is organized and
operated.
(4) Functionally related business
The term ''functionally related business'' means --
(A) a trade or business which is not an unrelated trade or business
(as defined in section 513), or
(B) an activity which is carried on within a larger aggregate of
similar activities or within a larger complex of other endeavors which
is related (aside from the need of the organization for income or funds
or the use it makes of the profits derived) to the exempt purposes of
the organization.
(5) Certain elderly care facilities
For purposes of this section (but no other provisions of this title),
the term ''operating foundation'' includes any organization which, on
May 26, 1969, and at all times thereafter before the close of the
taxable year, operated and maintained as its principal functional
purpose facilities for the long-term care, comfort, maintenance, or
education of permanently and totally disabled persons, elderly persons,
needy widows, or children but only if such organization meets the
requirements of paragraph (3)(B)(ii).
(Added Pub. L. 91-172, title I, 101(b), Dec. 30, 1969, 83 Stat.
502; amended Pub. L. 94-455, title XIII, 1302(a), 1303(a), 1310(a),
title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1713, 1715, 1729,
1834; Pub. L. 95-600, title V, 522(a), Nov. 6, 1978, 92 Stat. 2885;
Pub. L. 96-596, 2(a)(1)(C), (2)(B), (3)(B), (4)(A), Dec. 24, 1980, 94
Stat. 3469-3472; Pub. L. 97-34, title VIII, 823(a), Aug. 13, 1981, 95
Stat. 351; Pub. L. 97-448, title I, 108(b), Jan. 12, 1983, 96 Stat.
2391; Pub. L. 98-369, div. A, title III, 304(a), (b), 305(b)(4),
314(a)(1), (2), July 18, 1984, 98 Stat. 782-784, 787; Pub. L. 99-514,
title XIII, 1301(j)(6), Oct. 22, 1986, 100 Stat. 2658.)
1986 -- Subsec. (f)(2)(A). Pub. L. 99-514 substituted ''(relating to
State and local bonds)'' for ''(relating to interest on certain
governmental obligations)''.
1984 -- Subsec. (a)(2)(B). Pub. L. 98-369, 314(a)(1), substituted
''subsection (j)(2)'' for ''subsection (j)(4)''.
Subsec. (d)(1). Pub. L. 98-369, 304(b), substituted ''the sum of the
minimum investment return plus the amounts described in subsection
(f)(2)(C), reduced by'' for ''the minimum investment return reduced
by''.
Subsec. (f)(1). Pub. L. 98-369, 314(a)(2), substituted ''subsection
(j)'' for ''subsection (d)''.
Subsec. (g)(1)(A). Pub. L. 98-369, 304(a)(2), substituted
''including that portion of reasonable and necessary administrative
expenses'' for ''including administrative expenses''.
Subsec. (g)(2)(C)(ii). Pub. L. 98-369, 305(b)(4), substituted
''section 4963(e)'' for ''section 4962(e)''.
Subsec. (g)(4). Pub. L. 98-369, 304(a)(1), added par. (4).
1983 -- Subsec. (j)(3)(A)(i). Pub. L. 97-448 substituted ''or'' for
''and'' at the end.
1981 -- Subsec. (d)(1). Pub. L. 97-34, 823(a)(1), struck out ''or
the adjusted net income (whichever is higher)'' after ''return''.
Subsec. (j)(3). Pub. L. 97-34, 823(a)(2), (3), inserted in subpar.
(A) ''the lesser of'' after ''substantially all of'', designated
existing provisions as cl. (i), added cl. (ii), and inserted provision
respecting applicability of subpar. (A)(ii).
1980 -- Subsec. (b). Pub. L. 96-596, 2(a)(1)(C), substituted
''taxable period'' for ''correction period''.
Subsec. (g)(2)(C)(ii). Pub. L. 96-596, 2(a)(4)(A), substituted ''the
correction period (as defined in section 4962(e))'' for ''the initial
correction period provided in subsection (j)(2)''.
Subsec. (j)(1). Pub. L. 96-596, 2(a)(2)(B), substituted provision
ending the taxable period on the earlier of the date of mailing of a
notice of deficiency with respect to the tax imposed by subsec. (a) of
this section under section 6212 of this title or the date on which the
tax imposed by subsec. (a) of this section is assessed for provision
ending the taxable period on the date of mailing the notice of
deficiency with respect to a tax imposed by subsec. (a) of this section
under section 6212 of this title.
Subsec. (j)(2). Pub. L. 96-596, 2(a)(3)(B)(i), (iii), redesignated
par. (4) as (2) and struck out former par. (2), which defined
correction period, with respect to any private foundation for any
taxable year, as the period beginning with the first day of the taxable
year and ending 90 days after the date of mailing a notice of deficiency
with respect to the tax imposed by subsec. (b) of this section under
section 6212 of this title, extended by any period in which a deficiency
cannot be assessed under section 6213(a) of this title and any other
period which the Secretary determines is reasonable and necessary to
permit a distribution of undistributed income.
Subsec. (j)(3)(B)(i). Pub. L. 96-596, 2(a)(3)(B)(ii), substituted
''paragraph (4)'' for ''paragraph (5)''.
Subsec. (j)(4) to (6). Pub. L. 96-596, 2(a)(3)(B)(iii), (iv),
redesignated pars. (5) and (6) as (4) and (5), respectively.
1978 -- Subsec. (j)(6). Pub. L. 95-600 added par. (6).
1976 -- Subsec. (a)(2)(C). Pub. L. 94-455, 1906(b)(13)(A), struck
out ''or his delegate'' after ''Secretary''.
Subsec. (e). Pub. L. 94-455, 1303(a), among other changes,
substituted provisions establishing a fixed percentage rate to be used
in computing the minimum investment return for any private foundation
for provisions establishing a variable applicable percentage rate of 7
percent in 1970 and an applicable rate to be determined by the Secretary
after 1970, for use in computing the minimum investment return for any
private foundation and inserted provisions relating to reduction in
value for blockage or similar factors.
Subsec. (f)(2)(D). Pub. L. 94-455, 1310(a), added subpar. (D).
Subsec. (g)(2). Pub. L. 94-455, 1302(a), among other changes,
inserted reference to all taxable years beginning on or after Jan. 1,
1975, requirement that the project will not be completed before the end
of the taxable year of the foundation in which the set-aside is made,
and subpars. (C) to (E).
Subsecs. (h)(2), (j)(2)(B). Pub. L. 94-455, 1906(b)(13)(A), struck
out ''or his delegate'' after ''Secretary''.
Amendment by Pub. L. 99-514 applicable to bonds issued after Aug.
15, 1986, except as otherwise provided, see sections 1311 to 1318 of
Pub. L. 99-514, set out as an Effective Date; Transitional Rules note
under section 141 of this title.
Section 304(c) of Pub. L. 98-369 provided that: ''The amendments
made by this section (amending this section) shall apply to taxable
years beginning after December 31, 1984.''
Amendment by section 305(b)(4) of Pub. L. 98-369 applicable to
taxable events occurring after Dec. 31, 1984, see section 305(c) of
Pub. L. 98-369, set out as an Effective Date note under section 4962 of
this title.
Section 314(a)(4) of Pub. L. 98-369 provided that: ''The amendments
made by this subsection (amending this section and section 6501 of this
title) shall take effect on the date of the enactment of this Act (July
18, 1984).''.
Amendment by Pub. L. 97-448 effective, except as otherwise provided,
as if it had been included in the provision of the Economic Recovery Tax
Act of 1981, Pub. L. 97-34, to which such amendment relates, see
section 109 of Pub. L. 97-448, set out as a note under section 1 of
this title.
Section 823(b) of Pub. L. 97-34 provided that: ''The amendments
made by this section (amending this section) shall apply to taxable
years beginning after December 31, 1981.''
For effective date of amendment by Pub. L. 96-596 with respect to
any first tier tax and to any second tier tax, see section 2(d) of Pub.
L. 96-596, set out as an Effective Date note under section 4961 of this
title.
Section 522(b) of Pub. L. 95-600 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to taxable
years beginning after December 31, 1969.''
Section 1302(c) of Pub. L. 94-455 provided that: ''The amendments
made by this section (amending this section and section 6501 of this
title) shall apply to taxable years beginning after December 31, 1974.''
Section 1303(b) of Pub. L. 94-455 provided that: ''The amendment
made by this section (amending this section) applies to taxable years
beginning after December 31, 1975.''
Section 1310(b) of Pub. L. 94-455 provided that: ''The amendments
made by this section (amending this section) shall apply to taxable
years ending after the date of the enactment of this Act (Oct. 4,
1976).''
Applicability of section to organizations organized before May 27,
1969, see section 101(l)(3) of Pub. L. 91-172, set out as a note under
section 4940 of this title.
26 USC 4943. Taxes on excess business holdings
TITLE 26 -- INTERNAL REVENUE CODE
(a) Initial tax
(1) Imposition
There is hereby imposed on the excess business holdings of any
private foundation in a business enterprise during any taxable year
which ends during the taxable period a tax equal to 5 percent of the
value of such holdings.
(2) Special rules
The tax imposed by paragraph (1) --
(A) shall be imposed on the last day of the taxable year, but
(B) with respect to the private foundation's holdings in any business
enterprise, shall be determined as of that day during the taxable year
when the foundation's excess holdings in such enterprise were the
greatest.
(b) Additional tax
In any case in which an initial tax is imposed under subsection (a)
with respect to the holdings of a private foundation in any business
enterprise, if, at the close of the taxable period with respect to such
holdings, the foundation still has excess business holdings in such
enterprise, there is hereby imposed a tax equal to 200 percent of such
excess business holdings.
(c) Excess business holdings
For purposes of this section --
(1) In general
The term ''excess business holdings'' means, with respect to the
holdings of any private foundation in any business enterprise, the
amount of stock or other interest in the enterprise which the foundation
would have to dispose of to a person other than a disqualified person in
order for the remaining holdings of the foundation in such enterprise to
be permitted holdings.
(2) Permitted holdings in a corporation
(A) In general
The permitted holdings of any private foundation in an incorporated
business enterprise are --
(i) 20 percent of the voting stock, reduced by
(ii) the percentage of the voting stock owned by all disqualified
persons.
In any case in which all disqualified persons together do not own
more than 20 percent of the voting stock of an incorporated business
enterprise, nonvoting stock held by the private foundation shall also be
treated as permitted holdings.
(B) 35 percent rule where third person has effective control of
enterprise
If --
(i) the private foundation and all disqualified persons together do
not own more than 35 percent of the voting stock of an incorporated
business enterprise, and
(ii) it is established to the satisfaction of the Secretary that
effective control of the corporation is in one or more persons who are
not disqualified persons with respect to the foundation,
then subparagraph (A) shall be applied by substituting 35 percent for
20 percent.
(C) 2 percent de minimis rule
A private foundation shall not be treated as having excess business
holdings in any corporation in which it (together with all other private
foundations which are described in section 4946(a)(1)(H)) owns not more
than 2 percent of the voting stock and not more than 2 percent in value
of all outstanding shares of all classes of stock.
(3) Permitted holdings in partnerships, etc.
The permitted holdings of a private foundation in any business
enterprise which is not incorporated shall be determined under
regulations prescribed by the Secretary. Such regulations shall be
consistent in principle with paragraphs (2) and (4), except that --
(A) in the case of a partnership or joint venture, ''profits
interest'' shall be substituted for ''voting stock'', and ''capital
interest'' shall be substituted for ''nonvoting stock'',
(B) in the case of a proprietorship, there shall be no permitted
holdings, and
(C) in any other case, ''beneficial interest'' shall be substituted
for ''voting stock''.
(4) Present holdings
(A)(i) In applying this section with respect to the holdings of any
private foundation in a business enterprise, if such foundation and all
disqualified persons together have holdings in such enterprise in excess
of 20 percent of the voting stock on May 26, 1969, the percentage of
such holdings shall be substituted for ''20 percent,'' and for ''35
percent'' (if the percentage of such holdings is greater than 35
percent), wherever it appears in paragraph (2), but in no event shall
the percentage so substituted be more than 50 percent.
(ii) If the percentage of the holdings of any private foundation and
all disqualified persons together in a business enterprise (or if the
percentage of the holdings of the private foundation in such enterprise)
decreases for any reason, clause (i) and subparagraph (D) shall, except
as provided in the next sentence, be applied for all periods after such
decrease by substituting such decreased percentage for the percentage
held on May 26, 1969, but in no event shall the percentage substituted
be less than 20 percent. For purposes of the preceding sentence, any
decrease in percentage holdings attributable to issuances of stock (or
to issuances of stock coupled with redemptions of stock) shall be
disregarded so long as --
(I) the net percentage decrease disregarded under this sentence does
not exceed 2 percent, and
(II) the number of shares held by the foundation is not affected by
any such issuance or redemption.
(iii) The percentage substituted under clause (i), and any percentage
substituted under subparagraph (D), shall be applied both with respect
to the voting stock and, separately, with respect to the value of all
outstanding shares of all classes of stock.
(iv) In the case of any merger, recapitalization, or other
reorganization involving one or more business enterprises, the
application of clauses (i), (ii), and (iii) shall be determined under
regulations prescribed by the Secretary.
(B) Any interest in a business enterprise which a private foundation
holds on May 26, 1969, if the private foundation on such date has excess
business holdings, shall (while held by the foundation) be treated as
held by a disqualified person (rather than by the private foundation) --
(i) during the 20-year period beginning on such date, if the private
foundation and all disqualified persons have more than a 95 percent
voting stock interest on such date,
(ii) except as provided in clause (i), during the 15-year period
beginning on such date, if the foundation and all disqualified persons
have more than a 75 percent voting stock interest (or more than a 75
percent profits or beneficial interest in the case of any unincorporated
enterprise) on such date or more than a 75 percent interest in the value
of all outstanding shares of all classes of stock (or more than a 75
percent capital interest in the case of a partnership or joint venture)
on such date, or
(iii) during the 10-year period beginning on such date, in any other
case.
(C) The 20-year, 15-year, and 10-year periods described in
subparagraph (B) for the disposition of excess business holdings shall
be suspended during the pendency of any judicial proceeding by the
private foundation which is necessary to reform, or to excuse such
foundation from compliance with, its governing instrument or any other
instrument (as in effect on May 26, 1969) in order to allow disposition
of such holdings.
(D)(i) If, at any time during the second phase, all disqualified
persons together have holdings in a business enterprise in excess of 2
percent of the voting stock of such enterprise, then subparagraph (A)(i)
shall be applied by substituting for ''50 percent'' the following: ''50
percent, of which not more than 25 percent shall be voting stock held by
the private foundation''.
(ii) If, immediately before the close of the second phase, clause (i)
of this subparagraph did not apply with respect to a business
enterprise, then for all periods after the close of the second phase
subparagraph (A)(i) shall be applied by substituting for ''50 percent''
the following: ''35 percent, or if at any time after the close of the
second phase all disqualified persons together have had holdings in such
enterprise which exceed 2 percent of the voting stock, 35 percent, of
which not more than 25 percent shall be voting stock held by the private
foundation''.
(iii) For purposes of this subparagraph, the term ''second phase''
means the 15-year period immediately following the 20-year, 15-year, or
10-year period described in subparagraph (B), whichever applies, as
modified by subparagraph (C).
(E) Clause (ii) of subparagraph (B) shall not apply with respect to
any business enterprise if before January 1, 1971, one or more
individuals who are substantial contributors (or members of the family
(within the meaning of section 4946(d)) of one or more substantial
contributors) to the private foundation and who on May 26, 1969, held
more than 15 percent of the voting stock of the enterprise elect, in
such manner as the Secretary may by regulations prescribe, not to have
such clause (ii) apply with respect to such enterprise.
(5) Holdings acquired by trust or will
Paragraph (4) (other than subparagraph (B)(i)) shall apply to any
interest in a business enterprise which a private foundation acquires
under the terms of a trust which was irrevocable on May 26, 1969, or
under the terms of a will executed on or before such date, which are in
effect on such date and at all times thereafter, as if such interest
were held on May 26, 1969, except that the 15-year and 10-year periods
prescribed in clauses (ii) and (iii) of paragraph (4)(B) shall commence
with respect to such interest on the date of distribution under the
trust or will in lieu of May 26, 1969.
(6) 5-year period to dispose of gifts, bequests, etc.
Except as provided in paragraph (5), if, after May 26, 1969, there is
a change in the holdings in a business enterprise (other than by
purchase by the private foundation or by a disqualified person) which
causes the private foundation to have --
(A) excess business holdings in such enterprise, the interest of the
foundation in such enterprise (immediately after such change) shall
(while held by the foundation) be treated as held by a disqualified
person (rather than by the foundation) during the 5-year period
beginning on the date of such change in holdings; or
(B) an increase in excess business holdings in such enterprise
(determined without regard to subparagraph (A)), subparagraph (A) shall
apply, except that the excess holdings immediately preceding the
increase therein shall not be treated, solely because of such increase,
as held by a disqualified person (rather than by the foundation).
In any case where an acquisition by a disqualified person would
result in a substitution under clause (i) or (ii) of subparagraph (D) of
paragraph (4), the preceding sentence shall be applied with respect to
such acquisition as if it did not contain the phrase ''or by a
disqualified person'' in the material preceding subparagraph (A).
(7) 5-year extension of period to dispose of certain large gifts and
bequests
The Secretary may extend for an additional 5-year period the period
under paragraph (6) for disposing of excess business holdings in the
case of an unusually large gift or bequest of diverse business holdings
or holdings with complex corporate structures if --
(A) the foundation establishes that --
(i) diligent efforts to dispose of such holdings have been made
within the initial 5-year period, and
(ii) disposition within the initial 5-year period has not been
possible (except at a price substantially below fair market value) by
reason of such size and complexity or diversity of such holdings,
(B) before the close of the initial 5-year period --
(i) the private foundation submits to the Secretary a plan for
disposing of all of the excess business holdings involved in the
extension, and
(ii) the private foundation submits the plan described in clause (i)
to the Attorney General (or other appropriate State official) having
administrative or supervisory authority or responsibility with respect
to the foundation's disposition of the excess business holdings involved
and submits to the Secretary any response received by the private
foundation from the Attorney General (or other appropriate State
official) to such plan during such 5-year period, and
(C) the Secretary determines that such plan can reasonably be
expected to be carried out before the close of the extension period.
(d) Definitions; special rules
For purposes of this section --
(1) Business holdings
In computing the holdings of a private foundation, or a disqualified
person (as defined in section 4946) with respect thereto, in any
business enterprise, any stock or other interest owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust shall
be considered as being owned proportionately by or for its shareholders,
partners, or beneficiaries. The preceding sentence shall not apply with
respect to an income or remainder interest of a private foundation in a
trust described in section 4947(a)(2), but only if, in the case of
property transferred in trust after May 26, 1969, such foundation holds
only an income interest or only a remainder interest in such trust.
(2) Taxable period
The term ''taxable period'' means, with respect to any excess
business holdings of a private foundation in a business enterprise, the
period beginning on the first day on which there are excess holdings and
ending on the earlier of --
(A) the date of mailing of a notice of deficiency with respect to the
tax imposed by subsection (a) under section 6212 in respect of such
holdings, or
(B) the date on which the tax imposed by subsection (a) in respect of
such holdings is assessed.
(3) Business enterprise
The term ''business enterprise'' does not include --
(A) a functionally related business (as defined in section
4942(j)(4)), or
(B) a trade or business at least 95 percent of the gross income of
which is derived from passive sources.
For purposes of subparagraph (B), gross income from passive sources
includes the items excluded by section 512(b)(1), (2), (3), and (5), and
income from the sale of goods (including charges or costs passed on at
cost to purchasers of such goods or income received in settlement of a
dispute concerning or in lieu of the exercise of the right to sell such
goods) if the seller does not manufacture, produce, physically receive
or deliver, negotiate sales of, or maintain inventories in such goods.
(4) Disqualified person
The term ''disqualified person'' (as defined in section 4946(a)) does
not include a plan described in section 4975(e)(7) with respect to the
holdings of a private foundation described in paragraphs (4) and (5) of
subsection (c).
(Added Pub. L. 91-172, title I, 101(b), Dec. 30, 1969, 83 Stat.
507; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976,
90 Stat. 1834; Pub. L. 96-596, 2(a)(1)(D), (2)(C), (3)(C), (4)(B),
Dec. 24, 1980, 94 Stat. 3469-3472; Pub. L. 98-369, div. A, title III,
307(a), 308(a), 309(a), 310(a), 314(c)(1), July 18, 1984, 98 Stat. 784,
785, 787.)
1984 -- Subsec. (c)(4)(A)(ii). Pub. L. 98-369, 308(a), substituted
''For purposes of the preceding sentence, any decrease in percentage
holdings attributable to issuances of stock (or to issuances of stock
coupled with redemptions of stock) shall be disregarded so long as (I)
the net percentage decrease disregarded under this sentence does not
exceed 2 percent, and (II) the number of shares held by the foundation
is not affected by any such issuance or redemption'' for ''For purposes
of this clause, any decrease in percentage holdings attributable to
issuances of stock (or to issuances of stock coupled with redemptions of
stock) shall be determined only as of the close of each taxable year of
the private foundation unless the aggregate of the percentage decreases
attributable to the issuances of stock (or such issuances and
redemptions) during such taxable year equals or exceeds 1 percent''.
Subsec. (c)(4)(B)(i). Pub. L. 98-369, 309(a), substituted ''the
private foundation and all disqualified persons have'' for ''the private
foundation has''.
Subsec. (c)(6). Pub. L. 98-369, 310(a), inserted following subpar.
(B) ''In any case where an acquisition by a disqualified person would
result in a substitution under clause (i) or (ii) of subparagraph (D) of
paragraph (4), the preceding sentence shall be applied with respect to
such acquisition as if it did not contain the phrase 'or by a
disqualified person' in the material preceding subparagraph (A).''
Subsec. (c)(7). Pub. L. 98-369, 307(a), added par. (7).
Subsec. (d)(4). Pub. L. 98-369, 314(c)(1), added par. (4).
1980 -- Subsec. (b). Pub. L. 96-596, 2(a)(1)(D), substituted
''taxable period'' for ''correction period''.
Subsec. (d)(2). Pub. L. 96-596, 2(a)(2)(C), substituted provision
ending the taxable period on the earlier of the date of mailing of a
notice of deficiency with respect to the tax imposed by subsec. (a) of
this section under section 6212 of this title in respect to such
holdings or the date on which the tax imposed by subsec. (a) of this
section in respect to such holdings is assessed for provision ending the
taxable period on the date of mailing the notice of deficiency with
respect to a tax imposed by subsec. (a) of this section under section
6212 of this title in respect to such holdings.
Subsec. (d)(3), (4). Pub. L. 96-596, 2(a)(3)(C), (4)(B),
redesignated par. (4) as (3), and in subpar. (A) of par. (3) as so
redesignated, substituted ''section 4942(j)(4)'' for ''section
4942(j)(5)'', and struck out par. (3), which defined correction period,
with respect to excess business holdings of a private foundation in a
business enterprise, as the period ending 90 days after the date of
mailing of a notice of deficiency with respect to the tax imposed by
subsec. (b) of this section under section 6212 of this title, extended
by any period in which a deficiency cannot be assessed under section
6213(a) of this title and any other period which the Secretary
determines is reasonable and necessary to permit orderly disposition of
such excess business holdings.
1976 -- Subsecs. (c), (d). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Section 307(b) of Pub. L. 98-369, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) In general. -- The amendment made by subsection (a) (amending
this section) shall apply to business holdings with respect to which the
5-year period described in section 4943(c)(6) of the Internal Revenue
Code of 1986 (formerly I.R.C. 1954) ends on or after November 1, 1983.
''(2) Transitional rule. -- Any plan submitted to the Secretary of
the Treasury or his delegate on or before the 60th day after the date of
the enactment of this Act (July 18, 1984) shall be treated as submitted
before the close of the initial 5-year period referred to in section
4943(c)(7)(B) of the Internal Revenue Code of 1986 (as added by
subsection (a)).''
Section 308(b) of Pub. L. 98-369 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to increases
and decreases occurring after the date of the enactment of this Act
(July 18, 1984).''
Section 309(b) of Pub. L. 98-369 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect as if
included in the amendment made by section 101(b) of the Tax Reform Act
of 1969 (section 101(b) of Pub. L. 91-172 which enacted this section).''
Section 310(b) of Pub. L. 98-369 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to
acquisitions after the date of the enactment of this Act (July 18,
1984).''
Section 314(c)(2) of Pub. L. 98-369 provided that: ''The amendment
made by paragraph (1) (amending this section) shall apply with respect
to taxable years beginning after the date of the enactment of this Act
(July 18, 1984).''
For effective date of amendment by Pub. L. 96-596 with respect to
any first tier tax and to any second tier tax, see section 2(d) of Pub.
L. 96-596, set out as an Effective Date note under section 4961 of this
title.
Applicability of section to private foundations, see section
101(l)(4) of Pub. L. 91-172, set out as a note under section 4940 of
this title.
26 USC 4944. Taxes on investments which jeopardize charitable purpose
TITLE 26 -- INTERNAL REVENUE CODE
(a) Initial taxes
(1) On the private foundation
If a private foundation invests any amount in such a manner as to
jeopardize the carrying out of any of its exempt purposes, there is
hereby imposed on the making of such investment a tax equal to 5 percent
of the amount so invested for each year (or part thereof) in the taxable
period. The tax imposed by this paragraph shall be paid by the private
foundation.
(2) On the management
In any case in which a tax is imposed by paragraph (1), there is
hereby imposed on the participation of any foundation manager in the
making of the investment, knowing that it is jeopardizing the carrying
out of any of the foundation's exempt purposes, a tax equal to 5 percent
of the amount so invested for each year (or part thereof) in the taxable
period, unless such participation is not willful and is due to
reasonable cause. The tax imposed by this paragraph shall be paid by
any foundation manager who participated in the making of the investment.
(b) Additional taxes
(1) On the foundation
In any case in which an initial tax is imposed by subsection (a)(1)
on the making of an investment and such investment is not removed from
jeopardy within the taxable period, there is hereby imposed a tax equal
to 25 percent of the amount of the investment. The tax imposed by this
paragraph shall be paid by the private foundation.
(2) On the management
In any case in which an additional tax is imposed by paragraph (1),
if a foundation manager refused to agree to part or all of the removal
from jeopardy, there is hereby imposed a tax equal to 5 percent of the
amount of the investment. The tax imposed by this paragraph shall be
paid by any foundation manager who refused to agree to part or all of
the removal from jeopardy.
(c) Exception for program-related investments
For purposes of this section, investments, the primary purpose of
which is to accomplish one or more of the purposes described in section
170(c)(2)(B), and no significant purpose of which is the production of
income or the appreciation of property, shall not be considered as
investments which jeopardize the carrying out of exempt purposes.
(d) Special rules
For purposes of subsections (a) and (b) --
(1) Joint and several liability
If more than one person is liable under subsection (a)(2) or (b)(2)
with respect to any one investment, all such persons shall be jointly
and severally liable under such paragraph with respect to such
investment.
(2) Limit for management
With respect to any one investment, the maximum amount of the tax
imposed by subsection (a)(2) shall not exceed $5,000, and the maximum
amount of the tax imposed by subsection (b)(2) shall not exceed $10,000.
(e) Definitions
For purposes of this section --
(1) Taxable period
The term ''taxable period'' means, with respect to any investment
which jeopardizes the carrying out of exempt purposes, the period
beginning with the date on which the amount is so invested and ending on
the earliest of --
(A) the date of mailing of a notice of deficiency with respect to the
tax imposed by subsection (a)(1) under section 6212,
(B) the date on which the tax imposed by subsection (a)(1) is
assessed, or
(C) the date on which the amount so invested is removed from
jeopardy.
(2) Removal from jeopardy
An investment which jeopardizes the carrying out of exempt purposes
shall be considered to be removed from jeopardy when such investment is
sold or otherwise disposed of, and the proceeds of such sale or other
disposition are not investments which jeopardize the carrying out of
exempt purposes.
(Added Pub. L. 91-172, title I, 101(b), Dec. 30, 1969, 83 Stat.
511; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976,
90 Stat. 1834; Pub. L. 96-596, 2(a)(1)(E), (2)(D), (3)(D), Dec. 24,
1980, 94 Stat. 3469-3471.)
1980 -- Subsec. (b)(1). Pub. L. 96-596, 2(a)(1)(E), substituted
''taxable period'' for ''correction period''.
Subsec. (e)(1)(B), (C). Pub. L. 96-596, 2(a)(2)(D), added subpar.
(B) and redesignated former subpar. (B) as (C).
Subsec. (e)(3). Pub. L. 96-596, 2(a)(3)(D), struck out par. (3),
which defined correction period, with respect to any investment which
jeopardizes the carrying out of exempt purposes, as the period beginning
with the date on which such investment is entered into and ending 90
days after the date of mailing of a notice of deficiency with respect to
the tax imposed by subsec. (b)(1) of this section under section 6212 of
this title, extended by any period in which a deficiency cannot be
assessed under section 6213(a) of this title and any other period which
the Secretary determines is reasonable and necessary to bring about
removal from jeopardy.
1976 -- Subsec. (e)(3)(B). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary''.
For effective date of amendment by Pub. L. 96-596 with respect to
any first tier tax and to any second tier tax, see section 2(d) of Pub.
L. 96-596, set out as an Effective Date note under section 4961 of this
title.
26 USC 4945. Taxes on taxable expenditures
TITLE 26 -- INTERNAL REVENUE CODE
(a) Initial taxes
(1) On the foundation
There is hereby imposed on each taxable expenditure (as defined in
subsection (d)) a tax equal to 10 percent of the amount thereof. The
tax imposed by this paragraph shall be paid by the private foundation.
(2) On the management
There is hereby imposed on the agreement of any foundation manager to
the making of an expenditure, knowing that it is a taxable expenditure,
a tax equal to 2 1/2 percent of the amount thereof, unless such
agreement is not willful and is due to reasonable cause. The tax
imposed by this paragraph shall be paid by any foundation manager who
agreed to the making of the expenditure.
(b) Additional taxes
(1) On the foundation
In any case in which an initial tax is imposed by subsection (a)(1)
on a taxable expenditure and such expenditure is not corrected within
the taxable period, there is hereby imposed a tax equal to 100 percent
of the amount of the expenditure. The tax imposed by this paragraph
shall be paid by the private foundation.
(2) On the management
In any case in which an additional tax is imposed by paragraph (1),
if a foundation manager refused to agree to part or all of the
correction, there is hereby imposed a tax equal to 50 percent of the
amount of the taxable expenditure. The tax imposed by this paragraph
shall be paid by any foundation manager who refused to agree to part or
all of the correction.
(c) Special rules
For purposes of subsections (a) and (b) --
(1) Joint and several liability
If more than one person is liable under subsection (a)(2) or (b)(2)
with respect to the making of a taxable expenditure, all such persons
shall be jointly and severally liable under such paragraph with respect
to such expenditure.
(2) Limit for management
With respect to any one taxable expenditure, the maximum amount of
the tax imposed by subsection (a)(2) shall not exceed $5,000, and the
maximum amount of the tax imposed by subsection (b)(2) shall not exceed
$10,000.
(d) Taxable expenditure
For purposes of this section, the term ''taxable expenditure'' means
any amount paid or incurred by a private foundation --
(1) to carry on propaganda, or otherwise to attempt, to influence
legislation, within the meaning of subsection (e),
(2) except as provided in subsection (f), to influence the outcome of
any specific public election, or to carry on, directly or indirectly,
any voter registration drive,
(3) as a grant to an individual for travel, study, or other similar
purposes by such individual, unless such grant satisfies the
requirements of subsection (g),
(4) as a grant to an organization unless --
(A) such organization is described in paragraph (1), (2), or (3) of
section 509(a) or is an exempt operating foundation (as defined in
section 4940(d)(2)), or
(B) the private foundation exercises expenditure responsibility with
respect to such grant in accordance with subsection (h), or
(5) for any purpose other than one specified in section 170(c)(2)(B).
(e) Activities within subsection (d)(1)
For purposes of subsection (d)(1), the term ''taxable expenditure''
means any amount paid or incurred by a private foundation for --
(1) any attempt to influence any legislation through an attempt to
affect the opinion of the general public or any segment thereof, and
(2) any attempt to influence legislation through communication with
any member or employee of a legislative body, or with any other
government official or employee who may participate in the formulation
of the legislation (except technical advice or assistance provided to a
governmental body or to a committee or other subdivision thereof in
response to a written request by such body or subdivision, as the case
may be),
other than through making available the results of nonpartisan
analysis, study, or research. Paragraph (2) of this subsection shall
not apply to any amount paid or incurred in connection with an
appearance before, or communication to, any legislative body with
respect to a possible decision of such body which might affect the
existence of the private foundation, its powers and duties, its
tax-exempt status, or the deduction of contributions to such foundation.
(f) Nonpartisan activities carried on by certain organizations
Subsection (d)(2) shall not apply to any amount paid or incurred by
any organization --
(1) which is described in section 501(c)(3) and exempt from taxation
under section 501(a),
(2) the activities of which are nonpartisan, are not confined to one
specific election period, and are carried on in 5 or more States,
(3) substantially all of the income of which is expended directly for
the active conduct of the activities constituting the purpose or
function for which it is organized and operated,
(4) substantially all of the support (other than gross investment
income as defined in section 509(e)) of which is received from exempt
organizations, the general public, governmental units described in
section 170(c)(1), or any combination of the foregoing; not more than
25 percent of such support is received from any one exempt organization
(for this purpose treating private foundations which are described in
section 4946(a)(1)(H) with respect to each other as one exempt
organization); and not more than half of the support of which is
received from gross investment income, and
(5) contributions to which for voter registration drives are not
subject to conditions that they may be used only in specified States,
possessions of the United States, or political subdivisions or other
areas of any of the foregoing, or the District of Columbia, or that they
may be used in only one specific election period.
In determining whether the organization meets the requirements of
paragraph (4) for any taxable year of such organization, there shall be
taken into account the support received by such organization during such
taxable year and during the immediately preceding 4 taxable years of
such organization (excluding therefrom any preceding taxable year which
begins before January 1, 1970). Subsection (d)(4) shall not apply to
any grant to an organization which meets the requirements of this
subsection.
(g) Individual grants
Subsection (d)(3) shall not apply to an individual grant awarded on
an objective and nondiscriminatory basis pursuant to a procedure
approved in advance by the Secretary, if it is demonstrated to the
satisfaction of the Secretary that --
(1) the grant constitutes a scholarship or fellowship grant which
would be subject to the provisions of section 117(a) (as in effect on
the day before the date of the enactment of the Tax Reform Act of 1986)
and is to be used for study at an educational organization described in
section 170(b)(1)(A)(ii),
(2) the grant constitutes a prize or award which is subject to the
provisions of section 74(b)(without regard to paragraph (3) thereof), if
the recipient of such prize or award is selected from the general
public, or
(3) the purpose of the grant is to achieve a specific objective,
produce a report or other similar product, or improve or enhance a
literary, artistic, musical, scientific, teaching, or other similar
capacity, skill, or talent of the grantee.
(h) Expenditure responsibility
The expenditure responsibility referred to in subsection (d)(4) means
that the private foundation is responsible to exert all reasonable
efforts and to establish adequate procedures --
(1) to see that the grant is spent solely for the purpose for which
made,
(2) to obtain full and complete reports from the grantee on how the
funds are spent, and
(3) to make full and detailed reports with respect to such
expenditures to the Secretary.
(i) Other definitions
For purposes of this section --
(1) Correction
The terms ''correction'' and ''correct'' means, with respect to any
taxable expenditure, (A) recovering part or all of the expenditure to
the extent recovery is possible, and where full recovery is not possible
such additional corrective action as is prescribed by the Secretary by
regulations, or (B) in the case of a failure to comply with subsection
(h)(2) or (h)(3), obtaining or making the report in question.
(2) Taxable period
The term ''taxable period'' means, with respect to any taxable
expenditure, the period beginning with the date on which the taxable
expenditure occurs and ending on the earlier of --
(A) the date of mailing a notice of deficiency with respect to the
tax imposed by subsection (a)(1) under section 6212, or
(B) the date on which the tax imposed by subsection (a)(1) is
assessed.
(Added Pub. L. 91-172, title I, 101(b), Dec. 30, 1969, 83 Stat.
512; amended Pub. L. 94-455, title XIX, 1901(b)(8)(H), 1906(b)(13(A),
Oct. 4, 1976, 90 Stat. 1795, 1834; Pub. L. 96-596, 2(a)(1)(F), (2)(E),
Dec. 24, 1980, 94 Stat. 3469, 3470; Pub. L. 98-369, div. A, title III,
302(b), July 18, 1984, 98 Stat. 780; Pub. L. 99-514, title I,
122(a)(2)(B), Oct. 22, 1986, 100 Stat. 2110; Pub. L. 100-647, title I,
1001(d)(1)(B), Nov. 10, 1988, 102 Stat. 3350.)
The date of the enactment of the Tax Reform Act of 1986, referred to
in subsec. (g)(1), is the date of enactment of Pub. L. 99-514, which
was approved Oct. 22, 1986.
1988 -- Subsec. (g)(1). Pub. L. 100-647 amended par. (1) generally.
Prior to amendment, par. (1) read as follows: ''the grant constitutes
a scholarship or fellowship grant which is subject to the provisions of
section 117(a) and is to be used for study at an educational
organization described in section 170(b)(1)(A)(ii),''.
1986 -- Subsec. (g)(2). Pub. L. 99-514 inserted ''(without regard to
paragraph (3) thereof)'' after ''section 74(b)''.
1984 -- Subsec. (d)(4). Pub. L. 98-369, in amending par. (4)
generally, divided existing provisions into subpars. (A) and (B) and
inserted reference in subpar. (A) to exempt foundations (as defined in
section 4940(d)(2)).
1980 -- Subsec. (b)(1). Pub. L. 96-596, 2(a)(1)(F), substituted
''taxable period'' for ''correction period''.
Subsec. (i)(2). Pub. L. 96-596, 2(a)(2)(E), substituted provision
defining taxable period as the period beginning with the date on which
the taxable expenditure occurs and ending on the earlier of the date of
mailing a notice of deficiency with respect to the tax imposed by
subsec. (a)(1) of this section under section 6212 of this title or the
date on which the tax imposed by subsec. (a)(1) of this section is
assessed for provision defining correction period as the period
beginning with the date on which the taxable expenditure occurs and
ending 90 days after the date of mailing of a notice of deficiency with
respect to the tax imposed by subsec. (b)(1) of this section under
section 6212 of this title, extended by any period in which the
deficiency cannot be assessed under section 6213(a) of this title and
any other period which the Secretary determines to be reasonable and
necessary, except that such determination not be made with respect to
any taxable expenditure within the meaning of pars. (1), (2), (3), or
(4) of subsec. (d) of this section because of any action by an
appropriate State officer.
1976 -- Subsec. (g). Pub. L. 94-455, 1901(b)(8)(H),
1906(b)(13)(A), struck out in provisions preceding par. (1) ''or his
delegate'' after ''Secretary'' and substituted in par. (1)
''educational organization described in section 170(b)(1)(A)(ii)'' for
''educational institution described in section 151(e)(4)''.
Subsecs. (h), (i). Pub. L. 94-455, 1906(b)(13)(A), struck out ''or
his delegate'' after ''Secretary'' wherever appearing.
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Amendment by Pub. L. 99-514 applicable to prizes and awards granted
after Dec. 31, 1986, see section 151(c) of Pub. L. 99-514, set out as
a note under section 1 of this title.
Section 302(c)(2) of Pub. L. 98-369 provided that: ''The amendment
made by subsection (b) (amending this section) shall apply to grants
made after December 31, 1984, in taxable years ending after such date.''
For effective date of amendment by Pub. L. 96-596 with respect to
any first tier tax and to any second tier tax, see section 2(d) of Pub.
L. 96-596, set out as an Effective Date note under section 4961 of this
title.
Applicability of subsecs. (d)(4) and (h) of this section to grants
to private foundations described in section 101(l)(C)(3) of Pub. L.
91-172, see section 101(l)(5) of Pub. L. 91-172, set out as a note
under section 4940 of this title.
26 USC 4946. Definitions and special rules
TITLE 26 -- INTERNAL REVENUE CODE
(a) Disqualified person
(1) In general
For purposes of this subchapter, the term ''disqualified person''
means, with respect to a private foundation, a person who is --
(A) a substantial contributor to the foundation,
(B) a foundation manager (within the meaning of subsection (b)(1)),
(C) an owner of more than 20 percent of --
(i) the total combined voting power of a corporation,
(ii) the profits interest of a partnership, or
(iii) the beneficial interest of a trust or unincorporated
enterprise,
which is a substantial contributor to the foundation,
(D) a member of the family (as defined in subsection (d)) of any
individual described in subparagraph (A), (B), or (C),
(E) a corporation of which persons described in subparagraph (A),
(B), (C), or (D) own more than 35 percent of the total combined voting
power,
(F) a partnership in which persons described in subparagraph (A),
(B), (C), or (D) own more than 35 percent of the profits interest,
(G) a trust or estate in which persons described in subparagraph (A),
(B), (C), or (D) hold more than 35 percent of the beneficial interest,
(H) only for purposes of section 4943, a private foundation --
(i) which is effectively controlled (directly or indirectly) by the
same person or persons who control the private foundation in question,
or
(ii) substantially all of the contributions to which were made
(directly or indirectly) by the same person or persons described in
subparagraph (A), (B), or (C), or members of their families (within the
meaning of subsection (d)), who made (directly or indirectly)
substantially all of the contributions to the private foundation in
question, and
(I) only for purposes of section 4941, a government official (as
defined in subsection (c)).
(2) Substantial contributors
For purposes of paragraph (1), the term ''substantial contributor''
means a person who is described in section 507(d)(2).
(3) Stockholdings
For purposes of paragraphs (1)(C)(i) and (1)(E), there shall be taken
into account indirect stockholdings which would be taken into account
under section 267(c), except that, for purposes of this paragraph,
section 267(c)(4) shall be treated as providing that the members of the
family of an individual are the members within the meaning of subsection
(d).
(4) Partnerships; trusts
For purposes of paragraphs (1)(C)(ii) and (iii), (1)(F), and (1)(G),
the ownership of profits or beneficial interests shall be determined in
accordance with the rules for constructive ownership of stock provided
in section 267(c) (other than paragraph (3) thereof), except that
section 267(c)(4) shall be treated as providing that the members of the
family of an individual are the members within the meaning of subsection
(d).
(b) Foundation manager
For purposes of this subchapter, the term ''foundation manager''
means, with respect to any private foundation --
(1) an officer, director, or trustee of a foundation (or an
individual having powers or responsibilities similar to those of
officers, directors, or trustees of the foundation), and
(2) with respect to any act (or failure to act), the employees of the
foundation having authority or responsibility with respect to such act
(or failure to act).
(c) Government official
For purposes of subsection (a)(1)(I) and section 4941, the term
''government official'' means, with respect to an act of self-dealing
described in section 4941, an individual who, at the time of such act,
holds any of the following offices or positions (other than as a
''special Government employee'', as defined in section 202(a) of title
18, United States Code):
(1) an elective public office in the executive or legislative branch
of the Government of the United States,
(2) an office in the executive or judicial branch of the Government
of the United States, appointment to which was made by the President,
(3) a position in the executive, legislative, or judicial branch of
the Government of the United States --
(A) which is listed in schedule C of rule VI of the Civil Service
Rules, or
(B) the compensation for which is equal to or greater than the lowest
rate of compensation prescribed for GS-16 of the General Schedule under
section 5332 of title 5, United States Code,
(4) a position under the House of Representatives or the Senate of
the United States held by an individual receiving gross compensation at
an annual rate of $15,000 or more,
(5) an elective or appointive public office in the executive,
legislative, or judicial branch of the government of a State, possession
of the United States, or political subdivision or other area of any of
the foregoing, or of the District of Columbia, held by an individual
receiving gross compensation at an annual rate of $20,000 or more, or
(6) a position as personal or executive assistant or secretary to any
of the foregoing.
(d) Members of family
For purposes of subsection (a)(1), the family of any individual shall
include only his spouse, ancestors, children, grandchildren, great
grandchildren, and the spouses of children, grandchildren, and great
grandchildren.
(Added Pub. L. 91-172, title I, 101(b), Dec. 30, 1969, 83 Stat.
515; amended Pub. L. 95-227, 4(c)(2)(B), Feb. 10, 1978, 92 Stat. 22;
Pub. L. 98-369, div. A, title III, 306(a), July 18, 1984, 98 Stat.
784; Pub. L. 99-514, title XVI, 1606(a), Oct. 22, 1986, 100 Stat.
2771.)
1986 -- Subsec. (c)(5). Pub. L. 99-514 substituted ''$20,000'' for
''$15,000''.
1984 -- Subsec. (d). Pub. L. 98-369 amended subsec. (d) generally,
substituting references to children, grandchildren, and great
grandchildren for references to lineal descendants in two places.
1978 -- Subsecs. (a)(1), (b). Pub. L. 95-227 substituted
''subchapter'' for ''chapter''.
Section 1606(b) of Pub. L. 99-514 provided that: ''The amendment
made by this section (amending this section) shall apply to compensation
received after December 31, 1985.''
Section 306(c) of Pub. L. 98-369 provided that: ''The amendments
made by this subsection (probably should be ''section'', amending this
section and section 6104 of this title) shall take effect on January 1,
1985.''
Amendment by Pub. L. 95-227 applicable with respect to
contributions, acts, and expenditures made after Dec. 31, 1977, in and
for taxable years beginning after such date, see section 4(f) of Pub.
L. 95-227, set out as an Effective Date note under section 192 of this
title.
References in laws to the rates of pay for GS-16, 17, or 18, or to
maximum rates of pay under the General Schedule, to be considered
references to rates payable under specified sections of Title 5,
Government Organization and Employees, see section 529 (title I,
101(c)(1)) of Pub. L. 101-509, set out in a note under section 5376 of
Title 5.
26 USC 4947. Application of taxes to certain nonexempt trusts
TITLE 26 -- INTERNAL REVENUE CODE
(a) Application of tax
(1) Charitable trusts
For purposes of part II of subchapter F of chapter 1 (other than
section 508(a), (b), and (c)) and for purposes of this chapter, a trust
which is not exempt from taxation under section 501(a), all of the
unexpired interests in which are devoted to one or more of the purposes
described in section 170(c)(2)(B), and for which a deduction was allowed
under section 170, 545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or
2522 (or the corresponding provisions of prior law), shall be treated as
an organization described in section 501(c)(3). For purposes of section
509(a)(3)(A), such a trust shall be treated as if organized on the day
on which it first becomes subject to this paragraph.
(2) Split-interest trusts
In the case of a trust which is not exempt from tax under section
501(a), not all of the unexpired interests in which are devoted to one
or more of the purposes described in section 170(c)(2)(B), and which has
amounts in trust for which a deduction was allowed under section 170,
545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522, section 507
(relating to termination of private foundation status), section 508(e)
(relating to governing instruments) to the extent applicable to a trust
described in this paragraph, section 4941 (relating to taxes on
self-dealing), section 4943 (relating to taxes on excess business
holdings) except as provided in subsection (b)(3), section 4944
(relating to investments which jeopardize charitable purpose) except as
provided in subsection (b)(3), and section 4945 (relating to taxes on
taxable expenditures) shall apply as if such trust were a private
foundation. This paragraph shall not apply with respect to --
(A) any amounts payable under the terms of such trust to income
beneficiaries, unless a deduction was allowed under section
170(f)(2)(B), 2055(e)(2)(B), or 2522(c)(2)(B),
(B) any amounts in trust other than amounts for which a deduction was
allowed under section 170, 545(b)(2), 556(b)(2), 642(c), 2055,
2106(a)(2), or 2522, if such other amounts are segregated from amounts
for which no deduction was allowable, or
(C) any amounts transferred in trust before May 27, 1969.
(3) Segregated amounts
For purposes of paragraph (2)(B), a trust with respect to which
amounts are segregated shall separately account for the various income,
deduction, and other items properly attributable to each of such
segregated amounts.
(b) Special rules
(1) Regulations
The Secretary shall prescribe such regulations as may be necessary to
carry out the purposes of this section.
(2) Limit to segregated amounts
If any amounts in the trust are segregated within the meaning of
subsection (a)(2)(B) of this section, the value of the net assets for
purposes of subsections (c)(2) and (g) of section 507 shall be limited
to such segregated amounts.
(3) Sections 4943 and 4944
Sections 4943 and 4944 shall not apply to a trust which is described
in subsection (a)(2) if --
(A) all the income interest (and none of the remainder interest) of
such trust is devoted solely to one or more of the purposes described in
section 170(c)(2)(B), and all amounts in such trust for which a
deduction was allowed under section 170, 545(b)(2), 556(b)(2), 642(c),
2055, 2106(a)(2), or 2522 have an aggregate value not more than 60
percent of the aggregate fair market value of all amounts in such
trusts, or
(B) a deduction was allowed under section 170, 545(b)(2), 556(b)(2),
642(c), 2055, 2106(a)(2), or 2522 for amounts payable under the terms of
such trust to every remainder beneficiary but not to any income
beneficiary.
(Added Pub. L. 91-172, title I, 101(b), Dec. 30, 1969, 83 Stat.
517; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976,
90 Stat. 1834.)
1976 -- Subsec. (b)(1). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary''.
26 USC 4948. Application of taxes and denial of exemption with respect
to certain foreign organizations
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax on income of certain foreign organizations
In lieu of the tax imposed by section 4940, there is hereby imposed
for each taxable year on the gross investment income (within the meaning
of section 4940(c)(2)) derived from sources within the United States
(within the meaning of section 861) by every foreign organization which
is a private foundation for the taxable year a tax equal to 4 percent of
such income.
(b) Certain sections inapplicable
Section 507 (relating to termination of private foundation status),
section 508 (relating to special rules with respect to section 501(c)(3)
organizations), and this chapter (other than this section) shall not
apply to any foreign organization which has received substantially all
of its support (other than gross investment income) from sources outside
the United States.
(c) Denial of exemption to foreign organizations engaged in
prohibited transactions
(1) General rule
A foreign organization described in subsection (b) shall not be
exempt from taxation under section 501(a) if it has engaged in a
prohibited transaction after December 31, 1969.
(2) Prohibited transactions
For purposes of this subsection, the term ''prohibited transaction''
means any act or failure to act (other than with respect to section
4942(e)) which would subject a foreign organization described in
subsection (b), or a disqualified person (as defined in section 4946)
with respect thereto, to liability for a penalty under section 6684 or a
tax under section 507 if such foreign organization were a domestic
organization.
(3) Taxable years affected
(A) Except as provided in subparagraph (B), a foreign organization
described in subsection (b) shall be denied exemption from taxation
under section 501(a) by reason of paragraph (1) for all taxable years
beginning with the taxable year during which it is notified by the
Secretary that it has engaged in a prohibited transaction. The
Secretary shall publish such notice in the Federal Register on the day
on which he so notifies such foreign organization.
(B) Under regulations prescribed by the Secretary any foreign
organization described in subsection (b) which is denied exemption from
taxation under section 501(a) by reason of paragraph (1) may, with
respect to the second taxable year following the taxable year in which
notice is given under subparagraph (A) (or any taxable year thereafter),
file claim for exemption from taxation under section 501(a). If the
Secretary is satisfied that such organization will not knowingly again
engage in a prohibited transaction, such organization shall not, with
respect to taxable years beginning with the taxable year with respect to
which such claim is filed, be denied exemption from taxation under
section 501(a) by reason of any prohibited transaction which was engaged
in before the date on which such notice was given under subparagraph
(A).
(4) Disallowance of certain charitable deductions
No gift or bequest shall be allowed as a deduction under section 170,
545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522, if made --
(A) to a foreign organization described in subsection (b) after the
date on which the Secretary publishes notice under paragraph (3)(A) that
he has notified such organization that it has engaged in a prohibited
transaction, and
(B) in a taxable year of such organization for which it is not exempt
from taxation under section 501(a) by reason of paragraph (1).
(Added Pub. L. 91-172, title I, 101(b), Dec. 30, 1969, 83 Stat.
518; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976,
90 Stat. 1834.)
1976 -- Subsec. (c). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary'' wherever appearing.
26 USC Subchapter B -- Black Lung Benefit Trusts
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4951. Taxes on self-dealing.
4952. Taxes on taxable expenditures.
4953. Tax on excess contributions to black lung benefit trusts.
26 USC 4951. Taxes on self-dealing
TITLE 26 -- INTERNAL REVENUE CODE
(a) Initial taxes
(1) On self-dealer
There is hereby imposed a tax on each act of self-dealing between a
disqualified person and a trust described in section 501(c)(21). The
rate of tax shall be equal to 10 percent of the amount involved with
respect to the act of self-dealing for each year (or part thereof) in
the taxable period. The tax imposed by this paragraph shall be paid by
any disqualified person (other than a trustee acting only as a trustee
of the trust) who participates in the act of self-dealing.
(2) On trustee
In any case in which a tax is imposed by paragraph (1), there is
hereby imposed on the participation of any trustee of such a trust in an
act of self-dealing between a disqualified person and the trust, knowing
that it is such an act, a tax equal to 2 1/2 percent of the amount
involved with respect to the act of self-dealing for each year (or part
thereof) in the taxable period, unless such participation is not willful
and is due to reasonable cause. The tax imposed by this paragraph shall
be paid by any such trustee who participated in the act of self-dealing.
(b) Additional taxes
(1) On self-dealer
In any case in which an initial tax is imposed by subsection (a)(1)
on an act of self-dealing by a disqualified person with a trust
described in section 501(c)(21) and in which the act is not corrected
within the taxable period, there is hereby imposed a tax equal to 100
percent of the amount involved. The tax imposed by this paragraph shall
be paid by any disqualified person (other than a trustee acting only as
a trustee of such a trust) who participated in the act of self-dealing.
(2) On trustee
In any case in which an additional tax is imposed by paragraph (1),
if a trustee of such a trust refused to agree to part or all of the
correction, there is hereby imposed a tax equal to 50 percent of the
amount involved. The tax imposed by this paragraph shall be paid by any
such trustee who refused to agree to part or all of the correction.
(c) Joint and several liability
If more than one person is liable under any paragraph of subsection
(a) or (b) with respect to any one act of self-dealing, all such persons
shall be jointly and severally liable under such paragraph with respect
to such act.
(d) Self-dealing
(1) In general
For purposes of this section, the term ''self-dealing'' means any
direct or indirect --
(A) sale, exchange, or leasing of real or personal property between a
trust described in section 501(c)(21) and a disqualified person;
(B) lending of money or other extension of credit between such a
trust and a disqualified person;
(C) furnishing of goods, services, or facilities between such a trust
and a disqualified person;
(D) payment of compensation (or payment or reimbursement of expenses)
by such a trust to a disqualified person; and
(E) transfer to, or use by or for the benefit of, a disqualified
person of the income or assets of such a trust.
(2) Special rules
For purposes of paragraph (1) --
(A) the transfer of personal property by a disqualified person to
such a trust shall be treated as a sale or exchange if the property is
subject to a mortgage or similar lien;
(B) the furnishing of goods, services, or facilities by a
disqualified person to such a trust shall not be an act of self-dealing
if the furnishing is without charge and if the goods, services, or
facilities so furnished are used exclusively for the purposes specified
in section 501(c)(21)(A); and
(C) the payment of compensation (and the payment or reimbursement of
expenses) by such a trust to a disqualified person for personal services
which are reasonable and necessary to carrying out the exempt purpose of
the trust shall not be an act of self-dealing if the compensation (or
payment or reimbursement) is not excessive.
(e) Definitions
For purposes of this section --
(1) Taxable period
The term ''taxable period'' means, with respect to any act of
self-dealing, the period beginning with the date on which the act of
self-dealing occurs and ending on the earliest of --
(A) the date of mailing a notice of deficiency with respect to the
tax imposed by subsection (a)(1) under section 6212,
(B) the date on which the tax imposed by subsection (a)(1) is
assessed, or
(C) the date on which correction of the act of self-dealing is
completed.
(2) Amount involved
The term ''amount involved'' means, with respect to any act of
self-dealing, the greater of the amount of money and the fair market
value of the other property given or the amount of money and the fair
market value of the other property received; except that in the case of
services described in subsection (d)(2)(C), the amount involved shall be
only the excess compensation. For purposes of the preceding sentence,
the fair market value --
(A) in the case of the taxes imposed by subsection (a), shall be
determined as of the date on which the act of self-dealing occurs; and
(B) in the case of taxes imposed by subsection (b), shall be the
highest fair market value during the taxable period.
(3) Correction
The terms ''correction'' and ''correct'' mean, with respect to any
act of self-dealing, undoing the transaction to the extent possible, but
in any case placing the trust in a financial position not worse than
that in which it would be if the disqualified person were dealing under
the highest fiduciary standards.
(4) Disqualified person
The term ''disqualified person'' means, with respect to a trust
described in section 501(c)(21), a person who is --
(A) a contributor to the trust,
(B) a trustee of the trust,
(C) an owner of more than 10 percent of --
(i) the total combined voting power of a corporation,
(ii) the profits interest of a partnership, or
(iii) the beneficial interest of a trust or unincorporated
enterprise,
which is a contributor to the trust,
(D) an officer, director, or employee of a person who is a
contributor to the trust,
(E) the spouse, ancestor, lineal descendant, or spouse of a lineal
descendant of an individual described in subparagraph (A), (B), (C), or
(D),
(F) a corporation of which persons described in subparagraph (A),
(B), (C), (D), or (E) own more than 35 percent of the total combined
voting power,
(G) a partnership in which persons described in subparagraph (A),
(B), (C), (D), or (E), own more than 35 percent of the profits interest,
or
(H) a trust or estate in which persons described in subparagraph (A),
(B), (C), (D), or (E), hold more than 35 percent of the beneficial
interest.
For purposes of subparagraphs (C)(i) and (F), there shall be taken
into account indirect stockholdings which would be taken into account
under section 267(c), except that, for purposes of this paragraph,
section 267(c)(4) shall be treated as providing that the members of the
family of an individual are only those individuals described in
subparagraph (E) of this paragraph. For purposes of subparagraphs (C)
(ii) and (iii), (G), and (H), the ownership of profits or beneficial
interests shall be determined in accordance with the rules for
constructive ownership of stock provided in section 267(c) (other than
paragraph (3) thereof), except that section 267(c)(4) shall be treated
as providing that the members of the family of an individual are only
those individuals described in subparagraph (E) of this paragraph.
(f) Payments of benefits
For purposes of this section, a payment, out of assets or income of a
trust described in section 501(c)(21), for the purposes described in
subclause (I) or (IV) of section 501(c)(21)(A)(i) shall not be
considered an act of self-dealing.
(Added Pub. L. 95-227, 4(c)(1), Feb. 10, 1978, 92 Stat. 18; amended
Pub. L. 96-596, 2(a)(1)(G), (H), (2)(F), (3)(E), Dec. 24, 1980, 94
Stat. 3469-3471; Pub. L. 102-486, title XIX, 1940(b), Oct. 24, 1992,
106 Stat. 3035.)
1992 -- Subsec. (f). Pub. L. 102-486 substituted ''subclause (I) or
(IV) of section 501(c)(21)(A)(i)'' for ''clause (i) of section
501(c)(21)(A)''.
1980 -- Subsec. (b)(1). Pub. L. 96-596, 2(a)(1)(G), substituted
''taxable period'' for ''correction period''.
Subsec. (e)(1)(B), (C). Pub. L. 96-596, 2(a)(2)(F), added subpar.
(B) and redesignated former subpar. (B) as (C).
Subsec. (e)(2)(B). Pub. L. 96-596, 2(a)(1)(H), substituted ''taxable
period'' for ''correction period''.
Subsec. (e)(4), (5). Pub. L. 96-596, 2(a)(3)(E), redesignated par.
(5) as (4) and struck out former par. (4) which defined correction
period, with respect to any act of self-dealing, as the period beginning
with the date on which the act of self-dealing occurs and ending 90 days
after the date of mailing of a notice of deficiency under section 6212
of this title with respect to the tax imposed by subsec. (b)(1) of this
section, extended by any period in which a deficiency cannot be assessed
under section 6213(a) of this title and any other period which the
Secretary determines is reasonable and necessary to bring about
correction of the act of self-dealing.
Amendment by Pub. L. 102-486 applicable to taxable years beginning
after Dec. 31, 1991, see section 1940(d) of Pub. L. 102-486, set out
as a note under section 192 of this title.
For effective date of amendment by Pub. L. 96-596 with respect to
any first tier tax and to any second tier tax, see section 2(d) of Pub.
L. 96-596, set out as an Effective Date note under section 4961 of this
title.
Subchapter effective with respect to contributions, acts, and
expenditures made after Dec. 31, 1977, in and for taxable years
beginning after such date, see section 4(f) of Pub. L. 95-227, set out
as a note under section 192 of this title.
26 USC 4952. Taxes on taxable expenditures
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax imposed
(1) On the fund
There is hereby imposed on each taxable expenditure (as defined in
subsection (d)) from the assets or income of a trust described in
section 501(c)(21) a tax equal to 10 percent of the amount thereof. The
tax imposed by this paragraph shall be paid by the trustee out of the
assets of the trust.
(2) On the trustee
There is hereby imposed on the agreement of any trustee of such a
trust to the making of an expenditure, knowing that it is a taxable
expenditure, a tax equal to 2 1/2 percent of the amount thereof, unless
such agreement is not willful and is due to reasonable cause. The tax
imposed by this paragraph shall be paid by the trustee who agreed to the
making of the expenditure.
(b) Additional taxes
(1) On the fund
In any case in which an initial tax is imposed by subsection (a)(1)
on a taxable expenditure and such expenditure is not corrected within
the taxable period, there is hereby imposed a tax equal to 100 percent
of the amount of the expenditure. The tax imposed by this paragraph
shall be paid by the trustee out of the assets of the trust.
(2) On the trustee
In any case in which an additional tax is imposed by paragraph (1),
if a trustee refused to agree to a part or all of the correction, there
is hereby imposed a tax equal to 50 percent of the amount of the taxable
expenditure. The tax imposed by this paragraph shall be paid by any
trustee who refused to agree to part or all of the correction.
(c) Joint and several liability
For purposes of subsections (a) and (b), if more than one person is
liable under subsection (a)(2) or (b)(2) with respect to the making of a
taxable expenditure, all such persons shall be jointly and severally
liable under such paragraph with respect to such expenditure.
(d) Taxable expenditure
For purposes of this section, the term ''taxable expenditure'' means
any amount paid or incurred by a trust described in section 501(c)(21)
other than for a purpose specified in such section.
(e) Definitions
(1) Correction
The terms ''correction'' and ''correct'' mean, with respect to any
taxable expenditure, recovering part or all of the expenditure to the
extent recovery is possible, and where full recovery is not possible,
contributions by the person or persons whose liabilities for black lung
benefit claims (as defined in section 192(e)) are to be paid out of the
trust to the extent necessary to place the trust in a financial position
not worse than that in which it would be if the taxable expenditure had
not been made.
(2) Taxable period
The term ''taxable period'' means, with respect to any taxable
expenditure, the period beginning with the date on which the taxable
expenditure occurs and ending on the earlier of --
(A) the date of mailing a notice of deficiency with respect to the
tax imposed by subsection (a)(1) under section 6212, or
(B) the date on which the tax imposed by subsection (a)(1) is
assessed.
(Added Pub. L. 95-227, 4(c)(1), Feb. 10, 1978, 92 Stat. 21; amended
Pub. L. 96-596, 2(a)(1)(I), (2)(G), Dec. 24, 1980, 94 Stat. 3469,
3471.)
1980 -- Subsec. (b)(1). Pub. L. 96-596, 2(a)(1)(I), substituted
''taxable period'' for ''correction period''.
Subsec. (e)(2). Pub. L. 96-596, 2(a)(2)(G), substituted provision
defining taxable period as the period beginning with the date on which
the taxable expenditure occurs and ending on the earlier of the date of
mailing a notice of deficiency with respect to the tax imposed by
subsec. (a)(1) of this section under section 6212 of this title or the
date on which the tax imposed by subsec. (a)(1) of this section is
assessed for provision defining correction period as the period
beginning with the date on which the taxable expenditure occurs and
ending 90 days after the date of mailing a notice of deficiency under
section 6212 of this title with respect to the tax imposed by subsec.
(b)(1) of this section, extended by any period in which the deficiency
cannot be assessed under section 6213(a) of this title and any other
period which the Secretary determines reasonable and necessary to bring
about the correction of the taxable expenditure.
For effective date of amendment by Pub. L. 96-596 with respect to
any first tier tax and to any second tier tax, see section 2(d) of Pub.
L. 96-596, set out as an Effective Date note under section 4961 of this
title.
26 USC 4953. Tax on excess contributions to black lung benefit trusts
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax imposed
There is hereby imposed for each taxable year a tax in an amount
equal to 5 percent of the amount of the excess contributions made by a
person to or under a trust or trusts described in section 501(c)(21).
The tax imposed by this subsection shall be paid by the person making
the excess contribution.
(b) Excess contribution
For purposes of this section, the term ''excess contribution'' means
the sum of --
(1) the amount by which the amount contributed for the taxable year
to a trust or trusts described in section 501(c)(21) exceeds the amount
of the deduction allowable to such person for such contributions for the
taxable year under section 192, and
(2) the amount determined under this subsection for the preceding
taxable year, reduced by the sum of --
(A) the excess of the maximum amount allowable as a deduction under
section 192 for the taxable year over the amount contributed to the
trust or trusts for the taxable year, and
(B) amounts distributed from the trust to the contributor which were
excess contributions for the preceding taxable year.
(c) Treatment of withdrawal of excess contributions
Amounts distributed during the taxable year from a trust described in
section 501(c)(21) to the contributor thereof the sum of which does not
exceed the amount of the excess contribution made by the contributor
shall not be treated as --
(1) an act of self-dealing (within the meaning of section 4951),
(2) a taxable expenditure (within the meaning of section 4952), or
(3) an act contrary to the purposes for which the trust is exempt
from taxation under section 501(a).
(Added Pub. L. 95-227, 4(c)(1), Feb. 10, 1978, 92 Stat. 22.)
26 USC Subchapter C -- Political Expenditures of Section 501(c)(3)
Organizations
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4955. Taxes on political expenditures of section 501(c)(3)
organizations.
A prior subchapter C, consisting of sections 4961 to 4963 of this
title, was redesignated subchapter D.
26 USC 4955. Taxes on political expenditures of section 501(c)(3)
organizations
TITLE 26 -- INTERNAL REVENUE CODE
(a) Initial taxes
(1) On the organization
There is hereby imposed on each political expenditure by a section
501(c)(3) organization a tax equal to 10 percent of the amount thereof.
The tax imposed by this paragraph shall be paid by the organization.
(2) On the management
There is hereby imposed on the agreement of any organization manager
to the making of any expenditure, knowing that it is a political
expenditure, a tax equal to 2 1/2 percent of the amount thereof, unless
such agreement is not willful and is due to reasonable cause. The tax
imposed by this paragraph shall be paid by any organization manager who
agreed to the making of the expenditure.
(b) Additional taxes
(1) On the organization
In any case in which an initial tax is imposed by subsection (a)(1)
on a political expenditure and such expenditure is not corrected within
the taxable period, there is hereby imposed a tax equal to 100 percent
of the amount of the expenditure. The tax imposed by this paragraph
shall be paid by the organization.
(2) On the management
In any case in which an additional tax is imposed by paragraph (1),
if an organization manager refused to agree to part or all of the
correction, there is hereby imposed a tax equal to 50 percent of the
amount of the political expenditure. The tax imposed by this paragraph
shall be paid by any organization manager who refused to agree to part
or all of the correction.
(c) Special rules
For purposes of subsections (a) and (b) --
(1) Joint and several liability
If more than 1 person is liable under subsection (a)(2) or (b)(2)
with respect to the making of a political expenditure, all such persons
shall be jointly and severally liable under such subsection with respect
to such expenditure.
(2) Limit for management
With respect to any 1 political expenditure, the maximum amount of
the tax imposed by subsection (a)(2) shall not exceed $5,000, and the
maximum amount of the tax imposed by subsection (b)(2) shall not exceed
$10,000.
(d) Political expenditure
For purposes of this section --
(1) In general
The term ''political expenditure'' means any amount paid or incurred
by a section 501(c)(3) organization in any participation in, or
intervention in (including the publication or distribution of
statements), any political campaign on behalf of (or in opposition to)
any candidate for public office.
(2) Certain other expenditures included
In the case of an organization which is formed primarily for purposes
of promoting the candidacy (or prospective candidacy) of an individual
for public office (or which is effectively controlled by a candidate or
prospective candidate and which is availed of primarily for such
purposes), the term ''political expenditure'' includes any of the
following amounts paid or incurred by the organization:
(A) Amounts paid or incurred to such individual for speeches or other
services.
(B) Travel expenses of such individual.
(C) Expenses of conducting polls, surveys, or other studies, or
preparing papers or other materials, for use by such individual.
(D) Expenses of advertising, publicity, and fundraising for such
individual.
(E) Any other expense which has the primary effect of promoting
public recognition, or otherwise primarily accruing to the benefit, of
such individual.
(e) Coordination with section 4945
If tax is imposed under this section with respect to any political
expenditure, such expenditure shall not be treated as a taxable
expenditure for purposes of section 4945.
(f) Other definitions
For purposes of this section --
(1) Section 501(c)(3) organization
The term ''section 501(c)(3) organization'' means any organization
which (without regard to any political expenditure) would be described
in section 501(c)(3) and exempt from taxation under section 501(a).
(2) Organization manager
The term ''organization manager'' means --
(A) any officer, director, or trustee of the organization (or
individual having powers or responsibilities similar to those of
officers, directors, or trustees of the organization), and
(B) with respect to any expenditure, any employee of the organization
having authority or responsibility with respect to such expenditure.
(3) Correction
The terms ''correction'' and ''correct'' mean, with respect to any
political expenditure, recovering part or all of the expenditure to the
extent recovery is possible, establishment of safeguards to prevent
future political expenditures, and where full recovery is not possible,
such additional corrective action as is prescribed by the Secretary by
regulations.
(4) Taxable period
The term ''taxable period'' means, with respect to any political
expenditure, the period beginning with the date on which the political
expenditure occurs and ending on the earlier of --
(A) the date of mailing a notice of deficiency under section 6212
with respect to the tax imposed by subsection (a)(1), or
(B) the date on which tax imposed by subsection (a)(1) is assessed.
(Added Pub. L. 100-203, title X, 10712(a), Dec. 22, 1987, 101 Stat.
1330-465.)
Section 10712(d) of Pub. L. 100-203 provided that: ''The amendments
made by this section (enacting this section and amending sections 4962,
4963, 6213, 6501, 6503, 6684, 7422, and 7454 of this title) shall apply
to taxable years beginning after the date of the enactment of this Act
(Dec. 22, 1987).''
26 USC Subchapter D -- Abatement of First and Second Tier Taxes in
Certain Cases
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4961. Abatement of second tier taxes where there is correction.
4962. Abatement of first tier taxes in certain cases.
4963. Definitions.
1987 -- Pub. L. 100-203, title X, 10712(a), (b)(5), Dec. 22, 1987,
101 Stat. 1330-465, 1330-467, redesignated former subchapter C as D,
and struck out ''private foundation'' before ''first tier taxes'' in
item 4962.
1984 -- Pub. L. 98-369, div. A, title III, 305(b)(1), (2), July
18, 1984, 98 Stat. 783, substituted ''Abatement of First and Second
Tier Taxes in Certain Cases'' for ''Abatement of Second Tier Taxes Where
There Is Correction During Correction Period'' in the subchapter
heading, added item 4962, and renumbered former item 4962 as 4963.
26 USC 4961. Abatement of second tier taxes where there is correction
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
If any taxable event is corrected during the correction period for
such event, then any second tier tax imposed with respect to such event
(including interest, additions to the tax, and additional amounts) shall
not be assessed, and if assessed the assessment shall be abated, and if
collected shall be credited or refunded as an overpayment.
(b) Supplemental proceeding
If the determination by a court that the taxpayer is liable for a
second tier tax has become final, such court shall have jurisdiction to
conduct any necessary supplemental proceeding to determine whether the
taxable event was corrected during the correction period. Such a
supplemental proceeding may be begun only during the period which ends
on the 90th day after the last day of the correction period. Where such
a supplemental proceeding has begun, the reference in the second
sentence of section 6213(a) to a final decision of the Tax Court shall
be treated as including a final decision in such supplemental
proceeding.
(c) Suspension of period of collection for second tier tax
(1) Proceeding in District Court or United States Court of Federal
Claims
If, not later than 90 days after the day on which the second tier tax
is assessed, the first tier tax is paid in full and a claim for refund
of the amount so paid is filed, no levy or proceeding in court for the
collection of the second tier tax shall be made, begun, or prosecuted
until a final resolution of a proceeding begun as provided in paragraph
(2) (and of any supplemental proceeding with respect thereto under
subsection (b)). Notwithstanding section 7421(a), the collection by
levy or proceeding may be enjoined during the time such prohibition is
in force by a proceeding in the proper court.
(2) Suit must be brought to determine liability
If, within 90 days after the day on which his claim for refund is
denied, the person against whom the second tier tax was assessed fails
to begin a proceeding described in section 7422 for the determination of
his liability for such tax, paragraph (1) shall cease to apply with
respect to such tax, effective on the day following the close of the
90-day period referred to in this paragraph.
(3) Suspension of running of period of limitations on collection
The running of the period of limitations provided in section 6502 on
the collection by levy or by a proceeding in court with respect to any
second tier tax described in paragraph (1) shall be suspended for the
period during which the Secretary is prohibited from collecting by levy
or a proceeding in court.
(4) Jeopardy collection
If the Secretary makes a finding that the collection of the second
tier tax is in jeopardy, nothing in this subsection shall prevent the
immediate collection of such tax.
(Added Pub. L. 96-596, 2(c)(1), Dec. 24, 1980, 94 Stat. 3472;
amended Pub. L. 99-514, title XVIII, 1899A(50), Oct. 22, 1986, 100
Stat. 2961; Pub. L. 102-572, title IX, 902(b)(1), Oct. 29, 1992, 106
Stat. 4516.)
1992 -- Subsec. (c)(1). Pub. L. 102-572 substituted ''United States
Court of Federal Claims'' for ''United States Claims Court'' in heading.
1986 -- Subsec. (c)(1). Pub. L. 99-514 substituted ''United States
Claims Court'' for ''Court of Claims'' in heading.
Amendment by Pub. L. 102-572 effective Oct. 29, 1992, see section
911 of Pub. L. 102-572, set out as a note under section 171 of Title
28, Judiciary and Judicial Procedure.
Section 2(d) of Pub. L. 96-596, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) First tier taxes. -- The amendments made by this section
(enacting this section and section 4962 of this title and amending
sections 4941 to 4945, 4951, 4952, 4971, 4975, 6213, 6214, 6503, and
7422 of this title) with respect to any first tier tax shall take effect
as if included in the Internal Revenue Code of 1986 (formerly I.R.C.
1954) when such tax was first imposed.
''(2) Second tier taxes. -- The amendments made by this section with
respect to any second tier tax shall apply only with respect to taxes
assessed after the date of the enactment of this Act (Dec. 24, 1980).
Nothing in the preceding sentence shall be construed to permit the
assessment of a tax in a case to which, on the date of the enactment of
this Act, the doctrine of res judicata applies.
''(3) First and second tier tax. -- For purposes of this subsection,
the terms 'first tier tax' and 'second tier tax' have the respective
meanings given to such terms by section 4962 of the Internal Revenue
Code of 1986.''
26 USC 4962. Abatement of first tier taxes in certain cases
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
If it is established to the satisfaction of the Secretary that --
(1) a taxable event was due to reasonable cause and not to willful
neglect, and
(2) such event was corrected within the correction period for such
event,
then any qualified first tier tax imposed with respect to such event
(including interest) shall not be assessed and, if assessed, the
assessment shall be abated and, if collected, shall be credited or
refunded as an overpayment.
(b) Qualified first tier tax
For purposes of this section, the term ''qualified first tier tax''
means any first tier tax imposed by subchapter A or C of this chapter,
except that such term shall not include the tax imposed by section
4941(a) (relating to initial tax on self-dealing).
(c) Special rule for tax on political expenditures of section
501(c)(3) organizations
In the case of the tax imposed by section 4955(a), subsection (a)(1)
shall be applied by substituting ''not willful and flagrant'' for ''due
to reasonable cause and not to willful neglect''.
(Added Pub. L. 98-369, div. A, title III, 305(a), July 18, 1984, 98
Stat. 783; amended Pub. L. 100-203, title X, 10712(b)(1), (2), (4),
Dec. 22, 1987, 101 Stat. 1330-467.)
A prior section 4962 was renumbered section 4963 of this title.
1987 -- Pub. L. 100-203, 10712(b)(4), struck out ''private
foundation'' before ''first tier taxes'' in section catchline.
Subsec. (a). Pub. L. 100-203, 10712(b)(2), substituted ''any
qualified first tier tax'' for ''any private foundation first tier tax''
in closing provisions.
Subsec. (b). Pub. L. 100-203, 10712(b)(1), added subsec. (b) and
struck out former subsec. (b) ''Private foundation first tier tax''
which read as follows: ''For purposes of this section, the term
'private foundation first tier tax' means any first tier tax imposed by
subchapter A of chapter 42, except that such term shall not include the
tax imposed by section 4941(a) (relating to initial tax on
self-dealing).''
Subsec. (c). Pub. L. 100-203, 10712(b)(1), added subsec. (c).
Amendment by Pub. L. 100-203 applicable to taxable years beginning
after Dec. 22, 1987, see section 10712(d) of Pub. L. 100-203, set out
as an Effective Date note under section 4955 of this title.
Section 305(c) of Pub. L. 98-369 provided that: ''The amendments
made by this section (enacting this section, redesignating former
section 4962 as 4963, and amending sections 4942, 6213, and 6503 of this
title) shall apply to taxable events occurring after December 31,
1984.''
26 USC 4963. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) First tier tax
For purposes of this subchapter, the term ''first tier tax'' means
any tax imposed by subsection (a) of section 4941, 4942, 4943, 4944,
4945, 4951, 4952, 4955, 4971, or 4975.
(b) Second tier tax
For purposes of this subchapter, the term ''second tier tax'' means
any tax imposed by subsection (b) of section 4941, 4942, 4943, 4944,
4945, 4951, 4952, 4955, 4971, or 4975.
(c) Taxable event
For purposes of this subchapter, the term ''taxable event'' means any
act (or failure to act) giving rise to liability for tax under section
4941, 4942, 4943, 4944, 4945, 4951, 4952, 4955, 4971, or 4975.
(d) Correct
For purposes of this subchapter --
(1) In general
Except as provided in paragraph (2), the term ''correct'' has the
same meaning as when used in the section which imposes the second tier
tax.
(2) Special rules
The term ''correct'' means --
(A) in the case of the second tier tax imposed by section 4942(b),
reducing the amount of the undistributed income to zero,
(B) in the case of the second tier tax imposed by section 4943(b),
reducing the amount of the excess business holdings to zero, and
(C) in the case of the second tier tax imposed by section 4944,
removing the investment from jeopardy.
(e) Correction period
For purposes of this subchapter --
(1) In general
The term ''correction period'' means, with respect to any taxable
event, the period beginning on the date on which such event occurs and
ending 90 days after the date of mailing under section 6212 of a notice
of deficiency with respect to the second tier tax imposed on such
taxable event, extended by --
(A) any period in which a deficiency cannot be assessed under section
6213(a) (determined without regard to the last sentence of section
4961(b)), and
(B) any other period which the Secretary determines is reasonable and
necessary to bring about correction of the taxable event.
(2) Special rules for when taxable event occurs
For purposes of paragraph (1), the taxable event shall be treated as
occurring --
(A) in the case of section 4942, on the first day of the taxable year
for which there was a failure to distribute income,
(B) in the case of section 4943, on the first day on which there are
excess business holdings,
(C) in the case of section 4971, on the last day of the plan year in
which there is an accumulated funding deficiency, and
(D) in any other case, the date on which such event occurred.
(Added Pub. L. 96-596, 2(c)(1), Dec. 24, 1980, 94 Stat. 3473, 4962;
renumbered 4963, Pub. L. 98-369, div. A, title III, 305(a), July 18,
1984, 98 Stat. 783; amended Pub. L. 100-203, title X, 10712(b)(3),
Dec. 22, 1987, 101 Stat. 1330-467.)
1987 -- Subsecs. (a) to (c). Pub. L. 100-203 inserted reference to
section 4955 of this title.
Amendment by Pub. L. 100-203 applicable to taxable years beginning
after Dec. 22, 1987, see section 10712(d) of Pub. L. 100-203, set out
as an Effective Date note under section 4955 of this title.
For effective date of section with respect to any first tier tax and
to any second tier tax, see section 2(d) of Pub. L. 96-596, set out as
a note under section 4961 of this title.
26 USC CHAPTER 43 -- QUALIFIED PENSION, ETC., PLANS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4971. Taxes on failure to meet minimum funding standards.
4972. Tax on nondeductible contributions to qualified employer
plans.
4973. Tax on excess contributions to individual retirement accounts,
certain section 403(b) contracts, and certain individual retirement
annuities.
4974. Excise tax on certain accumulations in qualified retirement
plans.
4975. Tax on prohibited transactions.
4976. Taxes with respect to funded welfare benefit plans.
4977. Tax on certain fringe benefits provided by an employer.
4978. Tax on certain dispositions by employee stock ownership plans
and certain cooperatives.
(4978A. Repealed.)
4978B. Tax on disposition of employer securities to which section
133 applied.
4979. Tax on certain excess contributions.
4979A. Tax on certain prohibited allocations of qualified
securities.
4980. Tax on reversion of qualified plan assets to employer.
4980A. Tax on excess distributions from qualified retirement plans.
4980B. Failure to satisfy continuation coverage requirements of
group health plans.
1989 -- Pub. L. 101-239, title VII, 7301(d)(2),
7304(a)(2)(C)(iii), Dec. 19, 1989, 103 Stat. 2348, 2353, struck out
item 4978A ''Tax on certain dispositions of employer securities to which
section 2057 applied'' and added item 4978B.
1988 -- Pub. L. 100-647, title I, 1011A(g)(1)(B), title III,
3011(c), Nov. 10, 1988, 102 Stat. 3479, 3625, redesignated item 4981A
as 4980A and added item 4980B.
1987 -- Pub. L. 100-203, title X, 10413(b)(2), Dec. 22, 1987, 101
Stat. 1330-438, added item 4978A.
1986 -- Pub. L. 99-514, title XI, 1117(b)(2), 1121(a)(2),
1131(c)(2), 1132(b), 1133(b), title XVIII, 1854(a)(9)(C), 1899A(75),
Oct. 22, 1986, 100 Stat. 2462, 2465, 2478, 2480, 2483, 2877, 2963,
added item 4972, inserted ''section'' in item 4973, substituted ''Excise
tax on certain accumulations in qualified retirement plans'' for ''Tax
on certain accumulations in individual retirement accounts'' in item
4974, struck out ''and allocations'' after ''certain dispositions'' in
item 4978, and added items 4979, 4979A, 4980, and 4981A.
1984 -- Pub. L. 98-369, div. A, title IV, 491(d)(56), title V,
511(c)(2), 531(e)(2), 545(b), July 18, 1984, 98 Stat. 852, 862, 886,
896, substituted ''and certain individual retirement annuities'' for
''certain individual retirement annuities, and certain retirement
bonds'' in item 4973 and added items 4976 to 4978.
1982 -- Pub. L. 97-248, title II, 237(c)(2), Sept. 3, 1982, 96
Stat. 511, struck out item 4972 ''Tax on excess contributions for
self-employed individuals''.
1974 -- Pub. L. 93-406, title II, 1013(b), 2001(f)(2), 2002(h)(3),
Sept. 2, 1974, 88 Stat. 920, 957, 970, added chapter heading and
analysis of sections 4971 to 4975.
26 USC 4971. Taxes on failure to meet minimum funding standards
TITLE 26 -- INTERNAL REVENUE CODE
(a) Initial tax
For each taxable year of an employer who maintains a plan to which
section 412 applies, there is hereby imposed a tax of 10 percent (5
percent in the case of a multiemployer plan) on the amount of the
accumulated funding deficiency under the plan, determined as of the end
of the plan year ending with or within such taxable year.
(b) Additional tax
In any case in which an initial tax is imposed by subsection (a) on
an accumulated funding deficiency and such accumulated funding
deficiency is not corrected within the taxable period, there is hereby
imposed a tax equal to 100 percent of such accumulated funding
deficiency to the extent not corrected.
(c) Definitions
For purposes of this section --
(1) Accumulated funding deficiency
The term ''accumulated funding deficiency'' has the meaning given to
such term by the last two sentences of section 412(a).
(2) Correct
The term ''correct'' means, with respect to an accumulated funding
deficiency, the contribution, to or under the plan, of the amount
necessary to reduce such accumulated funding deficiency as of the end of
a plan year in which such deficiency arose to zero.
(3) Taxable period
The term ''taxable period'' means, with respect to an accumulated
funding deficiency, the period beginning with the end of the plan year
in which there is an accumulated funding deficiency and ending on the
earlier of --
(A) the date of mailing of a notice of deficiency with respect to the
tax imposed by subsection (a), or
(B) the date on which the tax imposed by subsection (a) is assessed.
(d) Notification of the Secretary of Labor
Before issuing a notice of deficiency with respect to the tax imposed
by subsection (a) or (b), the Secretary shall notify the Secretary of
Labor and provide him a reasonable opportunity (but not more than 60
days) --
(1) to require the employer responsible for contributing to or under
the plan to eliminate the accumulated funding deficiency, or
(2) to comment on the imposition of such tax.
In the case of a multiemployer plan which is in reorganization under
section 418, the same notice and opportunity shall be provided to the
Pension Benefit Guaranty Corporation.
(e) Liability for tax
(1) In general
Except as provided in paragraph (2), the tax imposed by subsection
(a) or (b) shall be paid by the employer responsible for contributing to
or under the plan the amount described in section 412(b)(3)(A).
(2) Joint and several liability where employer member of controlled
group
(A) In general
In the case of a plan other than a multiemployer plan, if the
employer referred to in paragraph (1) is a member of a controlled group,
each member of such group shall be jointly and severally liable for the
tax imposed by subsection (a) or (b).
(B) Controlled group
For purposes of subparagraph (A), the term ''controlled group'' means
any group treated as a single employer under subsection (b), (c), (m),
or (o) of section 414.
(f) Cross references
For disallowance of deduction for taxes paid under this section, see
section 275.
For liability for tax in case of an employer party to collective
bargaining agreement, see section 413(b)(6).
For provisions concerning notification of Secretary of Labor of
imposition of tax under this section, waiver of the tax imposed by
subsection (b), and other coordination between Secretary of the Treasury
and Secretary of Labor with respect to compliance with this section, see
section 3002(b) of title III of the Employee Retirement Income Security
Act of 1974.
(Added Pub. L. 93-406, title II, 1013(b), Sept. 2, 1974, 88 Stat.
920; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976,
90 Stat. 1834; Pub. L. 96-364, title II, 204, Sept. 26, 1980, 94 Stat.
1287; Pub. L. 96-596, 2(a)(1)(J), (2)(H), Dec. 24, 1980, 94 Stat.
3469, 3471; Pub. L. 100-203, title IX, 9304(c)(1), 9305(a), Dec. 22,
1987, 101 Stat. 1330-348, 1330-351.)
Section 3002(b) of title III of the Employee Retirement Income
Security Act of 1974, referred to in subsec. (f), is classified to
section 1202(b) of Title 29, Labor.
1987 -- Subsec. (a). Pub. L. 100-203, 9305(a)(2)(A), struck out at
end ''The tax imposed by this subsection shall be paid by the employer
responsible for contributing to or under the plan the amount described
in section 412(b)(3)(A).''
Pub. L. 100-203, 9304(c)(1), substituted ''10 percent (5 percent in
the case of a multiemployer plan)'' for ''5 percent''.
Subsec. (b). Pub. L. 100-203, 9305(a)(2)(B), struck out at end ''The
tax imposed by this subsection shall be paid by the employer described
in subsection (a).''
Subsecs. (e), (f). Pub. L. 100-203, 9305(a)(1), added subsec. (e)
and redesignated former subsec. (e) as (f).
1980 -- Subsec. (b). Pub. L. 96-596, 2(a)(1)(J), substituted
''taxable period'' for ''correction period''.
Subsec. (c)(1). Pub. L. 96-364, 204(1), substituted ''last two
sentences'' for ''last sentence''.
Subsec. (c)(3). Pub. L. 96-596, 2(a)(2)(H), substituted provision
defining taxable period as the period beginning with the end of the plan
year in which there is an accumulated funding deficiency and ending on
the earlier of the date of mailing of a notice of deficiency with
respect to the tax imposed by subsec. (a) of this section or the date
on which the tax imposed by subsec. (a) of this section is assessed for
provision defining correction period as the period beginning with the
end of a plan year in which there is an accumulated funding deficiency
and ending 90 days after the date of mailing of a notice of deficiency
under section 6212 of this title with respect to the tax imposed by
subsec. (b) of this section, extended by any period in which a
deficiency cannot be assessed under section 6213(a) of this title and by
any other period which the Secretary determines reasonable and necessary
to permit a reduction of the accumulated funding deficiency to zero.
Subsec. (d). Pub. L. 96-364, 204(2), inserted provisions relating to
a multiemployer plan in reorganization.
1976 -- Subsecs. (c), (d). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Section 9304(c)(2) of Pub. L. 100-203 provided that: ''The
amendments made by this subsection (amending this section) shall apply
to plan years beginning after 1988.''
Amendment by section 9305(a) of Pub. L. 100-203 applicable with
respect to plan years beginning after December 31, 1987, see section
9305(d) of Pub. L. 100-203, set out as a note under section 412 of this
title.
For effective date of amendment by Pub. L. 96-596 with respect to
any first tier tax and to any second tier tax, see section 2(d) of Pub.
L. 96-596, set out as an Effective Date note under section 4961 of this
title.
Amendment by Pub. L. 96-364 effective Sept. 26, 1980, see section
210(a) of Pub. L. 96-364, set out as an Effective Date note under
section 418 of this title.
Section applicable, except as otherwise provided in section 1017(c)
through (i) of Pub. L. 93-406, for plan years beginning after Sept. 2,
1974, and, in the case of plans in existence on Jan. 1, 1974, for plan
years beginning after Dec. 31, 1975, see section 1017 of Pub. L.
93-406, set out as an Effective Date; Transitional Rules note under
section 410 of this title.
26 USC 4972. Tax on nondeductible contributions to qualified employer
plans
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax imposed
In the case of any qualified employer plan, there is hereby imposed a
tax equal to 10 percent of the nondeductible contributions under the
plan (determined as of the close of the taxable year of the employer).
(b) Employer liable for tax
The tax imposed by this section shall be paid by the employer making
the contributions.
(c) Nondeductible contributions
For purposes of this section --
(1) In general
The term ''nondeductible contributions'' means, with respect to any
qualified employer plan, the sum of --
(A) the excess (if any) of --
(i) the amount contributed for the taxable year by the employer to or
under such plan, over
(ii) the amount allowable as a deduction under section 404 for such
contributions (determined without regard to subsection (e) thereof), and
(B) the amount determined under this subsection for the preceding
taxable year reduced by the sum of --
(i) the portion of the amount so determined returned to the employer
during the taxable year, and
(ii) the portion of the amount so determined deductible under section
404 for the taxable year (determined without regard to subsection (e)
thereof).
(2) Ordering rule for section 404
For purposes of paragraph (1), the amount allowable as a deduction
under section 404 for any taxable year shall be treated as --
(A) first from carryforwards to such taxable year from preceding
taxable years (in order of time), and
(B) then from contributions made during such taxable year.
(3) Contributions which may be returned to employer
In determining the amount of nondeductible contributions for any
taxable year, there shall not be taken into account any contribution for
such taxable year which is distributed to the employer in a distribution
described in section 4980(c)(2)(B)(ii) if such distribution is made on
or before the last day on which a contribution may be made for such
taxable year under section 404(a)(6).
(4) Special rule for self-employed individuals
For purposes of paragraph (1), if --
(A) the amount which is required to be contributed to a plan under
section 412 on behalf of an individual who is an employee (within the
meaning of section 401(c)(1)), exceeds
(B) the earned income (within the meaning of section 404(a)(8)) of
such individual derived from the trade or business with respect to which
such plan is established,
such excess shall be treated as an amount allowable as a deduction
under section 404.
(5) Pre-1987 contributions
The term ''nondeductible contribution'' shall not include any
contribution made for a taxable year beginning before January 1, 1987.
(d) Definitions
For purposes of this section --
(1) Qualified employer plan
(A) In general
The term ''qualified employer plan'' means --
(i) any plan meeting the requirements of section 401(a) which
includes a trust exempt from tax under section 501(a),
(ii) an annuity plan described in section 403(a), and
(iii) any simplified employee pension (within the meaning of section
408(k)).
(B) Exemption for governmental and tax exempt plans
The term ''qualified employer plan'' does not include a plan
described in subparagraph (A) or (B) of section 4980(c)(1).
(2) Employer
In the case of a plan which provides contributions or benefits for
employees some or all of whom are self-employed individuals within the
meaning of section 401(c)(1), the term ''employer'' means the person
treated as the employer under section 401(c)(4).
(Added Pub. L. 99-514, title XI, 1131(c)(1), Oct. 22, 1986, 100
Stat. 2477; amended Pub. L. 100-647, title I, 1011A(e)(1), (2), title
II, 2005(a)(1), Nov. 10, 1988, 102 Stat. 3477, 3610.)
A prior section, added Pub. L. 93-406, title II, 2001(f)(1), Sept.
2, 1974, 88 Stat. 955; amended Pub. L. 94-455, title XIX,
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97-34, title
III, 312(e)(3), Aug. 13, 1981, 95 Stat. 285; Pub. L. 97-448, title
I, 103(c)(10)(B), Jan. 12, 1983, 96 Stat. 2377; Pub. L. 98-369, div.
A, title IV, 491(d)(40), July 18, 1984, 98 Stat. 851, which related
to tax on excess contributions for self-employed individuals, was
repealed, applicable to years beginning after Dec. 31, 1983, by Pub.
L. 97-248, title II, 237(c)(1), Sept. 3, 1982, 96 Stat. 511.
1988 -- Subsec. (c). Pub. L. 100-647, 1011A(e)(1), amended subsec.
(c) generally, revising and restating as pars. (1) to (4) provisions of
former pars. (1) and (2).
Subsec. (c)(4), (5). Pub. L. 100-647, 2005(a)(1), added par. (4)
and redesignated former par. (4) as (5).
Subsec. (d)(1). Pub. L. 100-647, 1011A(e)(2), amended par. (1)
generally. Prior to amendment, par. (1) read as follows: ''The term
'qualified employer plan' means --
''(A) any plan meeting the requirements of section 401(a) which
includes a trust exempt from the tax under section 501(a),
''(B) an annuity plan described in section 403(a), and
''(C) any simplified employee pension (within the meaning of section
408(k)).''
Amendment by section 1011A(e)(1), (2) of Pub. L. 100-647 effective,
except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates,
see section 1019(a) of Pub. L. 100-647, set out as a note under section
1 of this title.
Amendment by section 2005(a)(1) of Pub. L. 100-647 effective as if
included in the amendment made by section 1131(c) of Pub. L. 99-514,
see section 2005(e) of Pub. L. 100-647, as amended, set out as a note
under section 404 of this title.
Section applicable to taxable years beginning after Dec. 31, 1986,
with special rules in case of plans maintained pursuant to collective
bargaining agreements, see section 1131(d) of Pub. L. 99-514, as
amended, set out as an Effective Date of 1986 Amendment note under
section 404 of this title.
Section 1011A(e)(5) of Pub. L. 100-647 provided that: ''In the case
of any taxable year beginning in 1987, the amount under section
4972(c)(1)(A)(ii) of the 1986 Code for a plan to which title IV of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1301 et seq.)
applies shall be increased by the amount (if any) by which, as of the
close of the plan year with or within which such taxable year begins --
''(A) the liabilities of such plan (determined as if the plan had
terminated as of such time), exceed
''(B) the assets of such plan.''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
26 USC 4973. Tax on excess contributions to individual retirement
accounts, certain section 403(b) contracts, and certain individual
retirement annuities
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax imposed
In the case of --
(1) an individual retirement account (within the meaning of section
408(a)), or
(2) an individual retirement annuity (within the meaning of section
408(b)), a custodial account treated as an annuity contract under
section 403(b)(7)(A) (relating to custodial accounts for regulated
investment company stock),
there is imposed for each taxable year a tax in an amount equal to 6
percent of the amount of the excess contributions to such individual's
accounts or annuities (determined as of the close of the taxable year).
The amount of such tax for any taxable year shall not exceed 6 percent
of the value of the account or annuity (determined as of the close of
the taxable year). In the case of an endowment contract described in
section 408(b), the tax imposed by this section does not apply to any
amount allocable to life, health, accident, or other insurance under
such contract. The tax imposed by this subsection shall be paid by such
individual.
(b) Excess contributions
For purposes of this section, in the case of individual retirement
accounts or individual retirement annuities, the term ''excess
contributions'' means the sum of --
(1) the excess (if any) of --
(A) the amount contributed for the taxable year to the accounts or
for the annuities (other than a rollover contribution described in
sections /1/ 402(c), 403(a)(4), 403(b)(8), or 408(d)(3)), over
(B) the amount allowable as a deduction under section 219 for such
contributions, and
(2) the amount determined under this subsection for the preceding
taxable year reduced by the sum of --
(A) the distributions out of the account for the taxable year which
were included in the gross income of the payee under section 408(d)(1),
(B) the distributions out of the account for the taxable year to
which section 408(d)(5) applies, and
(C) the excess (if any) of the maximum amount allowable as a
deduction under section 219 for the taxable year over the amount
contributed (determined without regard to section 219(f)(6)) to the
accounts or for the annuities for the taxable year.
For purposes of this subsection, any contribution which is
distributed from the individual retirement account or the individual
retirement annuity in a distribution to which section 408(d)(4) applies
shall be treated as an amount not contributed. For purposes of
paragraphs (1)(B) and (2)(C), the amount allowable as a deduction under
section 219 shall be computed without regard to section 219(g).
(c) Section 403(b) contracts
For purposes of this section, in the case of a custodial account
referred to in subsection (a)(2), the term ''excess contributions''
means the sum of --
(1) the excess (if any) of the amount contributed for the taxable
year to such account (other than a rollover contribution described in
section 403(b)(8) or 408(d)(3)(A)(iii)), over the lesser of the amount
excludable from gross income under section 403(b) or the amount
permitted to be contributed under the limitations contained in section
415 (or under whichever such section is applicable, if only one is
applicable), and
(2) the amount determined under this subsection for the preceding
taxable year, reduced by --
(A) the excess (if any) of the lesser of (i) the amount excludable
from gross income under section 403(b) or (ii) the amount permitted to
be contributed under the limitations contained in section 415 over the
amount contributed to the account for the taxable year (or under
whichever such section is applicable, if only one is applicable), and
(B) the sum of the distributions out of the account (for all prior
taxable years) which are included in gross income under section 72(e).
(Added Pub. L. 93-406, title II, 2002(d), Sept. 2, 1974, 88 Stat.
966; amended Pub. L. 94-455, title XV, 1501(b)(8), title XIX,
1904(a)(22), Oct. 4, 1976, 90 Stat. 1736, 1814; Pub. L. 95-600, title
I, 156(c)(3), (5), 157(b)(3), (j)(1), title VII, 701(aa)(1), Nov. 6,
1978, 92 Stat. 2803, 2804, 2809, 2921; Pub. L. 96-222, title I,
101(a)(13)(C), (14)(B), Apr. 1, 1980, 94 Stat. 204; Pub. L. 97-34,
title III, 311(h)(7), (9), (10), 313(b)(2), Aug. 13, 1981, 95 Stat.
282, 286; Pub. L. 98-369, div. A, title IV, 491(d)(41)-(44), (55),
July 18, 1984, 98 Stat. 851, 852; Pub. L. 99-514, title XI,
1102(b)(1), title XVIII, 1848(f), Oct. 22, 1986, 100 Stat. 2415, 2858;
Pub. L. 100-647, title I, 1011(b)(3), Nov. 10, 1988, 102 Stat. 3456;
Pub. L. 102-318, title V, 521(b)(41), July 3, 1992, 106 Stat. 313.)
1992 -- Subsec. (b)(1)(A). Pub. L. 102-318, which directed the
substitution of ''sections 402(c)'' for ''sections 402(a)(5),
402(a)(7)'', was executed by substituting ''sections 402(c)'' for
''section 402(a)(5), 402(a)(7)'' to reflect the probable intent of
Congress.
1988 -- Subsec. (b). Pub. L. 100-647 substituted ''shall be computed
without regard to section 219(g)'' for ''(after application of section
408(o)(2)(B)(ii)) shall be increased by the nondeductible limit under
section 408(o)(2)(B)'' in last sentence.
1986 -- Subsec. (b). Pub. L. 99-514, 1102(b)(1), inserted at end
''For purposes of paragraphs (1)(B) and (2)(C), the amount allowable as
a deduction under section 219 (after application of section
408(o)(2)(B)(ii)) shall be increased by the nondeductible limit under
section 408(o)(2)(B).''
Pub. L. 99-514, 1848(f), in introductory provisions, substituted
''or individual retirement annuities'' for '', individual retirement
annuities, or bonds'', in par. (1)(A), substituted ''(other than a
rollover contribution described in section 402(a)(5), 402(a)(7),
403(a)(4), 403(b)(8), or 408(d)(3)), over'' for ''or bonds (other than a
rollover contribution described in section 402(a)(5), 402(a)(7),
403(a)(4), 403(b)(8), 405(d)(3), or 408(d)(3)), over'', and in par.
(2)(A), struck out ''or bonds'' after ''for the annuities''.
1984 -- Pub. L. 98-369, 491(d)(55), substituted ''and certain
individual retirement annuities'' for ''certain individual retirement
annuities, and certain retirement bonds'' in section catchline.
Subsec. (a). Pub. L. 98-369, 491(d)(41), inserted ''or'' at end of
par. (1), struck out ''or'' at end of par. (2), struck out par. (3)
which imposed a tax in the case of a retirement bond, within the meaning
of section 409, established for the benefit of any individual, and in
the concluding provision substituted ''or annuity'' for '', annuity, or
bond'' and ''or annuities'' for '', annuities, or bonds''.
Subsec. (b). Pub. L. 98-369, 491(d)(43), substituted in provision
following par. (2)(C) ''or the individual retirement annuity'' for '',
individual retirement annuity, or bond''.
Subsec. (b)(1)(A). Pub. L. 98-369, 491(d)(42), which directed the
amendment of subpar. (A) by substituting ''and 408(d)(3)'' for
''408(d)(3), and 409(b)(3)(C)'' was executed, as the probable intent of
Congress, by substituting ''or 408(d)(3))'' for ''408(d)(3)), or
409(b)(3)(C)''.
Subsec. (c)(1). Pub. L. 98-369, 491(d)(44), substituted ''or
408(d)(3)(A)(iii)'' for '', 408(d)(3)(A)(iii), or 409(b)(3)(C)''.
1981 -- Subsec. (a). Pub. L. 97-34, 311(h)(9), substituted ''The
tax imposed by this subsection shall be paid by such individual'' for
''The tax imposed by this subsection shall be paid by the individual to
whom a deduction is allowed for the taxable year under section 219
(determined without regard to subsection (b)(1) thereof) or section 220
(determined without regard to subsection (b)(1) thereof), whichever is
appropriate''.
Subsec. (b)(1)(A). Pub. L. 97-34, 313(b)(2), inserted ''405(d)(3),''
after ''403(b)(8),''.
Subsec. (b)(1)(B). Pub. L. 97-34, 311(h)(7), substituted ''section
219'' for ''section 219 or 220''.
Subsec. (b)(2)(C). Pub. L. 97-34, 311(h)(7), (10), substituted
''section 219'' for ''section 219 or 220'', and ''section 219(f)(6)''
for ''sections 219(c)(5) and 220(c)(6)''.
1980 -- Subsec. (b)(1)(A). Pub. L. 96-222, 101(a)(14)(B), inserted
reference to section 402(a)(7).
Subsec. (c)(1). Pub. L. 96-222, 101(a)(13)(C), substituted
''409(b)(3)(C)'' for ''409(d)(3)(C)''.
1978 -- Subsec. (b)(1)(A). Pub. L. 95-600, 156(c)(3), inserted
reference to section 403(b)(8).
Subsec. (b)(2). Pub. L. 95-600, 157(b)(3), substituted ''reduced by
the sum of -- '' for ''reduced by the excess (if any) of'', struck out
''the maximum amount allowable as a deduction under section 219 or 220
for the taxable year over the amount contributed to the accounts or for
the annuities or bonds for the taxable years and reduced by the sum of
the distributions out of the account (for the taxable year and all prior
taxable years) which were included in the gross income of the payee
under section 408(d)(1)'' in provision preceding par. (A), and added
subpars. (A), (B), and (C).
Subsec. (b). Pub. L. 95-600, 157(j)(1), 701(aa)(1), struck out in
last sentence ''if such distribution consists of an excess contribution
solely because of employer contributions to a plan or contract described
in section 219(b)(2) or by reason of the application of section
219(b)(1) (without regard to the $1,500 limitation) or section 220(b)(1)
(without regard to the $1,750 limitation) and only if such distribution
does not exceed the excess of $1,500 or $1,750 if applicable, over the
amount described in paragraph (1)(B)'' after ''as an amount not
contributed''.
Subsec. (c)(1). Pub. L. 95-600, 156(c)(5), inserted ''(other than a
rollover contribution described in section 403(b)(8), 408(d)(3)(A)(iii),
or 409(d)(3)(C))'' after ''account''.
1976 -- Subsec. (a)(3). Pub. L. 94-455, 1501(b)(8)(A),
1904(a)(22)(A), substituted ''the individual to whom a deduction is
allowed for the taxable year under section 219 (determined without
regard to subsection (b)(1) thereof) or section 220 (determined without
regard to subsection (b)(1) thereof), whichever is appropriate'' for
''such individual'', effective for taxable years beginning after
December 31, 1976 and substituted ''such individual'' for ''the
individual to whom a deduction is allowed for the taxable year under
section 219 (determined without regard to subsection (b)(1) thereof) or
section 220 (determined without regard to subsection (b)(1) thereof),
whichever is appropriate'', effective for the first day of the first
month which begins more than 90 days after Oct. 4, 1976.
Subsec. (b)(1)(B). Pub. L. 94-455, 1501(b)(8)(B), inserted ''or
220'' after ''under section 219''.
Subsec. (b)(2). Pub. L. 94-455, 1501(b)(8)(C), inserted ''or 220''
after ''under section 219'' and ''the taxable year and'' before ''all
prior taxable years'' and struck out provisions relating to the
treatment of contributions out of individual retirement accounts,
annuities or bonds to which section 408(d)(4) applied.
Subsec. (c). Pub. L. 94-455, 1904(a)(22)(B), substituted
''subsection (a)(2)'' for ''subsection (a)(3)'' in provisions preceding
par. (1).
Amendment by Pub. L. 102-318 applicable to distributions after Dec.
31, 1992, see section 521(e) of Pub. L. 102-318, set out as a note
under section 402 of this title.
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Amendment by section 1102(b)(1) of Pub. L. 99-514 applicable to
contributions and distributions for taxable years beginning after Dec.
31, 1986, see section 1102(g) of Pub. L. 99-514, set out as a note
under section 219 of this title.
Amendment by section 1848(f) of Pub. L. 99-514 effective, except as
otherwise provided, as if included in the provisions of the Tax Reform
Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates,
see section 1881 of Pub. L. 99-514, set out as a note under section 48
of this title.
Amendment by Pub. L. 98-369 applicable to obligations issued after
Dec. 31, 1983, see section 491(f)(1) of Pub. L. 98-369, set out as a
note under section 62 of this title.
Amendment by section 311(h)(7), (9), (10) of Pub. L. 97-34
applicable to taxable years beginning after Dec. 31, 1981, see section
311(i)(1) of Pub. L. 97-34, set out as a note under section 219 of this
title.
Amendment by section 313(b)(2) of Pub. L. 97-34 applicable to
redemptions after Aug. 13, 1981, in taxable years ending after such
date, see section 313(c) of Pub. L. 97-34, set out as a note under
section 219 of this title.
Amendment by Pub. L. 96-222 effective, except as otherwise provided,
as if it had been included in the provision of the Revenue Act of 1978,
Pub. L. 95-600, to which such amendment relates, see section 201 of
Pub. L. 96-222, set out as a note under section 22 of this title.
Amendment by section 156(c)(3), (5) of Pub. L. 95-600 applicable to
distributions or transfers made after Dec. 31, 1977, in taxable years
beginning after such date, see section 156(d) of Pub. L. 95-600, set
out as a note under section 403 of this title.
Amendment by section 157(b)(3) of Pub. L. 95-600 applicable to
determination of deductions for taxable years beginning after Dec. 31,
1975, see section 157(b)(4)(A) of Pub. L. 95-600, set out as a note
under section 219 of this title.
Section 157(j)(2) of Pub. L. 95-600 provided that: ''The amendment
made by paragraph (1) (amending this section) shall apply to
contributions made for taxable years beginning after December 31,
1977.''
Section 701(aa)(2) of Pub. L. 95-600 provided that: ''The amendment
made by paragraph (1) (amending this section) shall apply as if included
in section 1501 of the Tax Reform Act of 1976 (section 1501 of Pub. L.
94-455) at the time of the enactment of such Act (Oct. 4, 1976).''
Section 703(j)(13) of Pub. L. 95-600 provided that:
''Notwithstanding section 1904(d) of the Tax Reform Act of 1976 (Pub.
L. 94-455, set out as an Effective Date of 1976 Amendment note under
section 4041 of this title), the amendment made by section
1904(a)(22)(A) of such Act (amending this section) shall take effect on
the date of the enactment of such Act (Oct. 4, 1976).''
Amendment by section 1501(b)(8) of Pub. L. 94-455 applicable to
taxable years beginning after Dec. 31, 1976, see section 1501(d) of
Pub. L. 94-455, set out as a note under section 62 of this title.
Amendment by section 1904(a)(22) of Pub. L. 94-455 effective on
first day of first month which begins more than 90 days after Oct. 4,
1976, see section 1904(d) of Pub. L. 94-455, set out as a note under
section 4041 of this title.
Section 2002(i)(2) of Pub. L. 93-406 provided that: ''The
amendments made by subsections (d) through (h) except subsection (g)(5)
and (6) (enacting this section and sections 4974 and 6693 of this title
and amending sections 37, 46, 50, 56, 72, 801, 805, 901, 3401, and 6047
of this title) shall take effect on January 1, 1975.''
For provisions directing that if any amendments made by subtitle B (
521-523) of title V of Pub. L. 102-318 require an amendment to any
plan, such plan amendment shall not be required to be made before the
first plan year beginning on or after Jan. 1, 1994, see section 523 of
Pub. L. 102-318, set out as a note under section 401 of this title.
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
/1/ So in original. Probably should be ''section''.
26 USC 4974. Excise tax on certain accumulations in qualified
retirement plans
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
If the amount distributed during the taxable year of the payee under
any qualified retirement plan or any eligible deferred compensation plan
(as defined in section 457(b)) is less than the minimum required
distribution for such taxable year, there is hereby imposed a tax equal
to 50 percent of the amount by which such minimum required distribution
exceeds the actual amount distributed during the taxable year. The tax
imposed by this section shall be paid by the payee.
(b) Minimum required distribution
For purposes of this section, the term ''minimum required
distribution'' means the minimum amount required to be distributed
during a taxable year under section 401(a)(9), 403(b)(10), 408(a)(6),
408(b)(3), or 457(d)(2), as the case may be, as determined under
regulations prescribed by the Secretary.
(c) Qualified retirement plan
For purposes of this section, the term ''qualified retirement plan''
means --
(1) a plan described in section 401(a) which includes a trust exempt
from tax under section 501(a),
(2) an annuity plan described in section 403(a),
(3) an annuity contract described in section 403(b),
(4) an individual retirement account described in section 408(a), or
(5) an individual retirement annuity described in section 408(b).
Such term includes any plan, contract, account, or annuity which, at
any time, has been determined by the Secretary to be such a plan,
contract, account, or annuity.
(d) Waiver of tax in certain cases
If the taxpayer establishes to the satisfaction of the Secretary that
--
(1) the shortfall described in subsection (a) in the amount
distributed during any taxable year was due to reasonable error, and
(2) reasonable steps are being taken to remedy the shortfall,
the Secretary may waive the tax imposed by subsection (a) for the
taxable year.
(Added Pub. L. 93-406, title II, 2002(e), Sept. 2, 1974, 88 Stat.
967; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976,
90 Stat. 1834; Pub. L. 95-600, title I, 157(i)(1), Nov. 6, 1978, 92
Stat. 2808; Pub. L. 99-514, title XI, 1121(a)(1), title XVIII,
1852(a)(7)(B), (C), Oct. 22, 1986, 100 Stat. 2464, 2866.)
1986 -- Pub. L. 99-514, 1121(a)(1), amended section generally,
substituting provisions imposing an excise tax on certain accumulations
in qualified retirement plans for provisions imposing an excise tax on
certain accumulations in individual retirement accounts and annuities.
Subsec. (a). Pub. L. 99-514, 1852(a)(7)(B), substituted ''section
408(a)(6) or 408(b)(3)'' for ''section 408(a)(6) or (7), or 408(b)(3) or
(4)''.
Subsec. (b). Pub. L. 99-514, 1852(a)(7)(C), substituted ''section
408(a)(6) or 408(b)(3)'' for ''section 408(a)(6) or (7) or 408(b)(3) or
(4)''.
1978 -- Subsec. (c). Pub. L. 95-600 added subsec. (c).
1976 -- Subsec. (b). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
Amendment by section 1121(a)(1) of Pub. L. 99-514 applicable to
years beginning after Dec. 31, 1988, with special provisions for plans
maintained pursuant to collective bargaining agreements ratified before
Mar. 1, 1986, and transition rules, see section 1121(d) of Pub. L.
99-514, set out as a note under section 401 of this title.
Amendment by section 1852(a)(7)(B), (C) of Pub. L. 99-514 effective,
except as otherwise provided, as if included in the provisions of the
Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such
amendment relates, see section 1881 of Pub. L. 99-514, set out as a
note under section 48 of this title.
Section 157(i)(2) of Pub. L. 95-600 provided that: ''The amendment
made by paragraph (1) (amending this section) shall apply to taxable
years beginning after December 31, 1975.''
Section effective Jan. 1, 1975, see section 2002(i)(2) of Pub. L.
93-406, set out as an Effective Date note under section 4973 of this
title.
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
26 USC 4975. Tax on prohibited transactions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Initial taxes on disqualified person
There is hereby imposed a tax on each prohibited transaction. The
rate of tax shall be equal to 5 percent of the amount involved with
respect to the prohibited transaction for each year (or part thereof) in
the taxable period. The tax imposed by this subsection shall be paid by
any disqualified person who participates in the prohibited transaction
(other than a fiduciary acting only as such).
(b) Additional taxes on disqualified person
In any case in which an initial tax is imposed by subsection (a) on a
prohibited transaction and the transaction is not corrected within the
taxable period, there is hereby imposed a tax equal to 100 percent of
the amount involved. The tax imposed by this subsection shall be paid
by any disqualified person who participated in the prohibited
transaction (other than a fiduciary acting only as such).
(c) Prohibited transaction
(1) General rule
For purposes of this section, the term ''prohibited transaction''
means any direct or indirect --
(A) sale or exchange, or leasing, of any property between a plan and
a disqualified person;
(B) lending of money or other extension of credit between a plan and
a disqualified person;
(C) furnishing of goods, services, or facilities between a plan and a
disqualified person;
(D) transfer to, or use by or for the benefit of, a disqualified
person of the income or assets of a plan;
(E) act by a disqualified person who is a fiduciary whereby he deals
with the income or assets of a plan in his own interests or for his own
account; or
(F) receipt of any consideration for his own personal account by any
disqualified person who is a fiduciary from any party dealing with the
plan in connection with a transaction involving the income or assets of
the plan.
(2) Special exemption
The Secretary shall establish an exemption procedure for purposes of
this subsection. Pursuant to such procedure, he may grant a conditional
or unconditional exemption of any disqualified person or transaction,
orders of disqualified persons or transactions, from all or part of the
restrictions imposed by paragraph (1) of this subsection. Action under
this subparagraph may be taken only after consultation and coordination
with the Secretary of Labor. The Secretary may not grant an exemption
under this paragraph unless he finds that such exemption is --
(A) administratively feasible,
(B) in the interests of the plan and of its participants and
beneficiaries, and
(C) protective of the rights of participants and beneficiaries of the
plan.
Before granting an exemption under this paragraph, the Secretary
shall require adequate notice to be given to interested persons and
shall publish notice in the Federal Register of the pendency of such
exemption and shall afford interested persons an opportunity to present
views. No exemption may be granted under this paragraph with respect to
a transaction described in subparagraph (E) or (F) of paragraph (1)
unless the Secretary affords an opportunity for a hearing and makes a
determination on the record with respect to the findings required under
subparagraphs (A), (B), and (C) of this paragraph, except that in lieu
of such hearing the Secretary may accept any record made by the
Secretary of Labor with respect to an application for exemption under
section 408(a) of title I of the Employee Retirement Income Security Act
of 1974.
(3) Special rule for individual retirement accounts
An individual for whose benefit an individual retirement account is
established and his beneficiaries shall be exempt for the tax imposed by
this section with respect to any transaction concerning such account
(which would otherwise be taxable under this section) if, with respect
to such transaction, the account ceases to be an individual retirement
account by reason of the application of section 408(e)(2)(A) or if
section 408(e)(4) applies to such account.
(d) Exemptions
The prohibitions provided in subsection (c) shall not apply to --
(1) any loan made by the plan to a disqualified person who is a
participant or beneficiary of the plan if such loan --
(A) is available to all such participants or beneficiaries on a
reasonably equivalent basis,
(B) is not made available to highly compensated employees (within the
meaning of section 414(q)) in an amount greater than the amount made
available to other employees,
(C) is made in accordance with specific provisions regarding such
loans set forth in the plan,
(D) bears a reasonable rate of interest, and
(E) is adequately secured;
(2) any contract, or reasonable arrangement, made with a disqualified
person for office space, or legal, accounting, or other services
necessary for the establishment or operation of the plan, if no more
than reasonable compensation is paid therefor;
(3) any loan to an /1/ leveraged employee stock ownership plan (as
defined in subsection (e)(7)), if --
(A) such loan is primarily for the benefit of participants and
beneficiaries of the plan, and
(B) such loan is at a reasonable rate of interest, and any collateral
which is given to a disqualified person by the plan consists only of
qualifying employer securities (as defined in subsection (e)(8));
(4) the investment of all or part of a plan's assets in deposits
which bear a reasonable interest rate in a bank or similar financial
institution supervised by the United States or a State, if such bank or
other institution is a fiduciary of such plan and if --
(A) the plan covers only employees of such bank or other institution
and employees of affiliates of such bank or other institution, or
(B) such investment is expressly authorized by a provision of the
plan or by a fiduciary (other than such bank or institution or
affiliates thereof) who is expressly empowered by the plan to so
instruct the trustee with respect to such investment;
(5) any contract for life insurance, health insurance, or annuities
with one or more insurers which are qualified to do business in a State
if the plan pays no more than adequate consideration, and if each such
insurer or insurers is --
(A) the employer maintaining the plan, or
(B) a disqualified person which is wholly owned (directly or
indirectly) by the employer establishing the plan, or by any person
which is a disqualified person with respect to the plan, but only if the
total premiums and annuity considerations written by such insurers for
life insurance, health insurance, or annuities for all plans (and their
employers) with respect to which such insurers are disqualified persons
(not including premiums or annuity considerations written by the
employer maintaining the plan) do not exceed 5 percent of the total
premiums and annuity considerations written for all lines of insurance
in that year by such insurers (not including premiums or annuity
considerations written by the employer maintaining the plan);
(6) the provision of any ancillary service by a bank or similar
financial institution supervised by the United States or a State, if
such service is provided at not more than reasonable compensation, if
such bank or other institution is a fiduciary of such plan, and if --
(A) such bank or similar financial institution has adopted adequate
internal safeguards which assure that the provision of such ancillary
service is consistent with sound banking and financial practice, as
determined by Federal or State supervisory authority, and
(B) the extent to which such ancillary service is provided is subject
to specific guidelines issued by such bank or similar financial
institution (as determined by the Secretary after consultation with
Federal and State supervisory authority), and under such guidelines the
bank or similar financial institution does not provide such ancillary
service --
(i) in an excessive or unreasonable manner, and
(ii) in a manner that would be inconsistent with the best interests
of participants and beneficiaries of employee benefit plans;
(7) the exercise of a privilege to convert securities, to the extent
provided in regulations of the Secretary but only if the plan receives
no less than adequate consideration pursuant to such conversion;
(8) any transaction between a plan and a common or collective trust
fund or pooled investment fund maintained by a disqualified person which
is a bank or trust company supervised by a State or Federal agency or
between a plan and a pooled investment fund of an insurance company
qualified to do business in a State if --
(A) the transaction is a sale or purchase of an interest in the fund,
(B) the bank, trust company, or insurance company receives not more
than a reasonable compensation, and
(C) such transaction is expressly permitted by the instrument under
which the plan is maintained, or by a fiduciary (other than the bank,
trust company, or insurance company, or an affiliate thereof) who has
authority to manage and control the assets of the plan;
(9) receipt by a disqualified person of any benefit to which he may
be entitled as a participant or beneficiary in the plan, so long as the
benefit is computed and paid on a basis which is consistent with the
terms of the plan as applied to all other participants and
beneficiaries;
(10) receipt by a disqualified person of any reasonable compensation
for services rendered, or for the reimbursement of expenses properly and
actually incurred, in the performance of his duties with the plan, but
no person so serving who already receives full-time pay from an employer
or an association of employers, whose employees are participants in the
plan or from an employee organization whose members are participants in
such plan shall receive compensation from such fund, except for
reimbursement of expenses properly and actually incurred;
(11) service by a disqualified person as a fiduciary in addition to
being an officer, employee, agent, or other representative of a
disqualified person;
(12) the making by a fiduciary of a distribution of the assets of the
trust in accordance with the terms of the plan if such assets are
distributed in the same manner as provided under section 4044 of title
IV of the Employee Retirement Income Security Act of 1974 (relating to
allocation of assets);
(13) any transaction which is exempt from section 406 of such Act by
reason of section 408(e) of such Act (or which would be so exempt if
such section 406 applied to such transaction) or which is exempt from
section 406 of such Act by reason of section 408(b) of such Act;
(14) any transaction required or permitted under part 1 of subtitle E
of title IV or section 4223 of the Employee Retirement Income Security
Act of 1974, but this paragraph shall not apply with respect to the
application of subsection (c)(1) (E) or (F); or
(15) a merger of multiemployer plans, or the transfer of assets or
liabilities between multiemployer plans, determined by the Pension
Benefit Guaranty Corporation to meet the requirements of section 4231 of
such Act, but this paragraph shall not apply with respect to the
application of subsection (c)(1) (E) or (F).
The exemptions provided by this subsection (other than paragraphs (9)
and (12)) shall not apply to any transaction with respect to a trust
described in section 401(a) which is part of a plan providing
contributions or benefits for employees some or all of whom are
owner-employees (as defined in section 401(c)(3)) in which a plan
directly or indirectly lends any part of the corpus or income of the
plan to, pays any compensation for personal services rendered to the
plan to, or acquires for the plan any property from or sells any
property to, any such owner-employee, a member of the family (as defined
in section 267(c)(4)) of any such owner-employee, or a corporation
controlled by any such owner-employee through the ownership, directly or
indirectly, of 50 percent or more of the total combined voting power of
all classes of stock entitled to vote or 50 percent or more of the total
value of shares of all classes of stock of the corporation. For
purposes of the preceding sentence, a shareholder-employee (as defined
in section 1379, as in effect on the day before the date of the
enactment of the Subchapter S Revision Act of 1982), a participant or
beneficiary of an individual retirement account or an individual
retirement annuity (as defined in section 408), and an employer or
association of employees which establishes such an account or annuity
under section 408(c) shall be deemed to be an owner-employee.
(e) Definitions
(1) Plan
For purposes of this section, the term ''plan'' means a trust
described in section 401(a) which forms a part of a plan, or a plan
described in section 403(a), which trust or plan is exempt from tax
under section 501(a), an individual retirement account described in
section 408(a) or an individual retirement annuity described in section
408(b) (or a trust, plan, account, or annuity which, at any time, has
been determined by the Secretary to be such a trust, plan, or account).
(2) Disqualified person
For purposes of this section, the term ''disqualified person'' means
a person who is --
(A) a fiduciary;
(B) a person providing services to the plan;
(C) an employer any of whose employees are covered by the plan;
(D) an employee organization any of whose members are covered by the
plan;
(E) an owner, direct or indirect, of 50 percent or more of --
(i) the combined voting power of all classes of stock entitled to
vote or the total value of shares of all classes of stock of a
corporation,
(ii) the capital interest or the profits interest of a partnership,
or
(iii) the beneficial interest of a trust or unincorporated
enterprise,
which is an employer or an employee organization described in
subparagraph (C) or (D);
(F) a member of the family (as defined in paragraph (6)) of any
individual described in subparagraph (A), (B), (C), or (E);
(G) a corporation, partnership, or trust or estate of which (or in
which) 50 percent or more of --
(i) the combined voting power of all classes of stock entitled to
vote or the total value of shares of all classes of stock of such
corporation,
(ii) the capital interest or profits interest of such partnership, or
(iii) the beneficial interest of such trust or estate,
is owned directly or indirectly, or held by persons described in
subparagraph (A), (B), (C), (D), or (E);
(H) an officer, director (or an individual having powers or
responsibilities similar to those of officers or directors), a 10
percent or more shareholder, or a highly compensated employee (earning
10 percent or more of the yearly wages of an employer) of a person
described in subparagraph (C), (D), (E), or (G); or
(I) a 10 percent or more (in capital or profits) partner or joint
venturer of a person described in subparagraph (C), (D), (E), or (G).
The Secretary, after consultation and coordination with the Secretary
of Labor or his delegate, may by regulation prescribe a percentage lower
than 50 percent for subparagraphs (E) and (G) and lower than 10 percent
for subparagraphs (H) and (I).
(3) Fiduciary
For purposes of this section, the term ''fiduciary'' means any person
who --
(A) exercises any discretionary authority or discretionary control
respecting management of such plan or exercises any authority or control
respecting management or disposition of its assets,
(B) renders investment advice for a fee or other compensation, direct
or indirect, with respect to any moneys or other property of such plan,
or has any authority or responsibility to do so, or
(C) has any discretionary authority or discretionary responsibility
in the administration of such plan.
Such term includes any person designated under section 405(c)(1)(B)
of the Employee Retirement Income Security Act of 1974.
(4) Stockholdings
For purposes of paragraphs (2)(E)(i) and (G)(i) there shall be taken
into account indirect stockholdings which would be taken into account
under section 267(c), except that, for purposes of this paragraph,
section 267(c)(4) shall be treated as providing that the members of the
family of an individual are the members within the meaning of paragraph
(6).
(5) Partnerships; trusts
For purposes of paragraphs (2)(E)(ii) and (iii), (G)(ii) and (iii),
and (I) the ownership of profits or beneficial interests shall be
determined in accordance with the rules for constructive ownership of
stock provided in section 267(c) (other than paragraph (3) thereof),
except that section 267(c)(4) shall be treated as providing that the
members of the family of an individual are the members within the
meaning of paragraph (6).
(6) Member of family
For purposes of paragraph (2)(F), the family of any individual shall
include his spouse, ancestor, lineal descendant, and any spouse of a
lineal descendant.
(7) Employee stock ownership plan
The term ''employee stock ownership plan'' means a defined
contribution plan --
(A) which is a stock bonus plan which is qualified, or a stock bonus
and a money purchase plan both of which are qualified under section
401(a), and which are designed to invest primarily in qualifying
employer securities; and
(B) which is otherwise defined in regulations prescribed by the
Secretary.
A plan shall not be treated as an employee stock ownership plan
unless it meets the requirements of section 409(h), section 409(o), and,
if applicable, section 409(n) and, if the employer has a
registration-type class of securities (as defined in section 409(e)(4)),
it meets the requirements of section 409(e).
(8) Qualifying employer security
The term ''qualifying employer security'' means any employer security
within the meaning of section 409(l). If any moneys or other property
of a plan are invested in shares of an investment company registered
under the Investment Company Act of 1940, the investment shall not cause
that investment company or that investment company's investment adviser
or principal underwriter to be treated as a fiduciary or a disqualified
person for purposes of this section, except when an investment company
or its investment adviser or principal underwriter acts in connection
with a plan covering employees of the investment company, its investment
adviser, or its principal underwriter.
(9) Section made applicable to withdrawal liability payment funds
For purposes of this section --
(A) In general
The term ''plan'' includes a trust described in section 501(c)(22).
(B) Disqualified person
In the case of any trust to which this section applies by reason of
subparagraph (A), the term ''disqualified person'' includes any person
who is a disqualified person with respect to any plan to which such
trust is permitted to make payments under section 4223 of the Employee
Retirement Income Security Act of 1974.
(f) Other definitions and special rules
For purposes of this section --
(1) Joint and several liability
If more than one person is liable under subsection (a) or (b) with
respect to any one prohibited transaction, all such persons shall be
jointly and severally liable under such subsection with respect to such
transaction.
(2) Taxable period
The term ''taxable period'' means, with respect to any prohibited
transaction, the period beginning with the date on which the prohibited
transaction occurs and ending on the earliest of --
(A) the date of mailing a notice of deficiency with respect to the
tax imposed by subsection (a) under section 6212,
(B) the date on which the tax imposed by subsection (a) is assessed,
or
(C) the date on which correction of the prohibited transaction is
completed.
(3) Sale or exchange; encumbered property
A transfer or real or personal property by a disqualified person to a
plan shall be treated as a sale or exchange if the property is subject
to a mortgage or similar lien which the plan assumes or if it is subject
to a mortgage or similar lien which a disqualified person placed on the
property within the 10-year period ending on the date of the transfer.
(4) Amount involved
The term ''amount involved'' means, with respect to a prohibited
transaction, the greater of the amount of money and the fair market
value of the other property given or the amount of money and the fair
market value of the other property received; except that, in the case
of services described in paragraphs (2) and (10) of subsection (d) the
amount involved shall be only the excess compensation. For purposes of
the preceding sentence, the fair market value --
(A) in the case of the tax imposed by subsection (a), shall be
determined as of the date on which the prohibited transaction occurs;
and
(B) in the case of the tax imposed by subsection (b), shall be the
highest fair market value during the taxable period.
(5) Correction
The terms ''correction'' and ''correct'' mean, with respect to a
prohibited transaction, undoing the transaction to the extent possible,
but in any case placing the plan in a financial position not worse than
that in which it would be if the disqualified person were acting under
the highest fiduciary standards.
(g) Application of section
This section shall not apply --
(1) in the case of a plan to which a guaranteed benefit policy (as
defined in section 401(b)(2)(B) of the Employee Retirement Income
Security Act of 1974) is issued, to any assets of the insurance company,
insurance service, or insurance organization merely because of its
issuance of such policy;
(2) to a governmental plan (within the meaning of section 414(d));
or
(3) to a church plan (within the meaning of section 414(e)) with
respect to which the election provided by section 410(d) has not been
made.
In the case of a plan which invests in any security issued by an
investment company registered under the Investment Company Act of 1940,
the assets of such plan shall be deemed to include such security but
shall not, by reason of such investment, be deemed to include any assets
of such company.
(h) Notification of Secretary of Labor
Before sending a notice of deficiency with respect to the tax imposed
by subsection (a) or (b), the Secretary shall notify the Secretary of
Labor and provide him a reasonable opportunity to obtain a correction of
the prohibited transaction or to comment on the imposition of such tax.
(i) Cross reference
For provisions concerning coordination procedures between Secretary
of Labor and Secretary of Treasury with respect to application of tax
imposed by this section and for authority to waive imposition of the tax
imposed by subsection (b), see section 3003 of the Employee Retirement
Income Security Act of 1974.
(Added Pub. L. 93-406, title II, 2003(a), Sept. 2, 1974, 88 Stat.
971; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976,
90 Stat. 1834; Pub. L. 95-600, title I, 141(f)(5), (6), Nov. 6, 1978,
92 Stat. 2795; Pub. L. 96-222, title I, 101(a)(7)(C), (K),
(L)(iv)(III), (v)(XI), Apr. 1, 1980, 94 Stat. 198-201; Pub. L. 96-364,
title II, 208(b), 209(b), Sept. 26, 1980, 94 Stat. 1289, 1290; Pub.
L. 96-596, 2(a)(1)(K),(L), (2)(I), (3)(F), Dec. 24, 1980, 94 Stat.
3469, 3471; Pub. L. 97-448, title III, 305(d)(5), Jan. 12, 1983, 96
Stat. 2400; Pub. L. 98-369, div. A, title IV, 491(d)(45), (46),
(e)(7), (8), July 18, 1984, 98 Stat. 851-853; Pub. L. 99-514, title XI,
1114(b)(15)(A), title XVIII, 1854(f)(3)(A), 1899A(51), Oct. 22, 1986,
100 Stat. 2452, 2882, 2961; Pub. L. 101-508, title XI, 11701(m), Nov.
5, 1990, 104 Stat. 1388-513.)
The Employee Retirement Income Security Act of 1974, referred to in
subsecs. (c)(2), (d)(12) to (15), (e)(3), (9)(B), (g)(1), and (i) is
Pub. L. 93-406, Sept. 2, 1974, 88 Stat. 832, as amended. Part 1 of
subtitle E of title IV of such Act is classified generally to part 1 (29
U.S.C. 1381 et seq.) of subtitle E of subchapter III of chapter 18 of
Title 29, Labor. Sections 401, 405, 406, 408, 3003, 4044, 4223, and
4231 of such Act are classified to sections 1101, 1105, 1106, 1108,
1203, 1344, 1403, and 1411, respectively, of Title 29. For complete
classification of this Act to the Code, see Short Title note set out
under section 1001 of Title 29 and Tables.
The date of the enactment of the Subchapter S Revision Act of 1982,
referred to in subsec. (d), is the date of enactment of Pub. L.
97-354, which was approved Oct. 19, 1982.
The Investment Company Act of 1940, referred to in subsecs. (e)(8)
and (g), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, as
amended, which is classified generally to subchapter I ( 80a-1 et seq.)
of chapter 2D of Title 15, Commerce and Trade. For complete
classification of this Act to the Code, see section 80a-51 of Title 15
and Tables.
1990 -- Subsec. (d)(13). Pub. L. 101-508 inserted before semicolon
at end ''or which is exempt from section 406 of such Act by reason of
section 408(b) of such Act''.
1986 -- Subsec. (d). Pub. L. 99-514, 1899A(51), inserted a closing
parenthesis after ''and (12)'' in second sentence.
Subsec. (d)(1)(B). Pub. L. 99-514, 1114(b)(15)(A), substituted
''highly compensated employees (within the meaning of section 414(q))''
for ''highly compensated employees, officers, or shareholders''.
Subsec. (e)(7). Pub. L. 99-514, 1854(f)(3)(A), inserted '', section
409(o), and, if applicable, section 409(n)'' in last sentence.
1984 -- Subsec. (d). Pub. L. 98-369, 491(d)(45), substituted in
provision following par. (15) ''or an individual retirement annuity (as
defined in section 408)'' for '', individual retirement annuity, or an
individual retirement bond (as defined in section 408 or 409)''.
Subsec. (e)(1). Pub. L. 98-369, 491(d)(46), struck out ''or 405(a)''
after ''section 403(a)'' and ''or a retirement bond described in section
409'' after ''section 408(b)'', and substituted ''or annuity'' for
''annuity, or bond'' and ''or account'' for ''account, or bond''.
Subsec. (e)(7). Pub. L. 98-369, 491(e)(7), substituted ''section
409(h)'' for ''section 409A(h)'', ''section 409(e)(4)'' for ''section
409A(e)(4)'', and ''section 409(e)'' for ''section 409A(e)''.
Subsec. (e)(8). Pub. L. 98-369, 491(e)(8), substituted ''section
409(l)'' for ''section 409A(l)''.
1983 -- Subsec. (d). Pub. L. 97-448 inserted '', as in effect on the
day before the date of the enactment of the Subchapter S Revision Act of
1982'' after ''section 1379'' in last sentence.
1980 -- Subsec. (b). Pub. L. 96-596, 2(a)(1)(K), substituted
''taxable period'' for ''correction period''.
Subsec. (d)(14), (15). Pub. L. 96-364, 208(b), added pars. (14)
and (15).
Subsec. (e)(7). Pub. L. 96-222, 101(a)(7)(K), (L)(iv)(III), (v)(XI),
substituted references to an employee stock ownership plan, for
references to a leveraged employee stock ownership plan wherever
appearing therein, and substituted provisions relating to treatment of a
plan as an employee stock ownership plan, for provisions relating to
treatment of a plan as a leveraged employee stock ownership plan.
Subsec. (e)(8). Pub. L. 96-222, 101(a)(7)(C), substituted provisions
defining ''qualifying employer security'' within the meaning of section
409A(l), for provisions defining such term as stock, or otherwise an
equity security, or within the meaning of section 503(e)(1) to (3).
Subsec. (e)(9). Pub. L. 96-364, 209(b), added par. (9).
Subsec. (f)(2)(B), (C). Pub. L. 96-596, 2(a)(2)(I), added subpar.
(B) and redesignated former subpar. (B) as (C).
Subsec. (f)(4)(B). Pub. L. 96-596, 2(a)(1)(L), substituted ''taxable
period'' for ''correction period''.
Subsec. (f)(6). Pub. L. 96-596, 2(a)(3)(F), struck out par. (6),
which defined correction period, with respect to a prohibited
transaction, as the period beginning on the date on which the prohibited
transaction occurs and ending 90 days after the date of mailing of a
notice of deficiency with respect to the tax imposed by subsec. (b) of
this section under section 6212 of this title, extended by any period in
which a deficiency cannot be assessed under section 6213(a) of this
title and any other period which the Secretary determines is reasonable
and necessary to bring about the correction of the prohibited
transaction.
1978 -- Subsec. (d)(3). Pub. L. 95-600, 141(f)(6), substituted
''leveraged employee'' for ''employee''.
Subsec. (e)(7). Pub. L. 95-600, 141(f)(5), substituted in heading
''Leveraged employee'' for ''Employee'', and in text, ''leveraged
employee'' for ''employee'' and inserted provision that a plan not be
treated as a leveraged employee stock ownership plan unless it meet the
requirements of section 409A(e) and (h).
1976 -- Subsecs. (c) to (f). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Amendment by Pub. L. 101-508 effective, except as otherwise
provided, as if included in the provision of the Revenue Reconciliation
Act of 1989, Pub. L. 101-239, title VII, to which such amendment
relates, see section 11701(n) of Pub. L. 101-508, set out as a note
under section 42 of this title.
Amendment by section 1114(b)(15)(A) of Pub. L. 99-514 applicable to
years beginning after Dec. 31, 1988, see section 1114(c)(3) of Pub. L.
99-514, set out as a note under section 414 of this title.
Amendment by section 1854(f)(3)(A) of Pub. L. 99-514 effective Oct.
22, 1986, see section 1854(f)(4)(A) of Pub. L. 99-514, set out as a
note under section 409 of this title.
Amendment by section 491(d)(45), (46) of Pub. L. 98-369 applicable
to obligations issued after Dec. 31, 1983, see section 491(f)(1) of
Pub. L. 98-369, set out as a note under section 62 of this title.
Amendment by section 491(e)(7), (8) of Pub. L. 98-369 effective Jan.
1, 1984, see section 491(f)(3) of Pub. L. 98-369, set out as a note
under section 401 of this title.
Amendment by Pub. L. 97-448 effective on date of enactment of
Subchapter S Revision Act of 1982 (Oct. 19, 1982), see section 311(c)(4)
of Pub. L. 97-448, set out as a note under section 1368 of this title.
For effective date of amendment by Pub. L. 96-596 with respect to
any first tier tax and to any second tier tax, see section 2(d) of Pub.
L. 96-596, set out as an Effective Date note under section 4961 of this
title.
Amendment by section 208(b) of Pub. L. 96-364 effective Sept. 26,
1980, see section 210(a) of Pub. L. 96-364, set out as an Effective
Date note under section 418 of this title.
Amendment by section 209(b) of Pub. L. 96-364 applicable to taxable
years ending after Sept. 26, 1980, see section 210(c) of Pub. L.
96-364, set out as an Effective Date note under section 418 of this
title.
Section 101(b)(1)(C) of Pub. L. 96-222 provided that: ''The
amendment made by subparagraph (C) of subsection (a)(6) (probably should
be '(a)(7)', which amended this section) shall apply to stock acquired
after December 31, 1979.''
Amendment by section 101(a)(7)(K), (L)(iv)(III), (v)(XI) of Pub. L.
96-222 effective, except as otherwise provided, as if it had been
included in the provision of the Revenue Act of 1978, Pub. L. 95-600,
to which such amendment relates, see section 201 of Pub. L. 96-222, set
out as a note under section 32 of this title.
Section 141(h) of Pub. L. 95-600, as added by Pub. L. 96-222, title
I, 101(a)(7)(B), Apr. 1, 1980, 94 Stat. 197; Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that: ''Paragraphs (5) and
(6) of subsection (f) (section 141(f)(5), (6) of Pub. L. 95-600) shall
apply --
''(1) insofar as they make the requirements of subsections (e) and
(h)(1)(B) of section 409A (now section 409) of the Internal Revenue Code
of 1986 (formerly I.R.C. 1954) applicable to section 4975 of such Code,
to stock acquired after December 31, 1979, and
''(2) insofar as they make paragraphs (1)(A) and (2) of section
409A(h) (now section 409(h)) of such Code applicable to such section
4975, to distributions after December 31, 1978.''
Section 2003(c) of Pub. L. 93-406, as amended by Pub. L. 99-514,
2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1)(A) The amendments made by this section (enacting this section
and amending section 503 of this title) shall take effect on January 1,
1975.
''(B) If, before the amendments made by this section (enacting this
section and amending section 503 of this title) take effect, an
organization described in section 401(a) of the Internal Revenue Code of
1986 (formerly I.R.C. 1954) is denied exemption under section 501(a) of
such Code by reason of section 503 of such Code, the denial of such
exemption shall not apply if the disqualified person elects (in such
manner and at such time as the Secretary or his delegate shall by
regulations prescribe) to pay, with respect to the prohibited
transaction (within the meaning of section 503(b) or (g)) which resulted
in such denial of exemption, a tax in the amount and in the manner
provided with respect to the tax imposed under section 4975 of such
Code. An election made under this subparagraph, once made, shall be
irrevocable. The Secretary of the Treasury or his delegate shall
prescribe such regulations as may be necessary to carry out the purposes
of this subparagraph.
''(2) Section 4975 of the Internal Revenue Code of 1986 (relating to
tax on prohibited transactions) shall not apply to --
''(A) a loan of money or other extension of credit between a plan and
a disqualified person under a binding contract in effect on July 1, 1974
(or pursuant to renewals of such a contract), until June 30, 1984, if
such loan or other extension of credit remains at least as favorable to
the plan as an arm's-length transaction with an unrelated party would
be, and if the execution of the contract, the making of the loan, or the
extension of credit was not, at the time of such execution, making, or
extension, a prohibited transaction (within the meaning of section
503(b) of such Code) or the corresponding provisions of prior law);
''(B) a lease of joint use of property involving the plan and a
disqualified person pursuant to a binding contract in effect on July 1,
1974 (or pursuant to renewals of such a contract), until June 30, 1984,
if such lease or joint use remains at least as favorable to the plan as
an arm's-length transaction with an unrelated party would be and if the
execution of the contract was not, at the time of such execution, a
prohibited transaction (within the meaning of section 503(b) of such
Code) or the corresponding provisions of prior law;
''(C) the sale, exchange, or other disposition of property described
in subparagraph (B) between a plan and a disqualified person before June
30, 1984, if --
''(i) in the case of a sale, exchange, or other disposition of the
property by the plan to the disqualified person, the plan receives an
amount which is not less than the fair market value of the property at
the time of such disposition; and
''(ii) in the case of the acquisition of the property by the plan,
the plan pays an amount which is not in excess of the fair market value
of the property at the time of such acquisition:
''(D) Until June 30, 1977, the provision of services to which
subparagraphs (A), (B), and (C) do not apply between a plan and a
disqualified person (i) under a binding contract in effect on July 1,
1974 (or pursuant to renewals of such contract), or (ii) if the
disqualified person ordinarily and customarily furnished such services
on June 30, 1974, if such provision of services remains at least as
favorable to the plan as an arm's-length transaction with an unrelated
party would be and if the provision of services was not, at the time of
such provision, a prohibited transaction (within the meaning of section
503(b) of such Code) or the corresponding provisions of prior law; or
''(E) the sale, exchange, or other disposition of property which is
owned by a plan on June 30, 1974, and all times thereafter, to a
disqualified person, if such plan is required to dispose of such
property in order to comply with the provisions of section 407(a)(2)(A)
(relating to the prohibition against holding excess employer securities
and employer real property) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1107(a)(2)) and if the plan receives not less
than adequate consideration.
For the purposes of this paragraph, the term 'disqualified person'
has the meaning provided by section 4975(e)(2) of the Internal Revenue
Code of 1986.''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
Secretary of the Treasury or his delegate to issue before Feb. 1,
1988, final regulations to carry out amendments made by section 1114 of
Pub. L. 99-514, see section 1141 of Pub. L. 99-514, set out as a note
under section 401 of this title.
Section 803(h) of Pub. L. 94-455 provided that: ''The Congress, in
a series of laws (the Regional Rail Reorganization Act of 1973, the
Employee Retirement Income Security Act of 1974, the Trade Act of 1974,
and the Tax Reduction Act of 1975) and this Act has made clear its
interest in encouraging employee stock ownership plans as a bold and
innovative method of strengthening the free private enterprise system
which will solve the dual problems of securing capital funds for
necessary capital growth and of bringing about stock ownership by all
corporate employees. The Congress is deeply concerned that the
objectives sought by this series of laws will be made unattainable by
regulations and rulings which treat employee stock ownership plans as
conventional retirement plans, which reduce the freedom of the employee
trusts and employers to take the necessary steps to implement the plans,
and which otherwise block the establishment and success of these plans.
Because of the special purposes for which employee stock ownership plans
are established, it is consistent with the intent of Congress to permit
these plans (whether structured as pension, stock bonus, or
profit-sharing plans) to distribute income on employer securities
currently.''
title 19 sections 2345, 2373; title 29 sections 1054,
1055, 1056, 1132, 1203, 1342, 1403; title 45 section
726.
/1/ So in original. Probably should be ''a''.
26 USC 4976. Taxes with respect to funded welfare benefit plans
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
If --
(1) an employer maintains a welfare benefit fund, and
(2) there is a disqualified benefit provided during any taxable year,
there is hereby imposed on such employer a tax equal to 100 percent
of such disqualified benefit.
(b) Disqualified benefit
For purposes of subsection (a) --
(1) In general
The term ''disqualified benefit'' means --
(A) any post-retirement medical benefit or life insurance benefit
provided with respect to a key employee if a separate account is
required to be established for such employee under section 419A(d) and
such payment is not from such account,
(B) any post-retirement medical benefit or life insurance benefit
provided with respect to an individual in whose favor discrimination is
prohibited unless the plan meets the requirements of section 505(b) with
respect to such benefit (whether or not such requirements apply to such
plan), and
(C) any portion of a welfare benefit fund reverting to the benefit of
the employer.
(2) Exception for collective bargaining plans
Paragraph (1)(B) shall not apply to any plan maintained pursuant to
an agreement between employee representatives and 1 or more employers if
the Secretary finds that such agreement is a collective bargaining
agreement and that the benefits referred to in paragraph (1)(B) were the
subject of good faith bargaining between such employee representatives
and such employer or employers.
(3) Exception for nondeductible contributions
Paragraph (1)(C) shall not apply to any amount attributable to a
contribution to the fund which is not allowable as a deduction under
section 419 for the taxable year or any prior taxable year (and such
contribution shall not be included in any carryover under section
419(d)).
(4) Exception for certain amounts charged against existing reserve
Subparagraphs (A) and (B) of paragraph (1) shall not apply to
post-retirement benefits charged against an existing reserve for
post-retirement medical or life insurance benefits (as defined in
section 512(a)(3)(E)) or charged against the income on such reserve.
(c) Definitions
For purposes of this section, the terms used in this section shall
have the same respective meanings as when used in subpart D of part I of
subchapter D of chapter 1.
(Added Pub. L. 98-369, div. A, title V, 511(c)(1), July 18, 1984, 98
Stat. 861; amended Pub. L. 99-514, title XVIII, 1851(a)(11), Oct. 22,
1986, 100 Stat. 2861; Pub. L. 100-647, title I, 1011B(a)(27)(A), (B),
title III, 3021(a)(1)(C), Nov. 10, 1988, 102 Stat. 3487, 3626; Pub. L.
101-140, title II, 203(a)(2), Nov. 8, 1989, 103 Stat. 830.)
Pub. L. 101-140 amended this section to read as if the amendments
made by section 1011B(a)(27) of Pub. L. 100-647 (enacting subsec. (c))
had not been enacted. Subsequent to enactment by Pub. L. 100-647,
subsec. (c) was amended by Pub. L. 100-647, 3021(a)(1)(C). See 1988
Amendment note below.
1989 -- Subsec. (b)(5). Pub. L. 101-140 amended subsec. (b) to read
as if amendments by Pub. L. 100-647, 1011B(a)(27)(B), had not been
enacted, see 1988 Amendment note below.
Subsecs. (c), (d). Pub. L. 101-140 amended this section to read as
if amendments by Pub. L. 100-647, 1011B(a)(27)(A), had not been
enacted, see 1988 Amendment note below.
1988 -- Subsec. (b)(5). Pub. L. 100-647, 1011B(a)(27)(B), added
par. (5) relating to limitation in case of benefits to which section 89
applies.
Subsec. (c). Pub. L. 100-647, 1011B(a)(27)(A), added subsec. (c)
relating to tax on funded welfare benefit funds which include
discriminatory employee benefit plan. Former subsec. (c) redesignated
(d).
Subsec. (c)(1)(B). Pub. L. 100-647, 3021(a)(1)(C)(i), substituted
''any testing year (as defined in section 89(j)(13))'' for ''any plan
year'', see Codification note above.
Subsec. (c)(2)(A). Pub. L. 100-647, 3021(a)(1)(C)(ii), substituted
''testing'' for ''plan'' in cls. (i) and (ii), see Codification note
above.
Subsec. (d). Pub. L. 100-647, 1011B(a)(27)(A), redesignated former
subsec. (c) as (d).
1986 -- Subsec. (b). Pub. L. 99-514 amended subsec. (b) generally.
Prior to amendment, subsec. (b) read as follows: ''For purposes of
subsection (a), the term 'disqualified benefit' means --
''(1) any medical benefit or life insurance benefit provided with
respect to a key employee other than from a separate account established
for such owner under section 419A(d), and
''(2) any post-retirement medical or life insurance benefit unless
the plan meets the requirements of section 505(b)(1) with respect to
such benefit, and
''(3) any portion of such fund reverting to the benefit of the
employer.''
Amendment by Pub. L. 101-140 effective as if included in section
1151 of Pub. L. 99-514, see section 203(c) of Pub. L. 101-140, set out
as a note under section 79 of this title.
Amendment by section 1011B(a)(27)(A), (B) of Pub. L. 100-647
effective, except as otherwise provided, as if included in the provision
of the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Amendment by section 3021(a)(1)(C) of Pub. L. 100-647 effective as
if included in the amendments by section 1151 of Pub. L. 99-514, see
section 3021(d)(1) of Pub. L. 100-647, set out as a note under section
129 of this title.
Amendment by Pub. L. 99-514 effective, except as otherwise provided,
as if included in the provisions of the Tax Reform Act of 1984, Pub. L.
98-369, div. A, to which such amendment relates, see section 1881 of
Pub. L. 99-514, set out as a note under section 48 of this title.
Section applicable to benefits provided after Dec. 31, 1985, see
section 511(e)(7) of Pub. L. 98-369, set out as a note under section
419 of this title.
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
26 USC 4977. Tax on certain fringe benefits provided by an employer
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
In the case of an employer to whom an election under this section
applies for any calendar year, there is hereby imposed a tax for such
calendar year equal to 30 percent of the excess fringe benefits.
(b) Excess fringe benefits
For purposes of subsection (a), the term ''excess fringe benefits''
means, with respect to any calendar year --
(1) the aggregate value of the fringe benefits provided by the
employer during the calendar year which were not includible in gross
income under paragraphs (1) and (2) of section 132(a), over
(2) 1 percent of the aggregate amount of compensation --
(A) which was paid by the employer during such calendar year to
employees, and
(B) was includible in gross income for purposes of chapter 1.
(c) Effect of election on section 132(a)
If --
(1) an election under this section is in effect with respect to an
employer for any calendar year, and
(2) at all times on or after January 1, 1984, and before the close of
the calendar year involved, substantially all of the employees of the
employer were entitled to employee discounts on goods or services
provided by the employer in 1 line of business,
for purposes of paragraphs (1) and (2) of section 132(a) (but not for
purposes of section 132(g)(2)), /1/ all employees of any line of
business of the employer which was in existence on January 1, 1984,
shall be treated as employees of the line of business referred to in
paragraph (2).
(d) Period of election
An election under this section shall apply to the calendar year for
which made and all subsequent calendar years unless revoked by the
employer.
(e) Treatment of controlled groups
All employees treated as employed by a single employer under
subsection (b), (c), or (m) of section 414 shall be treated as employed
by a single employer for purposes of this section.
(f) Section to apply only to employment within the United States
Except as otherwise provided in regulations, this section shall apply
only with respect to employment within the United States.
(Added Pub. L. 98-369, div. A, title V, 531(e)(1), July 18, 1984, 98
Stat. 885; amended Pub. L. 99-514, title XVIII, 1853(c)(1), (2), Oct.
22, 1986, 100 Stat. 2871.)
Section 132(g), referred to in subsec. (c), was amended generally by
Pub. L. 99-514, title XI, 1151(e)(2)(A), Oct. 22, 1986, 100 Stat.
2506, and as so amended, former par. (2) of subsec. (g) comprised the
entire subsec. (g). Section 132(g) was redesignated section 132(h) by
Pub. L. 102-486, title XIX, 1911(b), Oct. 24, 1992, 106 Stat. 3012.
1986 -- Subsec. (c)(2). Pub. L. 99-514, 1853(c)(1), amended par.
(2) generally. Prior to amendment, par. (2) read as follows: ''as of
January 1, 1984, substantially all of the employees of the employer were
entitled to employee discounts or services provided by the employer in 1
line of business,''.
Subsec. (f). Pub. L. 99-514, 1853(c)(2), added subsec. (f).
Amendment by Pub. L. 99-514 effective, except as otherwise provided,
as if included in the provisions of the Tax Reform Act of 1984, Pub. L.
98-369, div. A, to which such amendment relates, see section 1881 of
Pub. L. 99-514, set out as a note under section 48 of this title.
Section effective Jan. 1, 1985, see section 531(h) of Pub. L.
98-369, set out as a note under section 132 of this title.
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
Section 1853(c)(3) of Pub. L. 99-514 provided that: ''For purposes
of determining whether the requirements of section 4977(c) of the
Internal Revenue Code of 1954 (now 1986) are met in the case of an
agricultural cooperative incorporated in 1964, there shall not be taken
into account employees of a member of the same controlled group as such
cooperative which became a member during July 1980.''
/1/ See References in Text note below.
26 USC 4978. Tax on certain dispositions by employee stock ownership
plans and certain cooperatives
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax on dispositions of securities to which section 1042 applies
before close of minimum holding period
If, during the 3-year period after the date on which the employee
stock ownership plan or eligible worker-owned cooperative acquired any
qualified securities in a sale to which section 1042 applied, such plan
or cooperative disposes of any qualified securities and --
(1) the total number of shares held by such plan or cooperative after
such disposition is less than the total number of employer securities
held immediately after such sale, or
(2) except to the extent provided in regulations, the value of
qualified securities held by such plan or cooperative after such
disposition is less than 30 percent of the total value of all employer
securities as of such disposition,
there is hereby imposed a tax on the disposition equal to the amount
determined under subsection (b).
(b) Amount of tax
(1) In general
The amount of the tax imposed by subsection (a) shall be equal to 10
percent of the amount realized on the disposition.
(2) Limitation
The amount realized taken into account under paragraph (1) shall not
exceed that portion allocable to qualified securities acquired in the
sale to which section 1042 applied determined as if such securities were
disposed of --
(A) first, from section 133 securities (as defined in section
4978B(e)(2)) acquired during the 3-year period ending on the date of
such disposition, beginning with the securities first so acquired. /1/
(B) second, from section 133 securities (as so defined) acquired
before such 3-year period unless such securities (or proceeds from the
disposition) have been allocated to accounts of participants or
beneficiaries. /1/
(C) third, from qualified securities to which section 1042 applied
acquired during the 3-year period ending on the date of the disposition,
beginning with the securities first so acquired, and
(D) then from any other employer securities.
If subsection (d) or section 4978B(d) applies to a disposition, the
disposition shall be treated as made from employer securities in the
opposite order of the preceding sentence.
(3) Distributions to employees
The amount realized on any distribution to an employee for less than
fair market value shall be determined as if the qualified security had
been sold to the employee at fair market value.
(c) Liability for payment of taxes
The tax imposed by this subsection shall be paid by --
(1) the employer, or
(2) the eligible worker-owned cooperative,
that made the written statement described in section 1042(b)(3).
(d) Section not to apply to certain dispositions
(1) Certain distributions to employees
This section shall not apply with respect to any distribution of
qualified securities (or sale of such securities) which is made by
reason of --
(A) the death of the employee,
(B) the retirement of the employee after the employee has attained 59
1/2 years of age,
(C) the disability of the employee (within the meaning of section
72(m)(7)), or
(D) the separation of the employee from service for any period which
results in a 1-year break in service (within the meaning of section
411(a)(6)(A)).
(2) Certain reorganizations
In the case of any exchange of qualified securities in any
reorganization described in section 368(a)(1) for stock of another
corporation, such exchange shall not be treated as a disposition for
purposes of this section.
(3) Liquidation of corporation into cooperative
In the case of any exchange of qualified securities pursuant to the
liquidation of the corporation issuing qualified securities into the
eligible worker-owned cooperative in a transaction which meets the
requirements of section 332 (determined by substituting ''100 percent''
for ''80 percent'' each place it appears in section 332(b)(1)), such
exchange shall not be treated as a disposition for purposes of this
section.
(4) Dispositions to meet diversification requirements
This section shall not apply to any disposition of qualified
securities which is required under section 401(a)(28).
(e) Definitions and special rules
For purposes of this section --
(1) Employee stock ownership plan
The term ''employee stock ownership plan'' has the meaning given to
such term by section 4975(e)(7).
(2) Qualified securities
The term ''qualified securities'' has the meaning given to such term
by section 1042(c)(1).
(3) Eligible worker-owned cooperative
The term ''eligible worker-owned cooperative'' has the meaning given
to such term by section 1042(c)(2).
(4) Disposition
The term ''disposition'' includes any distribution.
(5) Employer securities
The term ''employer securities'' has the meaning given to such term
by section 409(l).
(Added Pub. L. 98-369, div. A, title V, 545(a), July 18, 1984, 98
Stat. 894; amended Pub. L. 99-514, title XVIII, 1854(e), Oct. 22,
1986, 100 Stat. 2880; Pub., L. 100-203, title X, 10413(b)(1), Dec.
22, 1987, 101 Stat. 1330-438; Pub. L. 100-647, title I, 1011B(j)(4),
Nov. 10, 1988, 102 Stat. 3492; Pub. L. 101-239, title VII,
7304(a)(2)(C)(ii), Dec. 19, 1989, 103 Stat. 2353.)
1989 -- Subsec. (b)(2). Pub. L. 101-239 substituted ''determined as
if such securities were disposed of -- '', subpars. (A) to (D), and
concluding provision for ''(determined as if such securities were
disposed of in the order described in section 4978A(e))''.
1988 -- Subsec. (d)(4). Pub. L. 100-647 added par. (4).
1987 -- Subsec. (b)(2). Pub. L. 100-203 substituted ''(determined as
if such securities were disposed of in the order described in section
4978A(e))'' for ''(determined as if such securities were disposed of
before any other securities)''.
1986 -- Subsec. (a)(1). Pub. L. 99-514, 1854(e)(1), substituted
''than'' for ''then''.
Subsec. (b)(1). Pub. L. 99-514, 1854(e)(2), substituted ''subsection
(a)'' for ''paragraph (1)''.
Subsec. (c). Pub. L. 99-514, 1854(e)(3), substituted ''section
1042(b)(3)'' for ''section 1042(a)(2)(B)''.
Subsec. (d)(1)(C). Pub. L. 99-514, 1854(e)(4), substituted ''section
72(m)(7)'' for ''section 72(m)(5)''.
Subsec. (d)(3). Pub. L. 99-514, 1854(e)(7), added par. (3).
Subsec. (e)(2). Pub. L. 99-514, 1854(e)(5), substituted ''section
1042(c)(1)'' for ''section 1042(b)(1)''.
Subsec. (e)(3). Pub. L. 99-514, 1854(e)(6), substituted ''section
1042(c)(2)'' for ''section 1042(b)(1)''.
Amendment by Pub. L. 101-239 applicable to estates of decedents
dying after Dec. 19, 1989, see section 7304(a)(3) of Pub. L. 101-239,
set out as a note under section 409 of this title.
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Section 10413(c) of Pub. L. 100-203 provided that: ''The amendments
made by this section (enacting section 4978A of this title and amending
this section) shall apply to taxable events (within the meaning of
section 4978A(c) of the Internal Revenue Code of 1986) occurring after
February 26, 1987.''
Amendment by Pub. L. 99-514 effective, except as otherwise provided,
as if included in the provisions of the Tax Reform Act of 1984, Pub. L.
98-369, div. A, to which such amendment relates, see section 1881 of
Pub. L. 99-514, set out as a note under section 48 of this title.
Section 545(c) of Pub. L. 98-369 provided that: ''The amendments
made by this section (enacting this section) shall apply to taxable
years beginning after the date of enactment of this Act (July 18,
1984).''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
/1/ So in original. The period probably should be a comma.
26 USC ( 4978A. Repealed. Pub. L. 101-239, title VII,
7304(a)(2)(C)(i), Dec. 19, 1989, 103 Stat. 2353)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added Pub. L. 100-203, title X, 10413(a), Dec. 22, 1987,
101 Stat. 1330-436; amended Pub. L. 100-647, title VI, 6060(a), Nov.
10, 1988, 102 Stat. 3699, related to tax on certain dispositions of
employer securities to which section 2057 applied.
Repeal applicable to estates of decedents dying after Dec. 19, 1989,
see section 7304(a)(3) of Pub. L. 101-239, set out as an Effective Date
of 1989 Amendment note under section 409 of this title.
26 USC 4978B. Tax on disposition of employer securities to which
section 133 applied
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
In the case of an employee stock ownership plan which has acquired
section 133 securities, there is hereby imposed a tax on each taxable
event in an amount equal to the amount determined under subsection (b).
(b) Amount of tax
(1) In general
The amount of the tax imposed by subsection (a) shall be equal to 10
percent of the amount realized on the disposition to the extent
allocable to section 133 securities under section 4978(b)(2).
(2) Dispositions other than sales or exchanges
For purposes of paragraph (1), in the case of a disposition of
employer securities which is not a sale or exchange, the amount realized
on such disposition shall be the fair market value of such securities at
the time of disposition.
(c) Taxable event
For purposes of this section, the term ''taxable event'' means any of
the following dispositions:
(1) Dispositions within 3 years
Any disposition of any employer securities by an employee stock
ownership plan within 3 years after such plan acquired section 133
securities if --
(A) the total number of employer securities held by such plan after
such disposition is less than the total number of employer securities
held after such acquisition, or
(B) except to the extent provided in regulations, the value of
employer securities held by such plan after the disposition is 50
percent or less of the total value of all employer securities as of the
time of the disposition.
For purposes of subparagraph (B), the aggregation rule of section
133(b)(6)(D) shall apply.
(2) Stock disposed of before allocation
Any disposition of section 133 securities to which paragraph (1) does
not apply if --
(A) such disposition occurs before such securities are allocated to
accounts of participants or their beneficiaries, and
(B) the proceeds from such disposition are not so allocated.
(d) Section not to apply to certain dispositions
(1) In general
This section shall not apply to any disposition described in
paragraph (1), (3), or (4) of section 4978(d).
(2) Certain reorganizations
For purposes of this section, any exchange of section 133 securities
for employer securities of another corporation in any reorganization
described in section 368(a)(1) shall not be treated as a disposition,
but the employer securities received shall be treated as section 133
securities and as having been held by the plan during the period the
securities which were exchanged were held.
(3) Forced disposition occurring by operation of State law
Any forced disposition of section 133 securities by an employee stock
ownership plan occurring by operation of a State law shall not be
treated as a disposition. This paragraph shall only apply to securities
which, at the time the securities were acquired by the plan, were
regularly traded on an established securities market.
(4) Coordination with other taxes
This section shall not apply to any disposition which is subject to
tax under section 4978 or section 4978A (as in effect on the day before
the date of enactment of this section).
(e) Definitions and special rules
For purposes of this section --
(1) Liability for payment of taxes
The tax imposed by this section shall be paid by the employer.
(2) Section 133 securities
The term ''section 133 securities'' means employer securities
acquired by an employee stock ownership plan in a transaction to which
section 133 applied.
(3) Disposition
The term ''disposition'' includes any distribution.
(4) Ordering rules
For ordering rules for dispositions of employer securities, see
section 4978(b)(2).
(Added Pub. L. 101-239, title VII, 7301(d)(1), Dec. 19, 1989, 103
Stat. 2347; amended Pub. L. 101-508, title XI, 11701(e), Nov. 5, 1990,
104 Stat. 1388-507.)
Section 4978A (as in effect on the day before the date of enactment
of this section), referred to in subsec. (d)(4), means section 4978A,
as in effect before being repealed by Pub. L. 101-239, title VII,
7304(a)(2)(C)(i), Dec. 19, 1989, 103 Stat. 2353.
1990 -- Subsec. (d)(4). Pub. L. 101-508, 11701(e)(2), added par.
(4).
Subsec. (e)(2). Pub. L. 101-508, 11701(e)(1), amended par. (2)
generally. Prior to amendment, par. (2) read as follows: ''The term
'section 133 securities' means employer securities acquired by an
employee stock ownership plan in a transaction to which section 133
applied, except that such term shall not include --
''(A) qualified securities (as defined in section 4978(e)(2)), or
''(B) qualified employer securities (as defined in section
4978A(f)(2), as in effect on the day before the date of the enactment of
this section).''
Amendment by Pub. L. 101-508 effective, except as otherwise
provided, as if included in the provision of the Revenue Reconciliation
Act of 1989, Pub. L. 101-239, title VII, to which such amendment
relates, see section 11701(n) of Pub. L. 101-508, set out as a note
under section 42 of this title.
Section applicable, except as otherwise provided, to loans made after
July 10, 1989, see section 7301(f) of Pub. L. 101-239, set out as a
note under section 133 of this title.
26 USC 4979. Tax on certain excess contributions
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
In the case of any plan, there is hereby imposed a tax for the
taxable year equal to 10 percent of the sum of --
(1) any excess contributions under such plan for the plan year ending
in such taxable year, and
(2) any excess aggregate contributions under the plan for the plan
year ending in such taxable year.
(b) Liability for tax
The tax imposed by subsection (a) shall be paid by the employer.
(c) Excess contributions
For purposes of this section, the term ''excess contributions'' has
the meaning given such term by sections 401(k)(8)(B), 408(k)(6)(C), and
501(c)(18).
(d) Excess aggregate contribution
For purposes of this section, the term ''excess aggregate
contribution'' has the meaning given to such term by section
401(m)(6)(B). For purposes of determining excess aggregate
contributions under an annuity contract described in section 403(b),
such contract shall be treated as a plan described in subsection (e)(1).
(e) Plan
For purposes of this section, the term ''plan'' means --
(1) a plan described in section 401(a) which includes a trust exempt
from tax under section 501(a),
(2) any annuity plan described in section 403(a),
(3) any annuity contract described in section 403(b),
(4) a simplified employee pension of an employer which satisfies the
requirements of section 408(k), and
(5) a plan described in section 501(c)(18).
Such term includes any plan which, at any time, has been determined
by the Secretary to be such a plan.
(f) No tax where excess distributed within 2 1/2 months of close of
year
(1) In general
No tax shall be imposed under this section on any excess contribution
or excess aggregate contribution, as the case may be, to the extent such
contribution (together with any income allocable thereto) is distributed
(or, if forfeitable, is forfeited) before the close of the first 2 1/2
months of the following plan year.
(2) Year of inclusion
(A) In general
Except as provided in subparagraph (B), any amount distributed as
provided in paragraph (1) shall be treated as received and earned by the
recipient in his taxable year for which such contribution was made.
(B) De minimis distributions
If the total excess contributions and excess aggregate contributions
distributed to a recipient under a plan for any plan year are less than
$100, such distributions (and any income allocable thereto) shall be
treated as earned and received by the recipient in his taxable year in
which such distributions were made.
(Added Pub. L. 99-514, title XI, 1117(b)(1), Oct. 22, 1986, 100
Stat. 2461; amended Pub. L. 100-647, title I, 1011(l)(8)-(11), Nov.
10, 1988, 102 Stat. 3470, 3471.)
1988 -- Subsec. (a)(1). Pub. L. 100-647, 1011(l)(8), struck out ''a
cash or deferred arrangement which is part of'' after ''contributions
under''.
Subsec. (c). Pub. L. 100-647, 1011(l)(9), struck out ''403(b),'' and
substituted ''408(k)(6)(C)'' for ''408(k)(8)(B)''.
Subsec. (d). Pub. L. 100-647, 1011(l)(10), inserted sentence at end
relating to determination of excess aggregate contributions under
certain annuity contracts.
Subsec. (f)(2). Pub. L. 100-647, 1011(l)(11), substituted ''Year of
inclusion'' for ''Included in prior year'' as heading, and amended text
generally. Prior to amendment, text read as follows: ''Any amount
distributed as provided in paragraph (1) shall be treated as received
and earned by the recipient in his taxable year for which such
contribution was made.''
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Section applicable to plan years beginning after Dec. 31, 1986, with
special provisions for plans maintained pursuant to collective
bargaining agreements ratified before Mar. 1, 1986, and for annuity
contracts under section 403(b) of this title, see section 1117(d) of
Pub. L. 99-514, set out as an Effective Date of 1986 Amendment note
under section 401 of this title.
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
Secretary of the Treasury or his delegate to issue before Feb. 1,
1988, final regulations to carry out this section, see section 1141 of
Pub. L. 99-514, set out as a note under section 401 of this title.
26 USC 4979A. Tax on certain prohibited allocations of qualified
securities
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
If there is a prohibited allocation of qualified securities by any
employee stock ownership plan or eligible worker-owned cooperative,
there is hereby imposed a tax on such allocation equal to 50 percent of
the amount involved.
(b) Prohibited allocation
For purposes of this section, the term ''prohibited allocation''
means --
(1) any allocation of qualified securities acquired in a sale to
which section 1042 applies which violates the provisions of section
409(n), and
(2) any benefit which accrues to any person in violation of the
provisions of section 409(n).
(c) Liability for tax
The tax imposed by this section shall be paid by --
(1) the employer sponsoring such plan, or
(2) the eligible worker-owned cooperative,
which made the written statement described in section 1042(b)(3)(B).
(d) Definitions
Terms used in this section have the same respective meaning as when
used in section 4978.
(Added and amended Pub. L. 99-514, title XI, 1172(b)(2), title
XVIII, 1854(a)(9)(A), Oct. 22, 1986, 100 Stat. 2514, 2877; Pub. L.
101-239, title VII, 7304(a)(2)(D), Dec. 19, 1989, 103 Stat. 2353.)
1989 -- Subsec. (b)(1). Pub. L. 101-239, 7304(a)(2)(D)(i), struck
out ''or section 2057'' after ''section 1042''.
Subsec. (c). Pub. L. 101-239, 7304(a)(2)(D)(ii), which directed
amendment of subsec. (c)(2) by striking out ''or section 2057(d)'', was
executed by striking out that language after ''section 1042(b)(3)(B)''
in concluding provisions, as the probable intent of Congress.
1986 -- Subsec. (b)(1). Pub. L. 99-514, 1172(b)(2)(A), inserted
reference to section 2057.
Subsec. (c). Pub. L. 99-514, 1172(b)(2)(B), inserted reference to
section 2057(d).
Amendment by Pub. L. 101-239 applicable to estates of decedents
dying after Dec. 19, 1989, see section 7304(a)(3) of Pub. L. 101-239,
set out as a note under section 409 of this title.
Amendment by section 1172(b)(2) of Pub. L. 99-514 applicable to
sales after Oct. 22, 1986, with respect to which election is made by
executor of an estate who is required to file the return of the tax
imposed by this title on a date (including extensions) after Oct. 22,
1986, see section 1172(c) of Pub. L. 99-514, set out as a note under
section 409 of this title.
Section 1854(a)(9)(D) of Pub. L. 99-514 provided that: ''The
amendments made by this paragraph (enacting this section and amending
section 1042 of this title) shall apply to sales of securities after the
date of the enactment of this Act (Oct. 22, 1986).''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
26 USC 4980. Tax on reversion of qualified plan assets to employer
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
There is hereby imposed a tax of 20 percent of the amount of any
employer reversion from a qualified plan.
(b) Liability for tax
The tax imposed by subsection (a) shall be paid by the employer
maintaining the plan.
(c) Definitions and special rules
For purposes of this section --
(1) Qualified plan
The term ''qualified plan'' means any plan meeting the requirements
of section 401(a) or 403(a), other than --
(A) a plan maintained by an employer if such employer has, at all
times, been exempt from tax under subtitle A, or
(B) a governmental plan (within the meaning of section 414(d)).
Such term shall include any plan which, at any time, has been
determined by the Secretary to be a qualified plan.
(2) Employer reversion
(A) In general
The term ''employer reversion'' means the amount of cash and the fair
market value of other property received (directly or indirectly) by an
employer from the qualified plan.
(B) Exceptions
The term ''employer reversion'' shall not include --
(i) except as provided in regulations, any amount distributed to or
on behalf of any employee (or his beneficiaries) if such amount could
have been so distributed before termination of such plan without
violating any provision of section 401, or
(ii) any distribution to the employer which is allowable under
section 401(a)(2) --
(I) in the case of a multiemployer plan, by reason of mistakes of law
or fact or the return of any withdrawal liability payment,
(II) in the case of a plan other than a multiemployer plan, by reason
of mistake of fact, or
(III) in the case of any plan, by reason of the failure of the plan
to initially qualify or the failure of contributions to be deductible.
(3) Exception for employee stock ownership plans
(A) In general
If, upon an employer reversion from a qualified plan, any applicable
amount is transferred from such plan to an employee stock ownership plan
described in section 4975(e)(7) or a tax credit employee stock ownership
plan (as described in section 409), such amount shall not be treated as
an employer reversion for purposes of this section (or includible in the
gross income of the employer) if --
(i) the requirements of subparagraphs (B), (C), and (D) are met, and
(ii) under the plan, employer securities to which subparagraph (B)
applies must, except to the extent necessary to meet the requirements of
section 401(a)(28), remain in the plan until distribution to
participants in accordance with the provisions of such plan.
(B) Investment in employer securities
The requirements of this subparagraph are met if, within 90 days
after the transfer (or such longer period as the Secretary may
prescribe), the amount transferred is invested in employer securities
(as defined in section 409(l)) or used to repay loans used to purchase
such securities.
(C) Allocation requirements
The requirements of this subparagraph are met if the portion of the
amount transferred which is not allocated under the plan to accounts of
participants in the plan year in which the transfer occurs --
(i) is credited to a suspense account and allocated from such account
to accounts of participants no less rapidly than ratably over a period
not to exceed 7 years, and
(ii) when allocated to accounts of participants under the plan, is
treated as an employer contribution for purposes of section 415(c),
except that --
(I) the annual addition (as determined under section 415(c))
attributable to each such allocation shall not exceed the value of such
securities as of the time such securities were credited to such suspense
account, and
(II) no additional employer contributions shall be permitted to an
employee stock ownership plan described in subparagraph (A) of the
employer before the allocation of such amount.
The amount allocated in the year of transfer shall not be less than
the lesser of the maximum amount allowable under section 415 or 1/8 of
the amount attributable to the securities acquired. In the case of
dividends on securities held in the suspense account, the requirements
of this subparagraph are met only if the dividends are allocated to
accounts of participants or paid to participants in proportion to their
accounts, or used to repay loans used to purchase employer securities.
(D) Participants
The requirements of this subparagraph are met if at least half of the
participants in the qualified plan are participants in the employee
stock ownership plan (as of the close of the 1st plan year for which an
allocation of the securities is required).
(E) Applicable amount
For purposes of this paragraph, the term ''applicable amount'' means
any amount which --
(i) is transferred after March 31, 1985, and before January 1, 1989,
or
(ii) is transferred after December 31, 1988, pursuant to a
termination which occurs after March 31, 1985, and before January 1,
1989.
(F) No credit or deduction allowed
No credit or deduction shall be allowed under chapter 1 for any
amount transferred to an employee stock ownership plan in a transfer to
which this paragraph applies.
(G) Amount transferred to include income thereon, etc.
The amount transferred shall not be treated as meeting the
requirements of subparagraphs (B) and (C) unless amounts attributable to
such amount also meet such requirements.
(4) Time for payment of tax
For purposes of subtitle F, the time for payment of the tax imposed
by subsection (a) shall be the last day of the month following the month
in which the employer reversion occurs.
(d) Increase in tax for failure to establish replacement plan or
increase benefits
(1) In general
Subsection (a) shall be applied by substituting ''50 percent'' for
''20 percent'' with respect to any employer reversion from a qualified
plan unless --
(A) the employer establishes or maintains a qualified replacement
plan, or
(B) the plan provides benefit increases meeting the requirements of
paragraph (3).
(2) Qualified replacement plan
For purposes of this subsection, the term ''qualified replacement
plan'' means a qualified plan established or maintained by the employer
in connection with a qualified plan termination (hereinafter referred to
as the ''replacement plan'') with respect to which the following
requirements are met:
(A) Participation requirement
At least 95 percent of the active participants in the terminated plan
who remain as employees of the employer after the termination are active
participants in the replacement plan.
(B) Asset transfer requirement
(i) 25 percent cushion
A direct transfer from the terminated plan to the replacement plan is
made before any employer reversion, and the transfer is in an amount
equal to the excess (if any) of --
(I) 25 percent of the maximum amount which the employer could receive
as an employer reversion without regard to this subsection, over
(II) the amount determined under clause (ii).
(ii) Reduction for increase in benefits
The amount determined under this clause is an amount equal to the
present value of the aggregate increases in the accrued benefits under
the terminated plan of any participants or beneficiaries pursuant to a
plan amendment which --
(I) is adopted during the 60-day period ending on the date of
termination of the qualified plan, and
(II) takes effect immediately on the termination date.
(iii) Treatment of amount transferred
In the case of the transfer of any amount under clause (i) --
(I) such amount shall not be includible in the gross income of the
employer,
(II) no deduction shall be allowable with respect to such transfer,
and
(III) such transfer shall not be treated as an employer reversion for
purposes of this section.
(C) Allocation requirements
(i) In general
In the case of any defined contribution plan, the portion of the
amount transferred to the replacement plan under subparagraph (B)(i) is
--
(I) allocated under the plan to the accounts of participants in the
plan year in which the transfer occurs, or
(II) credited to a suspense account and allocated from such account
to accounts of participants no less rapidly than ratably over the
7-plan-year period beginning with the year of the transfer.
(ii) Coordination with section 415 limitation
If, by reason of any limitation under section 415, any amount
credited to a suspense account under clause (i)(II) may not be allocated
to a participant before the close of the 7-year period under such clause
--
(I) such amount shall be allocated to the accounts of other
participants, and
(II) if any portion of such amount may not be allocated to other
participants by reason of any such limitation, shall be allocated to the
participant as provided in section 415.
(iii) Treatment of income
Any income on any amount credited to a suspense account under clause
(i)(II) shall be allocated to accounts of participants no less rapidly
than ratably over the remainder of the period determined under such
clause (after application of clause (ii)).
(iv) Unallocated amounts at termination
If any amount credited to a suspense account under clause (i)(II) is
not allocated as of the termination date of the replacement plan --
(I) such amount shall be allocated to the accounts of participants as
of such date, except that any amount which may not be allocated by
reason of any limitation under section 415 shall be allocated to the
accounts of other participants, and
(II) if any portion of such amount may not be allocated to other
participants under subclause (I) by reason of such limitation, such
portion shall be treated as an employer reversion to which this section
applies.
(3) Pro rata benefit increases
(A) In general
The requirements of this paragraph are met if a plan amendment to the
terminated plan is adopted in connection with the termination of the
plan which provides pro rata increases in the accrued benefits of all
qualified participants which --
(i) have an aggregate present value not less than 20 percent of the
maximum amount which the employer could receive as an employer reversion
without regard to this subsection, and
(ii) take effect immediately on the termination date.
(B) Pro rata increase
For purposes of subparagraph (A), a pro rata increase is an increase
in the present value of the accrued benefit of each qualified
participant in an amount which bears the same ratio to the aggregate
amount determined under subparagraph (A)(i) as --
(i) the present value of such participant's accrued benefit
(determined without regard to this subsection), bears to
(ii) the aggregate present value of accrued benefits of the
terminated plan (as so determined).
Notwithstanding the preceding sentence, the aggregate increases in
the present value of the accrued benefits of qualified participants who
are not active participants shall not exceed 40 percent of the aggregate
amount determined under subparagraph (A)(i) by substituting ''equal to''
for ''not less than''.
(4) Coordination with other provisions
(A) Limitations
A benefit may not be increased under paragraph (2)(B)(ii) or (3)(A),
and an amount may not be allocated to a participant under paragraph
(2)(C), if such increase or allocation would result in a failure to meet
any requirement under section 401(a)(4) or 415.
(B) Treatment as employer contributions
Any increase in benefits under paragraph (2)(B)(ii) or (3)(A), or any
allocation of any amount (or income allocable thereto) to any account
under paragraph (2)(C), shall be treated as an annual benefit or annual
addition for purposes of section 415.
(C) 10-year participation requirement
Except as provided by the Secretary, section 415(b)(5)(D) shall not
apply to any increase in benefits by reason of this subsection to the
extent that the application of this subparagraph does not discriminate
in favor of highly compensated employees (as defined in section 414(q)).
(5) Definitions and special rules
For purposes of this subsection --
(A) Qualified participant
The term ''qualified participant'' means an individual who --
(i) is an active participant,
(ii) is a participant or beneficiary in pay status as of the
termination date,
(iii) is a participant not described in clause (i) or (ii) --
(I) who has a nonforfeitable right to an accrued benefit under the
terminated plan as of the termination date, and
(II) whose service, which was creditable under the terminated plan,
terminated during the period beginning 3 years before the termination
date and ending with the date on which the final distribution of assets
occurs, or
(iv) is a beneficiary of a participant described in clause (iii)(II)
and has a nonforfeitable right to an accrued benefit under the
terminated plan as of the termination date.
(B) Present value
Present value shall be determined as of the termination date and on
the same basis as liabilities of the plan are determined on termination.
(C) Reallocation of increase
Except as provided in paragraph (2)(C), if any benefit increase is
reduced by reason of the last sentence of paragraph (3)(A)(ii) or
paragraph (4), the amount of such reduction shall be allocated to the
remaining participants on the same basis as other increases (and shall
be treated as meeting any allocation requirement of this subsection).
(D) Plans taken into account
For purposes of determining whether there is a qualified replacement
plan under paragraph (2), the Secretary may provide that --
(i) 2 or more plans may be treated as 1 plan, or
(ii) a plan of a successor employer may be taken into account.
(E) Special rule for participation requirement
For purposes of paragraph (2)(A), all employers treated as 1 employer
under section 414(b), (c), (m), or (o) shall be treated as 1 employer.
(6) Subsection not to apply to employer in bankruptcy
This subsection shall not apply to an employer who, as of the
termination date of the qualified plan, is in bankruptcy liquidation
under chapter 7 of title 11 of the United States Code or in similar
proceedings under State law.
(Added Pub. L. 99-514, title XI, 1132(a), Oct. 22, 1986, 100 Stat.
2478; amended Pub. L. 100-647, title I, 1011A(f)(1)-(3), (6), (7),
title V, 5072(a), title VI, 6069(a), Nov. 10, 1988, 102 Stat. 3478,
3479, 3681, 3704; Pub. L. 101-508, title XII, 12001, 12002(a), Nov.
5, 1990, 104 Stat. 1388-562.)
1990 -- Subsec. (a). Pub. L. 101-508, 12001, which directed the
substitution of ''20 percent'' for ''15 percent'' in ''section 4980(a)''
without specifying the Internal Revenue Code of 1986, was executed to
subsec. (a) of this section to reflect the probable intent of Congress.
Subsec. (d). Pub. L. 101-508, 12002(a), which directed the addition
of subsec. (d) to ''section 4980(a)'' without specifying the Internal
Revenue Code of 1986, was executed to this section to reflect the
probable intent of Congress.
1988 -- Subsec. (a). Pub. L. 100-647, 6069(a), substituted ''15''
for ''10''.
Subsec. (c)(1)(A). Pub. L. 100-647, 1011A(f)(1), substituted
''subtitle A'' for ''this subtitle''.
Subsec. (c)(3)(A). Pub. L. 100-647, 1011A(f)(2), inserted ''or a tax
credit employee stock ownership plan (as described in section 409)''
after ''section 4975(e)(7)'' in introductory text, and '', except to the
extent necessary to meet the requirements of section 401(a)(28),'' after
''must'' in cl. (ii).
Subsec. (c)(3)(C). Pub. L. 100-647, 1011A(f)(3), struck out ''(by
reason of the limitations of section 415)'' after ''not allocated'' in
introductory text, and inserted sentence at end relating to minimum
amount allocated in year of transfer.
Pub. L. 100-647, 1011A(f)(7), inserted sentence at end relating to
dividends on securities held in suspense account.
Subsec. (c)(3)(F), (G). Pub. L. 100-647, 1011A(f)(6), added
subpars. (F) and (G).
Subsec. (c)(4). Pub. L. 100-647, 5072(a), added par. (4).
Section 12003 of Pub. L. 101-508 provided that:
''(a) In General. -- Except as provided in subsection (b), the
amendments made by this subtitle (subtitle A ( 12001-12003) of title
XII of Pub. L. 101-508, amending this section and sections 1002, 1104,
and 1344 of Title 29, Labor) shall apply to reversions occurring after
September 30, 1990.
''(b) Exception. -- The amendments made by this subtitle shall not
apply to any reversion after September 30, 1990, if --
''(1) in the case of plans subject to title IV of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1301 et seq.), a
notice of intent to terminate under such title was provided to
participants (or if no participants, to the Pension Benefit Guaranty
Corporation) before October 1, 1990,
''(2) in the case of plans subject to title I (29 U.S.C. 1001 et
seq.) (and not to title IV) of such Act, a notice of intent to reduce
future accruals under section 204(h) of such Act (29 U.S.C. 1054(h)) was
provided to participants in connection with the termination before
October 1, 1990,
''(3) in the case of plans not subject to title I or IV of such Act,
a request for a determination letter with respect to the termination was
filed with the Secretary of the Treasury or the Secretary's delegate
before October 1, 1990, or
''(4) in the case of plans not subject to title I or IV of such Act
and having only 1 participant, a resolution terminating the plan was
adopted by the employer before October 1, 1990.''
Amendment by section 1011A(f)(1)-(3), (6), (7) of Pub. L. 100-647
effective, except as otherwise provided, as if included in the provision
of the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Section 5072(b) of Pub. L. 100-647 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to reversions
after December 31, 1988.''
Section 6069(b) of Pub. L. 100-647 provided that:
''(1) In general. -- The amendment made by subsection (a) (amending
this section) shall apply to reversions occurring on or after October
21, 1988.
''(2) Exception. -- The amendment made by subsection (a) shall not
apply to any reversion on or after October 21, 1988, pursuant to a plan
termination if --
''(A) with respect to plans subject to title IV of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1301 et seq.), a
notice of intent to terminate required under such title was provided to
participants (or if no participants, to the Pension Benefit Guaranty
Corporation) before October 21, 1988,
''(B) with respect to plans subject to title I of such Act (29 U.S.C.
1001 et seq.), a notice of intent to reduce future accruals required
under section 204(h) of such Act (29 U.S.C. 1054(h)) was provided to
participants in connection with the termination before October 21, 1988,
''(C) with respect to plans not subject to title I or IV of such Act,
the Board of Directors of the employer approved the termination or the
employer took other binding action before October 21, 1988, or
''(D) such plan termination was directed by a final order of a court
of competent jurisdiction entered before October 21, 1988, and notice of
such order was provided to participants before such date.''
Section 1132(c) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, 1011A(f)(4), (5), Nov. 10, 1988, 102 Stat. 3479, provided
that:
''(1) In general. -- The amendments made by this section (enacting
this section) shall apply to reversions occurring after December 31,
1985.
''(2) Exception where termination date occurred before january 1,
1986. --
''(A) In general. -- Except as provided in subparagraph (B), the
amendments made by this section shall not apply to any reversion after
December 31, 1985, which occurs pursuant to a plan termination where the
termination date is before January 1, 1986.
''(B) Election to have amendments apply. -- A corporation may elect
to have the amendments made by this section apply to any reversion after
1985 pursuant to a plan termination occurring before 1986 if such
corporation was incorporated in the State of Delaware in March, 1978,
and became a parent corporation of the consolidated group on September
19, 1978, pursuant to a merger agreement recorded in the State of Nevada
on September 19, 1978.
''(3) Termination date. -- For purposes of paragraph (2), the term
'termination date' is the date of the termination (within the meaning of
section 411(d)(3) of the Internal Revenue Code of 1986) of the plan.
''(4) Transition rule for certain terminations. --
''(A) In general. -- In the case of a taxpayer to which this
paragraph applies, the amendments made by this section shall not apply
to any termination occurring before the date which is 1 year after the
date of the enactment of this Act (Oct. 22, 1986).
''(B) Taxpayers to whom paragraph applies. -- This paragraph shall
apply to --
''(i) a corporation incorporated on June 13, 1917, which has its
principal place of business in Bartlesville, Oklahoma,
''(ii) a corporation incorporated on January 17, 1917, which is
located in Coatesville, Pennsylvania,
''(iii) a corporation incorporated on January 23, 1928, which has its
principal place of business in New York, New York,
''(iv) a corporation incorporated on April 23, 1956, which has its
principal place of business in Dallas, Texas, and
''(v) a corporation incorporated in the State of Nevada, the
principal place of business of which is in Denver, Colorado, and which
filed for relief from creditors under the United States Bankruptcy Code
on August 28, 1986.
''(5) Special rule for employee stock ownership plans. -- Section
4980(c)(3) of the Internal Revenue Code of 1986 (as added by subsection
(a)) shall apply to reversions occurring after March 31, 1985.''
Pub. L. 101-239, title VII, 7861(b), Dec. 19, 1989, 103 Stat.
2430, provided that:
''(1) Notwithstanding any other provision of law, in the case of any
qualified pension plan and welfare benefit plan described in paragraph
(2), the assets of such pension plan in excess of its liabilities may be
transferred to such welfare benefit plan upon the termination of such
pension plan if such assets are to be used to provide retiree health
benefits.
''(2) For purposes of paragraph (1), a qualified pension plan and
welfare benefit plan are described in this paragraph if --
''(A) both such plans are jointly administered pursuant to a
collective bargaining agreement between the employer maintaining such
plans and one or more employee representatives,
''(B) the welfare benefit plan provides retiree health benefits, and
''(C) the qualified pension plan has assets in excess of liabilities
(determined on a termination basis) and the welfare benefit plan has
assets which are less than the present value of the benefits to be
provided under the plan (determined as of the time of termination of the
pension plan).
''(3) For purposes of the Internal Revenue Code of 1986, any transfer
of assets to which paragraph (1) applies shall be treated as a reversion
of such assets to the employer maintaining the plan which is includible
in the gross income of such employer and subject to the tax imposed by
section 4980 of such Code.''
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
26 USC 4980A. Tax on excess distributions from qualified retirement
plans
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
There is hereby imposed a tax equal to 15 percent of the excess
distributions with respect to any individual during any calendar year.
(b) Liability for tax
The individual with respect to whom the excess distributions are made
shall be liable for the tax imposed by subsection (a). The amount of
the tax imposed by subsection (a) shall be reduced by the amount (if
any) of the tax imposed by section 72(t) to the extent attributable to
such excess distributions.
(c) Excess distributions
For purposes of this section --
(1) In general
The term ''excess distributions'' means the aggregate amount of the
retirement distributions with respect to any individual during any
calendar year to the extent such amount exceeds the greater of --
(A) $150,000, or
(B) $112,500 (adjusted at the same time and in the same manner as
under section 415(d)).. /1/
(2) Exclusion of certain distributions
The following distributions shall not be taken into account under
paragraph (1):
(A) Any retirement distribution with respect to an individual made
after the death of such individual.
(B) Any retirement distribution with respect to an individual payable
to an alternate payee pursuant to a qualified domestic relations order
(within the meaning of section 414(p)) if includible in income of the
alternate payee.
(C) Any retirement distribution with respect to an individual which
is attributable to the individual's investment in the contract (as
defined in section 72(f)).
(D) Any retirement distribution to the extent not included in gross
income by reason of a rollover contribution.
(E) Any retirement distribution with respect to an individual of an
annuity contract the value of which is not includible in gross income at
the time of the distribution (other than distributions under, or
proceeds from the sale or exchange of, such contract).
(F) Any retirement distribution with respect to an individual of --
(i) excess deferrals (and income allocable thereto) under section
402(g)(2)(A)(ii), or
(ii) excess contributions (and income allocable thereto) under
section 401(k)(8) or 408(d)(4) or excess aggregate contributions (and
income allocable thereto) under section 401(m)(6).
Any distribution described in subparagraph (B) shall be treated as a
retirement distribution to the person to whom paid for purposes of this
section.
(3) Aggregation of payments
If retirement distributions with respect to any individual during any
calendar year are received by the individual and 1 or more other
persons, all such distributions shall be aggregated for purposes of
determining the amount of the excess distributions for the calendar
year.
(4) Special rule where taxpayer elects income averaging
If the retirement distributions with respect to any individual during
any calendar year include a lump sum distribution to which an election
under section 402(d)(4)(B) applies --
(A) paragraph (1) shall be applied separately with respect to such
lump sum distribution and other retirement distributions, and
(B) the limitation under paragraph (1) with respect to such lump sum
distribution shall be equal to 5 times the amount of such limitation
determined without regard to this subparagraph.
(d) Increase in estate tax if individual dies with excess
accumulation
(1) In general
The tax imposed by chapter 11 with respect to the estate of any
individual shall be increased by an amount equal to 15 percent of the
individual's excess retirement accumulation.
(2) No credit allowable
No credit shall be allowable under chapter 11 with respect to any
portion of the tax imposed by chapter 11 attributable to the increase
under paragraph (1).
(3) Excess retirement accumulation
For purposes of paragraph (1), the term ''excess retirement
accumulation'' means the excess (if any) of --
(A) the value of the individual's interests (other than as a
beneficiary, determined after application of paragraph (5)) in qualified
employer plans and individual retirement plans as of the date of the
decedent's death (or, in the case of an election under section 2032, the
applicable valuation date prescribed by such section), over
(B) the present value (as determined under rules prescribed by the
Secretary as of the valuation date prescribed in subparagraph (A)) of a
single life annuity with annual payments equal to the limitation of
subsection (c) (as in effect for the year in which death occurs and as
if the individual had not died).
(4) Rules for computing excess retirement accumulation
The excess retirement accumulation of an individual shall be computed
without regard to --
(A) any community property law,
(B) the value of --
(i) amounts payable to an alternate payee pursuant to a qualified
domestic relations order (within the meaning of section 414(p)) if
includible in income of the alternate payee, and
(ii) the individual's investment in the contract (as defined in
section 72(f)), and
(C) the excess (if any) of --
(i) any interests which are payable immediately after death, over
(ii) the value of such interests immediately before death.
(5) Election by spouse to have excess distribution rule apply
(A) In general
If the spouse of an individual is the beneficiary of all of the
interests described in paragraph (3)(A), the spouse may elect --
(i) not to have this subsection apply, and
(ii) to have this section apply to such interests and any retirement
distribution attributable to such interests as if such interests were
the spouse's.
(B) De minimis exception
If 1 or more persons other than the spouse are beneficiaries of a de
minimis portion of the interests described in paragraph (3)(A) --
(i) the spouse shall not be treated as failing to meet the
requirements of subparagraph (A), and
(ii) if the spouse makes the election under subparagraph (A), this
section shall not apply to such portion or any retirement distribution
attributable to such portion.
(e) Retirement distributions
For purposes of this section --
(1) In general
The term ''retirement distribution'' means, with respect to any
individual, the amount distributed during the taxable year under --
(A) any qualified employer plan with respect to which such individual
is or was the employee, and
(B) any individual retirement plan.
(2) Qualified employer plan
The term ''qualified employer plan'' means --
(A) any plan described in section 401(a) which includes a trust
exempt from tax under section 501(a),
(B) an annuity plan described in section 403(a), or
(C) an annuity contract described in section 403(b).
Such term includes any plan or contract which, at any time, has been
determined by the Secretary to be such a plan or contract.
(f) Exemption of accrued benefits in excess of $562,500 on August 1,
1986
For purposes of this section --
(1) In general
If an election is made with respect to an eligible individual to have
this subsection apply, the individual's excess distributions and excess
retirement accumulation shall be computed without regard to any
distributions or interests attributable to the accrued benefit of the
individual as of August 1, 1986.
(2) Reduction in amounts which may be received without tax
If this subsection applies to any individual --
(A) Excess distributions
Subsection (c)(1) shall be applied --
(i) without regard to subparagraph (A), and
(ii) by reducing (but not below zero) the amount determined under
subparagraph (B) thereof by retirement distributions attributable (as
determined under rules prescribed by the Secretary) to the individual's
accrued benefit as of August 1, 1986.
(B) Excess retirement accumulation
The amount determined under subsection (d)(3)(B) (without regard to
subsection (c)(1)(A)) with respect to such individual shall be reduced
(but not below zero) by the present value of the individual's accrued
benefit as of August 1, 1986, which has not been distributed as of the
date of death.
(3) Eligible individual
For purposes of this subsection, the term ''eligible individual''
means any individual if, on August 1, 1986, the present value of such
individual's interests in qualified employer plans and individual
retirement plans exceeded $562,500.
(4) Certain amounts excluded
In determining an individual's accrued benefit for purposes of this
subsection, there shall not be taken into account any portion of the
accrued benefit --
(A) payable to an alternate payee pursuant to a qualified domestic
relations order (within the meaning of section 414(p)) if includible in
income of the alternate payee, or
(B) attributable to the individual's investment in the contract (as
defined in section 72(f)).
(5) Election
An election under paragraph (1) shall be made on an individual's
return of tax imposed by chapter 1 or 11 for a taxable year beginning
before January 1, 1989.
(Added Pub. L. 99-514, title XI, 1133(a), Oct. 22, 1986, 100 Stat.
2481, 4981A; renumbered 4980A and amended Pub. L. 100-647, title I,
1011A(g)(1)(A), (2)-(6), (9), Nov. 10, 1988, 102 Stat. 3479-3482; Pub.
L. 102-318, title V, 521(b)(42), July 3, 1992, 106 Stat. 313.)
1992 -- Subsec. (c)(4). Pub. L. 102-318 substituted ''402(d)(4)(B)''
for ''402(e)(4)(B)''.
1988 -- Pub. L. 100-647, 1011A(g)(1)(A), renumbered section 4981A
of this title as this section.
Subsec. (c)(1). Pub. L. 100-647, 1011A(g)(2), substituted ''the
greater of -- '' for ''$112,500 (adjusted at the same time and in the
same manner as under section 415(d))'' and added subpars. (A) and (B).
Subsec. (c)(2)(C). Pub. L. 100-647, 1011A(g)(3)(A), substituted
''individual's'' for ''employee's''.
Subsec. (c)(2)(E), (F). Pub. L. 100-647, 1011A(g)(3)(B), added
subpars. (E) and (F).
Subsec. (c)(5). Pub. L. 100-647, 1011A(g)(4)(B), struck out par.
(5) which related to special rule for accrued benefits as of Aug. 1,
1986.
Subsec. (d)(2). Pub. L. 100-647, 1011A(g)(5)(A), substituted
''chapter 11'' for ''section 2010''.
Subsec. (d)(3)(A). Pub. L. 100-647, 1011A(g)(9), inserted ''(other
than as a beneficiary, determined after application of paragraph (5))''
after ''individual's interests''.
Subsec. (d)(3)(B). Pub. L. 100-647, 1011A(g)(6), amended subpar.
(B) generally. Prior to amendment, subpar. (B) read as follows: ''the
present value (as determined under rules prescribed by the Secretary as
of the valuation date prescribed in subparagraph (A)) of an annuity for
a term certain --
''(i) with annual payments equal to the limitation of subsection (c)
(as in effect for the year in which the death occurs), and
''(ii) payable for a period equal to the life expectancy of the
individual immediately before his death.''
Subsec. (d)(4), (5). Pub. L. 100-647, 1011A(g)(5)(B), added pars.
(4) and (5).
Subsec. (f). Pub. L. 100-647, 1011A(g)(4)(A), added subsec. (f).
Amendment by Pub. L. 102-318 applicable to distributions after Dec.
31, 1992, see section 521(e) of Pub. L. 102-318, set out as a note
under section 402 of this title.
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Section 1133(c) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, 1011A(g)(8), Nov. 10, 1988, 102 Stat. 3482, provided that:
''(1) In general. -- Except as provided in this subsection, the
amendments made by this section (enacting this section), shall apply to
distributions made after December 31, 1986, other than a distribution
with respect to a decedent dying before January 1, 1987.
''(2) Estate tax. -- Section 4981A(d) (probably should be 4980A(d))
of the Internal Revenue Code of 1986 (as added by subsection (a)) shall
apply to the estates of decedents dying after December 31, 1986.
''(3) Plan terminations before 1987. -- The amendments made by this
section shall not apply to distributions before January 1, 1988, which
are made on account of the termination of a qualified employer plan if
such termination occurred before January 1, 1987.''
For provisions directing that if any amendments made by subtitle B (
521-523) of title V of Pub. L. 102-318 require an amendment to any
plan, such plan amendment shall not be required to be made before the
first plan year beginning on or after Jan. 1, 1994, see section 523 of
Pub. L. 102-318, set out as a note under section 401 of this title.
For provisions directing that if any amendments made by section
1133(a) of Pub. L. 99-514 require an amendment to any plan, such plan
amendment shall not be required to be made before the first plan year
beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, set out as a note under section 401 of this title.
Secretary of the Treasury or his delegate to issue before Feb. 1,
1988, final regulations to carry out this section, see section 1141 of
Pub. L. 99-514, set out as a note under section 401 of this title.
/1/ So in original.
26 USC 4980B. Failure to satisfy continuation coverage requirements of
group health plans
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
There is hereby imposed a tax on the failure of a group health plan
to meet the requirements of subsection (f) with respect to any qualified
beneficiary.
(b) Amount of tax
(1) In general
The amount of the tax imposed by subsection (a) on any failure with
respect to a qualified beneficiary shall be $100 for each day in the
noncompliance period with respect to such failure.
(2) Noncompliance period
For purposes of this section, the term ''noncompliance period''
means, with respect to any failure, the period --
(A) beginning on the date such failure first occurs, and
(B) ending on the earlier of --
(i) the date such failure is corrected, or
(ii) the date which is 6 months after the last day in the period
applicable to the qualified beneficiary under subsection (f)(2)(B)
(determined without regard to clause (iii) thereof).
If a person is liable for tax under subsection (e)(1)(B) by reason of
subsection (e)(2)(B) with respect to any failure, the noncompliance
period for such person with respect to such failure shall not begin
before the 45th day after the written request described in subsection
(e)(2)(B) is provided to such person.
(3) Minimum tax for noncompliance period where failure discovered
after notice of examination
Notwithstanding paragraphs (1) and (2) of subsection (c) --
(A) In general
In the case of 1 or more failures with respect to a qualified
beneficiary --
(i) which are not corrected before the date a notice of examination
of income tax liability is sent to the employer, and
(ii) which occurred or continued during the period under examination,
the amount of tax imposed by subsection (a) by reason of such
failures with respect to such beneficiary shall not be less than the
lesser of $2,500 or the amount of tax which would be imposed by
subsection (a) without regard to such paragraphs.
(B) Higher minimum tax where violations are more than de minimis
To the extent violations by the employer (or the plan in the case of
a multiemployer plan) for any year are more than de minimis,
subparagraph (A) shall be applied by substituting ''$15,000'' for
''$2,500'' with respect to the employer (or such plan).
(c) Limitations on amount of tax
(1) Tax not to apply where failure not discovered exercising
reasonable diligence
No tax shall be imposed by subsection (a) on any failure during any
period for which it is established to the satisfaction of the Secretary
that none of the persons referred to in subsection (e) knew, or
exercising reasonable diligence would have known, that such failure
existed.
(2) Tax not to apply to failures corrected within 30 days
No tax shall be imposed by subsection (a) on any failure if --
(A) such failure was due to reasonable cause and not to willful
neglect, and
(B) such failure is corrected during the 30-day period beginning on
the 1st date any of the persons referred to in subsection (e) knew, or
exercising reasonable diligence would have known, that such failure
existed.
(3) $100 limit on amount of tax for failures on any day with respect
to a qualified beneficiary
(A) In general
Except as provided in subparagraph (B), the maximum amount of tax
imposed by subsection (a) on failures on any day during the
noncompliance period with respect to a qualified beneficiary shall be
$100.
(B) Special rule where more than 1 qualified beneficiary
If there is more than 1 qualified beneficiary with respect to the
same qualifying event, the maximum amount of tax imposed by subsection
(a) on all failures on any day during the noncompliance period with
respect to such qualified beneficiaries shall be $200.
(4) Overall limitation for unintentional failures
In the case of failures which are due to reasonable cause and not to
willful neglect --
(A) Single employer plans
(i) In general
In the case of failures with respect to plans other than
multiemployer plans, the tax imposed by subsection (a) for failures
during the taxable year of the employer shall not exceed the amount
equal to the lesser of --
(I) 10 percent of the aggregate amount paid or incurred by the
employer (or predecessor employer) during the preceding taxable year for
group health plans, or
(II) $500,000.
(ii) Taxable years in the case of certain controlled groups
For purposes of this subparagraph, if not all persons who are treated
as a single employer for purposes of this section have the same taxable
year, the taxable years taken into account shall be determined under
principles similar to the principles of section 1561.
(B) Multiemployer plans
(i) In general
In the case of failures with respect to a multiemployer plan, the tax
imposed by subsection (a) for failures during the taxable year of the
trust forming part of such plan shall not exceed the amount equal to the
lesser of --
(I) 10 percent of the amount paid or incurred by such trust during
such taxable year to provide medical care (as defined in section 213(d))
directly or through insurance, reimbursement, or otherwise, or
(II) $500,000.
For purposes of the preceding sentence, all plans of which the
same trust forms a part shall be treated as 1 plan.
(ii) Special rule for employers required to pay tax
If an employer is assessed a tax imposed by subsection (a) by reason
of a failure with respect to a multiemployer plan, the limit shall be
determined under subparagraph (A) (and not under this subparagraph) and
as if such plan were not a multiemployer plan.
(C) Special rule for persons providing benefits
In the case of a person described in subsection (e)(1)(B) (and not
subsection (e)(1)(A)), the aggregate amount of tax imposed by subsection
(a) for failures during a taxable year with respect to all plans shall
not exceed $2,000,000.
(5) Waiver by Secretary
In the case of a failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all of the tax imposed
by subsection (a) to the extent that the payment of such tax would be
excessive relative to the failure involved.
(d) Tax not to apply to certain plans
This section shall not apply to --
(1) any failure of a group health plan to meet the requirements of
subsection (f) with respect to any qualified beneficiary if the
qualifying event with respect to such beneficiary occurred during the
calendar year immediately following a calendar year during which all
employers maintaining such plan normally employed fewer than 20
employees on a typical business day,
(2) any governmental plan (within the meaning of section 414(d)), or
(3) any church plan (within the meaning of section 414(e)).
(e) Liability for tax
(1) In general
Except as otherwise provided in this subsection, the following shall
be liable for the tax imposed by subsection (a) on a failure:
(A)(i) In the case of a plan other than a multiemployer plan, the
employer.
(ii) In the case of a multiemployer plan, the plan.
(B) Each person who is responsible (other than in a capacity as an
employee) for administering or providing benefits under the plan and
whose act or failure to act caused (in whole or in part) the failure.
(2) Special rules for persons described in paragraph (1)(B)
(A) No liability unless written agreement
Except in the case of liability resulting from the application of
subparagraph (B) of this paragraph, a person described in subparagraph
(B) (and not in subparagraph (A)) of paragraph (1) shall be liable for
the tax imposed by subsection (a) on any failure only if such person
assumed (under a legally enforceable written agreement) responsibility
for the performance of the act to which the failure relates.
(B) Failure to cover qualified beneficiaries where current employees
are covered
A person shall be treated as described in paragraph (1)(B) with
respect to a qualified beneficiary if --
(i) such person provides coverage under a group health plan for any
similarly situated beneficiary under the plan with respect to whom a
qualifying event has not occurred, and
(ii) the --
(I) employer or plan administrator, or
(II) in the case of a qualifying event described in subparagraph (C)
or (E) of subsection (f)(3) where the person described in clause (i) is
the plan administrator, the qualified beneficiary,
submits to such person a written request that such person make
available to such qualified beneficiary the same coverage which such
person provides to the beneficiary referred to in clause (i).
(f) Continuation coverage requirements of group health plans
(1) In general
A group health plan meets the requirements of this subsection only if
each qualified beneficiary who would lose coverage under the plan as a
result of a qualifying event is entitled to elect, within the election
period, continuation coverage under the plan.
(2) Continuation coverage
For purposes of paragraph (1), the term ''continuation coverage''
means coverage under the plan which meets the following requirements:
(A) Type of benefit coverage
The coverage must consist of coverage which, as of the time the
coverage is being provided, is identical to the coverage provided under
the plan to similarly situated beneficiaries under the plan with respect
to whom a qualifying event has not occurred. If coverage under the plan
is modified for any group of similarly situated beneficiaries, the
coverage shall also be modified in the same manner for all individuals
who are qualified beneficiaries under the plan pursuant to this
subsection in connection with such group.
(B) Period of coverage
The coverage must extend for at least the period beginning on the
date of the qualifying event and ending not earlier than the earliest of
the following:
(i) Maximum required period
In the case of a qualifying event described in paragraph (3)(B),
except as provided in subclause (II), the date which is 18 months after
the date of the qualifying event.
If a qualifying event (other than a qualifying event described in
paragraph (3)(F)) occurs during the 18 months after the date of a
qualifying event described in paragraph (3)(B), the date which is 36
months after the date of the qualifying event described in paragraph
(3)(B).
In the case of a qualifying event described in paragraph (3)(F)
(relating to bankruptcy proceedings), the date of the death of the
covered employee or qualified beneficiary (described in subsection
(g)(1)(D)(iii)), or in the case of the surviving spouse or dependent
children of the covered employee, 36 months after the date of the death
of the covered employee.
In the case of a qualifying event not described in paragraph (3)(B)
or (3)(F), the date which is 36 months after the date of the qualifying
event.
In the case of a qualified beneficiary who is determined, under
title II or XVI of the Social Security Act, to have been disabled at the
time of a qualifying event described in paragraph (3)(B), any reference
in subclause (I) or (II) to 18 months with respect to such event is
deemed a reference to 29 months, but only if the qualified beneficiary
has provided notice of such determination under paragraph (6)(C) before
the end of such 18 months.
In the case of an event described in paragraph (3)(D) (without regard
to whether such event is a qualifying event), the period of coverage for
qualified beneficiaries other than the covered employee for such event
or any subsequent qualifying event shall not terminate before the close
of the 36-month period beginning on the date the covered employee
becomes entitled to benefits under title XVIII of the Social Security
Act.
(ii) End of plan
The date on which the employer ceases to provide any group health
plan to any employee.
(iii) Failure to pay premium
The date on which coverage ceases under the plan by reason of a
failure to make timely payment of any premium required under the plan
with respect to the qualified beneficiary. The payment of any premium
(other than any payment referred to in the last sentence of subparagraph
(C)) shall be considered to be timely if made within 30 days after the
date due or within such longer period as applies to or under the plan.
(iv) Group health plan coverage or medicare entitlement
The date on which the qualified beneficiary first becomes, after the
date of the election --
(I) covered under any other group health plan (as an employee or
otherwise) which does not contain any exclusion or limitation with
respect to any preexisting condition of such beneficiary, or
(II) in the case of a qualified beneficiary other than a qualified
beneficiary described in subsection (g)(1)(D) entitled to benefits under
title XVIII of the Social Security Act.
(v) Termination of extended coverage for disability
In the case of a qualified beneficiary who is disabled at the time of
a qualifying event described in paragraph (3)(B), the month that begins
more than 30 days after the date of the final determination under title
II or XVI of the Social Security Act that the qualified beneficiary is
no longer disabled.
(C) Premium requirements
The plan may require payment of a premium for any period of
continuation coverage, except that such premium --
(i) shall not exceed 102 percent of the applicable premium for such
period, and
(ii) may, at the election of the payor, be made in monthly
installments.
In no event may the plan require the payment of any premium before
the day which is 45 days after the day on which the qualified
beneficiary made the initial election for continuation coverage. In the
case of an individual described in the last sentence of subparagraph
(B)(i), any reference in clause (i) of this subparagraph to ''102
percent'' is deemed a reference to ''150 percent'' for any month after
the 18th month of continuation coverage described in subclause (I) or
(II) of subparagraph (B)(i).
(D) No requirement of insurability
The coverage may not be conditioned upon, or discriminate on the
basis of lack of, evidence of insurability.
(E) Conversion option
In the case of a qualified beneficiary whose period of continuation
coverage expires under subparagraph (B)(i), the plan must, during the
180-day period ending on such expiration date, provide to the qualified
beneficiary the option of enrollment under a conversion health plan
otherwise generally available under the plan.
(3) Qualifying event
For purposes of this subsection, the term ''qualifying event'' means,
with respect to any covered employee, any of the following events which,
but for the continuation coverage required under this subsection, would
result in the loss of coverage of a qualified beneficiary --
(A) The death of the covered employee.
(B) The termination (other than by reason of such employee's gross
misconduct), or reduction of hours, of the covered employee's
employment.
(C) The divorce or legal separation of the covered employee from the
employee's spouse.
(D) The covered employee becoming entitled to benefits under title
XVIII of the Social Security Act.
(E) A dependent child ceasing to be a dependent child under the
generally applicable requirements of the plan.
(F) A proceeding in a case under title 11, United States Code,
commencing on or after July 1, 1986, with respect to the employer from
whose employment the covered employee retired at any time.
In the case of an event described in subparagraph (F), a loss of
coverage includes a substantial elimination of coverage with respect to
a qualified beneficiary described in subsection (g)(1)(D) within one
year before or after the date of commencement of the proceeding.
(4) Applicable premium
For purposes of this subsection --
(A) In general
The term ''applicable premium'' means, with respect to any period of
continuation coverage of qualified beneficiaries, the cost to the plan
for such period of the coverage for similarly situated beneficiaries
with respect to whom a qualifying event has not occurred (without regard
to whether such cost is paid by the employer or employee).
(B) Special rule for self-insured plans
To the extent that a plan is a self-insured plan --
(i) In general
Except as provided in clause (ii), the applicable premium for any
period of continuation coverage of qualified beneficiaries shall be
equal to a reasonable estimate of the cost of providing coverage for
such period for similarly situated beneficiaries which --
(I) is determined on an actuarial basis, and
(II) takes into account such factors as the Secretary may prescribe
in regulations.
(ii) Determination on basis of past cost
If a plan administrator elects to have this clause apply, the
applicable premium for any period of continuation coverage of qualified
beneficiaries shall be equal to --
(I) the cost to the plan for similarly situated beneficiaries for the
same period occurring during the preceding determination period under
subparagraph (C), adjusted by
(II) the percentage increase or decrease in the implicit price
deflator of the gross national product (calculated by the Department of
Commerce and published in the Survey of Current Business) for the
12-month period ending on the last day of the sixth month of such
preceding determination period.
(iii) Clause (ii) not to apply where significant change
A plan administrator may not elect to have clause (ii) apply in any
case in which there is any significant difference between the
determination period and the preceding determination period, in coverage
under, or in employees covered by, the plan. The determination under
the preceding sentence for any determination period shall be made at the
same time as the determination under subparagraph (C).
(C) Determination period
The determination of any applicable premium shall be made for a
period of 12 months and shall be made before the beginning of such
period.
(5) Election
For purposes of this subsection --
(A) Election period
The term ''election period'' means the period which --
(i) begins not later than the date on which coverage terminates under
the plan by reason of a qualifying event,
(ii) is of at least 60 days' duration, and
(iii) ends not earlier than 60 days after the later of --
(I) the date described in clause (i), or
(II) in the case of any qualified beneficiary who receives notice
under paragraph (6)(D), the date of such notice.
(B) Effect of election on other beneficiaries
Except as otherwise specified in an election, any election of
continuation coverage by a qualified beneficiary described in
subparagraph (A)(i) or (B) of subsection (g)(1) shall be deemed to
include an election of continuation coverage on behalf of any other
qualified beneficiary who would lose coverage under the plan by reason
of the qualifying event. If there is a choice among types of coverage
under the plan, each qualified beneficiary is entitled to make a
separate selection among such types of coverage.
(6) Notice requirement
In accordance with regulations prescribed by the Secretary --
(A) The group health plan shall provide, at the time of commencement
of coverage under the plan, written notice to each covered employee and
spouse of the employee (if any) of the rights provided under this
subsection.
(B) The employer of an employee under a plan must notify the plan
administrator of a qualifying event described in subparagraph (A), (B),
(D), or (F) of paragraph (3) with respect to such employee within 30
days (or, in the case of a group health plan which is a multiemployer
plan, such longer period of time as may be provided in the terms of the
plan) of the date of the qualifying event.
(C) Each covered employee or qualified beneficiary is responsible for
notifying the plan administrator of the occurrence of any qualifying
event described in subparagraph (C) or (E) of paragraph (3) within 60
days after the date of the qualifying event and each qualified
beneficiary who is determined, under title II or XVI of the Social
Security Act, to have been disabled at the time of a qualifying event
described in paragraph (3)(B) is responsible for notifying the plan
administrator of such determination within 60 days after the date of the
determination and for notifying the plan administrator within 30 days of
the date of any final determination under such title or titles that the
qualified beneficiary is no longer disabled.
(D) The plan administrator shall notify --
(i) in the case of a qualifying event described in subparagraph (A),
(B), (D), or (F) of paragraph (3), any qualified beneficiary with
respect to such event, and
(ii) in the case of a qualifying event described in subparagraph (C)
or (E) of paragraph (3) where the covered employee notifies the plan
administrator under subparagraph (C), any qualified beneficiary with
respect to such event,
of such beneficiary's rights under this subsection.
The requirements of subparagraph (B) shall be considered satisfied in
the case of a multiemployer plan in connection with a qualifying event
described in paragraph (3)(B) if the plan provides that the
determination of the occurrence of such qualifying event will be made by
the plan administrator. For purposes of subparagraph (D), any
notification shall be made within 14 days (or, in the case of a group
health plan which is a multiemployer plan, such longer period of time as
may be provided in the terms of the plan) of the date on which the plan
administrator is notified under subparagraph (B) or (C), whichever is
applicable, and any such notification to an individual who is a
qualified beneficiary as the spouse of the covered employee shall be
treated as notification to all other qualified beneficiaries residing
with such spouse at the time such notification is made.
(7) Covered employee
For purposes of this subsection, the term ''covered employee'' means
an individual who is (or was) provided coverage under a group health
plan by virtue of the performance of services by the individual for 1 or
more persons maintaining the plan (including as an employee defined in
section 401(c)(1)).
(8) Optional extension of required periods
A group health plan shall not be treated as failing to meet the
requirements of this subsection solely because the plan provides both --
(A) that the period of extended coverage referred to in paragraph
(2)(B) commences with the date of the loss of coverage, and
(B) that the applicable notice period provided under paragraph (6)(B)
commences with the date of the loss of coverage.
(g) Definitions
For purposes of this section --
(1) Qualified beneficiary
(A) In general
The term ''qualified beneficiary'' means, with respect to a covered
employee under a group health plan, any other individual who, on the day
before the qualifying event for that employee, is a beneficiary under
the plan --
(i) as the spouse of the covered employee, or
(ii) as the dependent child of the employee.
(B) Special rule for terminations and reduced employment
In the case of a qualifying event described in subsection (f)(3)(B),
the term ''qualified beneficiary'' includes the covered employee.
(C) Exception for nonresident aliens
Notwithstanding subparagraphs (A) and (B), the term ''qualified
beneficiary'' does not include an individual whose status as a covered
employee is attributable to a period in which such individual was a
nonresident alien who received no earned income (within the meaning of
section 911(d)(2)) from the employer which constituted income from
sources within the United States (within the meaning of section
861(a)(3)). If an individual is not a qualified beneficiary pursuant to
the previous sentence, a spouse or dependent child of such individual
shall not be considered a qualified beneficiary by virtue of the
relationship of the individual.
(D) Special rule for retirees and widows
In the case of a qualifying event described in subsection (f)(3)(F),
the term ''qualified beneficiary'' includes a covered employee who had
retired on or before the date of substantial elimination of coverage and
any other individual who, on the day before such qualifying event, is a
beneficiary under the plan --
(i) as the spouse of the covered employee,
(ii) as the dependent child of the covered employee, or
(iii) as the surviving spouse of the covered employee.
(2) Group health plan
The term ''group health plan'' has the meaning given such term by
section 5000(b)(1).
(3) Plan administrator
The term ''plan administrator'' has the meaning given the term
''administrator'' by section 3(16)(A) of the Employee Retirement Income
Security Act of 1974.
(4) Correction
A failure of a group health plan to meet the requirements of
subsection (f) with respect to any qualified beneficiary shall be
treated as corrected if --
(A) such failure is retroactively undone to the extent possible, and
(B) the qualified beneficiary is placed in a financial position which
is as good as such beneficiary would have been in had such failure not
occurred.
For purposes of applying subparagraph (B), the qualified beneficiary
shall be treated as if he had elected the most favorable coverage in
light of the expenses he incurred since the failure first occurred.
(Added Pub. L. 100-647, title III, 3011(a), Nov. 10, 1988, 102 Stat.
3616; amended Pub. L. 101-239, title VI, 6202(b)(3)(B), 6701(a)-(c),
title VII, 7862(c)(2)(B), (3)(C), (4)(B), (5)(A), 7891(d)(1)(B),
(2)(A), Dec. 19, 1989, 103 Stat. 2233, 2294, 2295, 2432, 2433, 2446;
Pub. L. 101-508, title XI, 11702(f), Nov. 5, 1990, 104 Stat. 1388-515.)
The Social Security Act, referred to in subsec. (f)(2)(B)(i)(IV),
(V), (iv)(II), (v), (3)(D), (6)(C), is act Aug. 14, 1935, ch. 531, 49
Stat. 620, as amended. Titles II, XVI, and XVIII of the Social
Security Act are classified generally to subchapters II ( 401 et seq.),
XVI ( 1381 et seq.), and XVIII ( 1395 et seq.), respectively, of chapter
7 of Title 42, The Public Health and Welfare. For complete
classification of this Act to the Code, see section 1305 of Title 42 and
Tables.
Section 3(16)(A) of the Employee Retirement Income Security Act of
1974, referred to in subsec. (g)(3), is classified to section
1002(16)(A) of Title 29, Labor.
1990 -- Subsec. (d)(1). Pub. L. 101-508 amended par. (1) generally.
Prior to amendment, par. (1) read as follows: ''any failure of a
group health plan to meet the requirements of subsection (f) if all
employers maintaining such plan normally employed fewer than 20
employees on a typical business day during the preceding calendar
year,''.
1989 -- Subsec. (f)(2)(B)(i). Pub. L. 101-239, 6701(a)(1), inserted
after and below subcl. (IV) ''In the case of a qualified beneficiary
who is determined, under title II or XVI of the Social Security Act, to
have been disabled at the time of a qualifying event described in
paragraph (3)(B), any reference in subclause (I) or (II) to 18 months
with respect to such event is deemed a reference to 29 months, but only
if the qualified beneficiary has provided notice of such determination
under paragraph (6)(C) before the end of such 18 months.''
Subsec. (f)(2)(B)(i)(V). Pub. L. 101-239, 7862(c)(5)(A), added
subcl. (V).
Subsec. (f)(2)(B)(iv). Pub. L. 101-239, 7862(c)(3)(C), substituted
''entitlement'' for ''eligibility'' in heading and inserted ''which does
not contain any exclusion or limitation with respect to any preexisting
condition of such beneficiary'' after ''or otherwise)'' in subcl. (I).
Subsec. (f)(2)(B)(v). Pub. L. 101-239, 6701(a)(2), added cl. (v).
Subsec. (f)(2)(C). Pub. L. 101-239, 7862(c)(4)(B), amended last
sentence generally. Prior to amendment, last sentence read as follows:
''If an election is made after the qualifying event, the plan shall
permit payment for continuation coverage during the period preceding the
election to be made within 45 days of the date of the election.''
Pub. L. 101-239, 6701(b), inserted at end ''In the case of an
individual described in the last sentence of subparagraph (B)(i), any
reference in clause (i) of this subparagraph to '102 percent' is deemed
a reference to '150 percent' for any month after the 18th month of
continuation coverage described in subclause (I) or (II) of subparagraph
(B)(i).''
Subsec. (f)(6). Pub. L. 101-239, 7891(d)(1)(B)(ii), inserted after
and below subpar. (D) the following new flush sentence ''The
requirements of subparagraph (B) shall be considered satisfied in the
case of a multiemployer plan in connection with a qualifying event
described in paragraph (3)(B) if the plan provides that the
determination of the occurrence of such qualifying event will be made by
the plan administrator.''
Pub. L. 101-239, 7891(d)(1)(B)(i)(II), inserted ''(or, in the case
of a group health plan which is a multiemployer plan, such longer period
of time as may be provided in the terms of the plan)'' after ''14 days''
in last sentence.
Subsec. (f)(6)(B). Pub. L. 101-239, 7891(d)(1)(B)(i)(I), inserted
''(or, in the case of a group health plan which is a multiemployer plan,
such longer period of time as may be provided in the terms of the
plan)'' after ''30 days''.
Subsec. (f)(6)(C). Pub. L. 101-239, 6701(c), inserted before period
at end ''and each qualified beneficiary who is determined, under title
II or XVI of the Social Security Act, to have been disabled at the time
of a qualifying event described in paragraph (3)(B) is responsible for
notifying the plan administrator of such determination within 60 days
after the date of the determination and for notifying the plan
administrator within 30 days of the date of any final determination
under such title or titles that the qualified beneficiary is no longer
disabled''.
Subsec. (f)(7). Pub. L. 101-239, 7862(c)(2)(B), substituted ''the
performance of services by the individual for 1 or more persons
maintaining the plan (including as an employee defined in section
401(c)(1))'' for ''the individual's employment or previous employment
with an employer''.
Subsec. (f)(8). Pub. L. 101-239, 7891(d)(2)(A), added par. (8).
Subsec. (g)(2). Pub. L. 101-239, 6202(b)(3)(B), substituted
''section 5000(b)(1)'' for ''section 162(i)''.
Amendment by Pub. L. 101-508 effective as if included in the
provision of the Technical and Miscellaneous Revenue Act of 1988, Pub.
L. 100-647, to which such amendment relates, see section 11702(j) of
Pub. L. 101-508, set out as a note under section 59 of this title.
Amendment by section 6202(b)(3)(B) of Pub. L. 101-239 applicable to
items and services furnished after Dec. 19, 1989, see section
6202(b)(5) of Pub. L. 101-239, set out as a note under section 162 of
this title.
Section 6701(d) of Pub. L. 101-239 provided that: ''The amendments
made by this section (amending this section) shall apply to plan years
beginning on or after the date of the enactment of this Act (Dec. 19,
1989), regardless of whether the qualifying event occurred before, on,
or after such date.''
Section 7862(c)(2)(C) of Pub. L. 101-239 provided that: ''The
amendments made by this paragraph (amending this section and section
1167 of Title 29, Labor) shall apply to plan years beginning after
December 31, 1989.''
Amendment by section 7862(c)(3)(C) of Pub. L. 101-239 applicable to
(i) qualifying events occurring after Dec. 31, 1989, and (ii) in the
case of qualified beneficiaries who elected continuation coverage after
Dec. 31, 1988, the period for which the required premium was paid (or
was attempted to be paid but was rejected as such), see section
7862(c)(3)(D) of Pub. L. 101-239, set out as a note under section 162
of this title.
Section 7862(c)(4)(C) of Pub. L. 101-239 provided that: ''The
amendments made by this paragraph (amending this section and section
1162 of Title 29, Labor) shall apply to plan years beginning after
December 31, 1989.''
Section 7862(c)(5)(C) of Pub. L. 101-239 provided that: ''The
amendments made by this paragraph (amending this section and section
1162 of Title 29) shall apply to plan years beginning after December 31,
1989.''
Section 7891(d)(1)(C) of Pub. L. 101-239 provided that: ''The
amendments made by this paragraph (amending this section and section
1166 of Title 29) shall apply with respect to plan years beginning on or
after January 1, 1990.''
Section 7891(d)(2)(C) of Pub. L. 101-239 provided that: ''The
amendments made by this paragraph (amending this section and section
1167 of Title 29) shall apply with respect to plan years beginning on or
after January 1, 1990.''
Section applicable to taxable years beginning after Dec. 31, 1988,
but not applicable to any plan for any plan year to which section 162(k)
of this title (as in effect on the day before Nov. 10, 1988) did not
apply by reason of section 10001(e)(2) of Pub. L. 99-272, see section
3011(d) of Pub. L. 100-647, set out as an Effective Date of 1988
Amendment note under section 162 of this title.
/1/ So in original. Subclause (V) probably should immediately follow
subclause (IV).
26 USC CHAPTER 44 -- QUALIFIED INVESTMENT ENTITIES
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4981. Excise tax on undistributed income of real estate investment
trusts.
4982. Excise tax on undistributed income of regulated investment
companies.
1986 -- Pub. L. 99-514, title VI, 651(c), Oct. 22, 1986, 100 Stat.
2297, substituted: ''QUALIFIED INVESTMENT ENTITIES'' for ''REAL ESTATE
INVESTMENT TRUSTS'' as chapter heading, substituted ''Excise tax on
undistributed income of real estate investment trusts'' for ''Excise tax
based on certain real estate investment trust taxable income not
distributed during the taxable year'' in item 4981, and added item 4982.
1976 -- Pub. L. 94-455, title XVI, 1605(a), Oct. 4, 1976, 90 Stat.
1754, added chapter heading and section analysis.
26 USC 4981. Excise tax on undistributed income of real estate
investment trusts
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
There is hereby imposed a tax on every real estate investment trust
for each calendar year equal to 4 percent of the excess (if any) of --
(1) the required distribution for such calendar year, over
(2) the distributed amount for such calendar year.
(b) Required distribution
For purposes of this section --
(1) In general
The term ''required distribution'' means, with respect to any
calendar year, the sum of --
(A) 85 percent of the real estate investment trust's ordinary income
for such calendar year, plus
(B) 95 percent of the real estate investment trust's capital gain net
income for such calendar year.
(2) Increase by prior year shortfall
The amount determined under paragraph (1) for any calendar year shall
be increased by the excess (if any) of --
(A) the grossed up required distribution for the preceding calendar
year, over
(B) the distributed amount for such preceding calendar year.
(3) Grossed up required distribution
The grossed up required distribution for any calendar year is the
required distribution for such year determined --
(A) with the application of paragraph (2) to such taxable year, and
(B) by substituting ''100 percent'' for each percentage set forth in
paragraph (1).
(c) Distributed amount
For purposes of this section --
(1) In general
The term ''distributed amount'' means, with respect to any calendar
year, the sum of --
(A) the deduction for dividends paid (as defined in section 561)
during such calendar year (but computed without regard to that portion
of such deduction which is attributable to the amount excluded under
section 857(b)(2)(D)), and
(B) any amount on which tax is imposed under subsection (b)(1) or
(b)(3)(A) of section 857 for any taxable year ending in such calendar
year.
(2) Increase by prior year overdistribution
The amount determined under paragraph (1) for any calendar year shall
be increased by the excess (if any) of --
(A) the distributed amount for the preceding calendar year
(determined with the application of this paragraph to such preceding
calendar year), over
(B) the grossed up required distribution for such preceding calendar
year.
(3) Determination of dividends paid
The amount of the dividends paid during any calendar year shall be
determined without regard to the provisions of section 858.
(d) Time for payment of tax
The tax imposed by this section for any calendar year shall be paid
on or before March 15 of the following calendar year.
(e) Definitions and special rules
For purposes of this section --
(1) Ordinary income
The term ''ordinary income'' means the real estate investment trust
taxable income (as defined in section 857(b)(2)) determined --
(A) without regard to subparagraph (B) of section 857(b)(2),
(B) by not taking into account any gain or loss from the sale or
exchange of a capital asset, and
(C) by treating the calendar year as the trust's taxable year.
(2) Capital gain net income
(A) In general
The term ''capital gain net income'' has the meaning given such term
by section 1222(9) (determined by treating the calendar year as the
trust's taxable year).
(B) Reduction for net ordinary loss
The amount determined under subparagraph (A) shall be reduced by the
amount of the trust's net ordinary loss for the taxable year.
(C) Net ordinary loss
For purposes of this paragraph, the net ordinary loss for the
calendar year is the amount which would be net operating loss of the
trust for the calendar year if the amount of such loss were determined
in the same manner as ordinary income is determined under paragraph (1).
(3) Treatment of deficiency distributions
In the case of any deficiency dividend (as defined in section 860(f))
--
(A) such dividend shall be taken into account when paid without
regard to section 860, and
(B) any income giving rise to the adjustment shall be treated as
arising when the dividend is paid.
(Added Pub. L. 94-455, title XVI, 1605(a), Oct. 4, 1976, 90 Stat.
1754; amended Pub. L. 99-514, title VI, 668(a), Oct. 22, 1986, 100
Stat. 2306; Pub. L. 100-647, title I, 1006(s)(1), (3), Nov. 10, 1988,
102 Stat. 3418.)
1988 -- Subsec. (c)(1)(A). Pub. L. 100-647, 1006(s)(3), inserted
''(but computed without regard to that portion of such deduction which
is attributable to the amount excluded under section 857(b)(2)(D)''
after ''such calendar year''.
Subsec. (e)(2). Pub. L. 100-647, 1006(s)(1), amended par. (2)
generally, designating existing provisions as subpar. (A) and adding
subpars. (B) and (C).
1986 -- Pub. L. 99-514 substituted ''Excise tax on undistributed
income of real estate investment trusts'' for ''Excise tax based on
certain real estate investment trust taxable income not distributed
during the taxable year'' as section catchline and amended text
generally. Prior to amendment text read as follows: ''Effective with
respect to taxable years beginning after December 31, 1979, there is
hereby imposed on each real estate investment trust for the taxable year
a tax equal to 3 percent of the amount (if any) by which 75 percent of
the real estate investment trust taxable income (as defined in section
857(b)(2), but determined without regard to section 857(b)(2)(B), and by
excluding any net capital gain for the taxable year) exceeds the amount
of the dividends paid deduction (as defined in section 561, but computed
without regard to capital gains dividends as defined in section
857(b)(3)(C) and without regard to any dividend paid after the close of
the taxable year) for the taxable year. For purposes of the preceding
sentence, the determination of the real estate investment trust taxable
income shall be made by taking into account only the amount and
character of the items of income and deduction as reported by such trust
in its return for the taxable year.''
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Amendment by Pub. L. 99-514 applicable to calendar years beginning
after Dec. 31, 1986, see section 669(b) of Pub. L. 99-514, set out as
a note under section 856 of this title.
26 USC 4982. Excise tax on undistributed income of regulated
investment companies
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
There is hereby imposed a tax on every regulated investment company
for each calendar year equal to 4 percent of the excess (if any) of --
(1) the required distribution for such calendar year, over
(2) the distributed amount for such calendar year.
(b) Required distribution
For purposes of this section --
(1) In general
The term ''required distribution'' means, with respect to any
calendar year, the sum of --
(A) 98 percent of the regulated investment company's ordinary income
for such calendar year, plus
(B) 98 percent of the regulated investment company's capital gain net
income for the 1-year period ending on October 31 of such calendar year.
(2) Increase by prior year shortfall
The amount determined under paragraph (1) for any calendar year shall
be increased by the excess (if any) of --
(A) the grossed up required distribution for the preceding calendar
year, over
(B) the distributed amount for such preceding calendar year.
(3) Grossed up required distribution
The grossed up required distribution for any calendar year is the
required distribution for such year determined --
(A) with the application of paragraph (2) to such taxable year, and
(B) by substituting ''100 percent'' for each percentage set forth in
paragraph (1).
(c) Distributed amount
For purposes of this section --
(1) In general
The term ''distributed amount'' means, with respect to any calendar
year, the sum of --
(A) the deduction for dividends paid (as defined in section 561)
during such calendar year, and
(B) any amount on which tax is imposed under subsection (b)(1) or
(b)(3)(A) of section 852 for any taxable year ending in such calendar
year.
(2) Increase by prior year overdistribution
The amount determined under paragraph (1) for any calendar year shall
be increased by the excess (if any) of --
(A) the distributed amount for the preceding calendar year
(determined with the application of this paragraph to such preceding
calendar year), over
(B) the grossed up required distribution for such preceding calendar
year.
(3) Determination of dividends paid
The amount of the dividends paid during any calendar year shall be
determined without regard to --
(A) the provisions of section 855, and
(B) any exempt-interest dividend as defined in section 852(b)(5).
(d) Time for payment of tax
The tax imposed by this section for any calendar year shall be paid
on or before March 15 of the following calendar year.
(e) Definitions and special rules
For purposes of this section --
(1) Ordinary income
The term ''ordinary income'' means the investment company taxable
income (as defined in section 852(b)(2)) determined --
(A) without regard to subparagraphs (A) and (D) of section 852(b)(2),
(B) by not taking into account any gain or loss from the sale or
exchange of a capital asset, and
(C) by treating the calendar year as the company's taxable year.
(2) Capital gain net income
(A) In general
Except as provided in subparagraph (B), the term ''capital gain net
income'' has the meaning given such term by section 1222(9) (determined
by treating the 1-year period ending on October 31 of any calendar year
as the company's taxable year).
(B) Reduction by net ordinary loss for calendar year
The amount determined under subparagraph (A) shall be reduced (but
not below the net capital gain) by the amount of the company's net
ordinary loss for the calendar year.
(C) Definitions
For purposes of this paragraph --
(i) Net capital gain
The term ''net capital gain'' has the meaning given such term by
section 1222(11) (determined by treating the 1-year period ending on
October 31 of the calendar year as the company's taxable year).
(ii) Net ordinary loss
The net ordinary loss for the calendar year is the amount which would
be the net operating loss of the company for the calendar year if the
amount of such loss were determined in the same manner as ordinary
income is determined under paragraph (1).
(3) Treatment of deficiency distributions
In the case of any deficiency dividend (as defined in section 860(f))
--
(A) such dividend shall be taken into account when paid without
regard to section 860, and
(B) any income giving rise to the adjustment shall be treated as
arising when the dividend is paid.
(4) Election to use taxable year in certain cases
(A) In general
If --
(i) the taxable year of the regulated investment company ends with
the month of November or December, and
(ii) such company makes an election under this paragraph,
subsection (b)(1)(B) and paragraph (2) of this subsection shall be
applied by taking into account the company's taxable year in lieu of the
1-year period ending on October 31 of the calendar year.
(B) Election revocable only with consent
An election under this paragraph, once made, may be revoked only with
the consent of the Secretary.
(5) Treatment of foreign currency gains and losses after October 31
of calendar year
Any foreign currency gain or loss which is attributable to a section
988 transaction and which is properly taken into account for the portion
of the calendar year after October 31 shall not be taken into account in
determining the amount of the ordinary income of the regulated
investment company for such calendar year but shall be taken into
account in determining the ordinary income of the investment company for
the following calendar year. In the case of any company making an
election under paragraph (4), the preceding sentence shall be applied by
substituting the last day of the company's taxable year for October 31.
(f) Exception for certain regulated investment companies
This section shall not apply to any regulated investment company for
any calendar year if at all times during such calendar year each
shareholder in such company was either --
(1) a trust described in section 401(a) and exempt from tax under
section 501(a), or
(2) a segregated asset account of a life insurance company held in
connection with variable contracts (as defined in section 817(d)).
For purposes of the preceding sentence, any shares attributable to an
investment in the regulated investment company (not exceeding $250,000)
made in connection with the organization of such company shall not be
taken into account.
(Added Pub. L. 99-514, title VI, 651(a), Oct. 22, 1986, 100 Stat.
2294; amended Pub. L. 100-203, title X, 10104(b)(1), Dec. 22, 1987,
101 Stat. 1330-387; Pub. L. 100-647, title I, 1006(l)(2), (5), (6),
Nov. 10, 1988, 102 Stat. 3413, 3414; Pub. L. 101-239, title VII,
7204(a)(1), Dec. 19, 1989, 103 Stat. 2334.)
1989 -- Subsec. (b)(1)(A). Pub. L. 101-239 substituted ''98
percent'' for ''97 percent''.
1988 -- Subsec. (e)(2). Pub. L. 100-647, 1006(l)(2), amended par.
(2) generally. Prior to amendment, par. (2) read as follows: ''The
term 'capital gain net income' has the meaning given to such term by
section 1222(9) (determined by treating the 1-year period ending on
October 31 of any calendar year as the company's taxable year).''
Subsec. (e)(5). Pub. L. 100-647, 1006(l)(5), added par. (5).
Subsec. (f). Pub. L. 100-647, 1006(l)(6), added subsec. (f).
1987 -- Subsec. (b)(1)(B). Pub. L. 100-203 substituted ''98
percent'' for ''90 percent''.
Section 7204(a)(2) of Pub. L. 101-239 provided that: ''The
amendment made by paragraph (1) (amending this section) shall apply to
calendar years ending after July 10, 1989.''
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Section 10104(b)(2) of Pub. L. 100-203 provided that: ''The
amendment made by paragraph (1) (amending this section) shall take
effect as if included in the amendments made by section 651 of the Tax
Reform Act of 1986 (section 651 of Pub. L. 99-514, see Effective Date
note below).''
Section 651(d) of Pub. L. 99-514 provided that: ''The amendments
made by this section (enacting this section and amending sections 852
and 855 of this title) shall apply to calendar years beginning after
December 31, 1986.''
26 USC (CHAPTER 45 -- REPEALED)
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 4986 to 4990. Repealed. Pub. L. 100-418, title I, 1941(a),
Aug. 23, 1988, 102 Stat. 1322)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4986, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 230, related to imposition of windfall profit tax on
domestic crude oil.
Section 4987, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 230; amended Pub. L. 97-34, title VI, 602(a), Aug.
13, 1981, 95 Stat. 337; Pub. L. 98-369, div. A, title I, 25(a), July
18, 1984, 98 Stat. 506, related to amount of windfall profit tax on
domestic crude oil.
Section 4988, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 231; amended Pub. L. 97-448, title II, 201(a),
(h)(1)(D), Jan. 12, 1983, 96 Stat. 2391, 2394; Pub. L. 99-514, title
XIII, 1301(j)(4), Oct. 22, 1986, 100 Stat. 2657, related to windfall
profit and removal price.
Section 4989, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 233; amended Pub. L. 97-448, title II, 201(b), Jan.
12, 1983, 96 Stat. 2392, related to adjusted base price for purposes of
windfall profit tax on domestic crude oil.
Section 4990, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 234, related to phaseout of windfall profit tax on
domestic crude oil.
Repeal applicable to crude oil removed from the premises on or after
Aug. 23, 1988, see section 1941(c) of Pub. L. 100-418, set out as an
Effective Date of 1988 Amendment note under section 164 of this title.
Pub. L. 96-223, title I, 102, Apr. 2, 1980, 94 Stat. 255, provided
for Windfall Profit Tax Account in Treasury, specified uses for amounts
in that Account, defined ''net revenues'', required President to propose
allocation of net revenues, and required Secretary of the Treasury to
make reports to Congress.
26 USC ( 4991 to 4994. Repealed. Pub. L. 100-418, title I, 1941(a),
Aug. 23, 1988, 102 Stat. 1322)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4991, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 235; amended Pub. L. 97-34, title VI, 601(b)(1),
603(a), Aug. 13, 1981, 95 Stat. 336, 338; Pub. L. 97-448, title II,
201(c), Jan. 12, 1983, 96 Stat. 2392; Pub. L. 99-514, title XVIII,
1879(h)(1), Oct. 22, 1986, 100 Stat. 2907, related to taxable crude
oil and categories of oil.
Section 4992, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 236; amended Pub. L. 97-34, title VI, 603(c), Aug.
13, 1981, 95 Stat. 338; Pub. L. 97-354, 3(b)(2), Oct. 19, 1982, 96
Stat. 1688; Pub. L. 97-448, title II, 201(d), Jan. 12, 1983, 96
Stat. 2392, related to independent producer oil.
Section 4993, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 239; amended Pub. L. 97-448, title II, 201(e), Jan.
12, 1983, 96 Stat. 2392, related to incremental tertiary oil.
Section 4994, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 241; amended Pub. L. 97-34, title VI, 601(b)(2),
603(b), 604(a)-(c), Aug. 13, 1981, 95 Stat. 337-339; Pub. L. 97-248,
title II, 291, Sept. 3, 1982, 96 Stat. 572; Pub. L. 97-448, title
I, 106(a)(2), (4)(B), (b), title II, 201(f), Jan. 12, 1983, 96 Stat.
2388, 2390, 2392, related to definitions and special rules with respect
to exempt oil.
Repeal applicable to crude oil removed from the premises on or after
Aug. 23, 1988, see section 1941(c) of Pub. L. 100-418, set out as an
Effective Date of 1988 Amendment note under section 164 of this title.
26 USC ( 4995 to 4998. Repealed. Pub. L. 100-418, title I, 1941(a),
Aug. 23, 1988, 102 Stat. 1322)
TITLE 26 -- INTERNAL REVENUE CODE
Section 4995, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 244; amended Pub. L. 97-34, title VI, 601(b)(3), Aug.
13, 1981, 95 Stat. 337; Pub. L. 97-448, title II, 201(g), Jan. 12,
1983, 96 Stat. 2393, related to withholding and depository requirements
bearing on the windfall profit tax.
Section 4996, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 247; amended Pub. L. 97-248, title II, 284(a), Sept.
3, 1982, 96 Stat. 569; Pub. L. 97-354, 3(b)(1), Oct. 19, 1982, 96
Stat. 1688; Pub. L. 97-448, title II, 201(h)(1)(A)-(C), (2), Jan.
12, 1983, 96 Stat. 2393-2395, provided for other definitions and
special rules bearing on the windfall profit tax.
Section 4997, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 249; amended Pub. L. 97-448, title II, 201(i)(1),
Jan. 12, 1983, 96 Stat. 2395, related to records and information, and
regulations, bearing on the windfall profit.
Section 4998, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2,
1980, 94 Stat. 250, related to cross references.
Repeal applicable to crude oil removed from the premises on or after
Aug. 23, 1988, see section 1941(c) of Pub. L. 100-418, set out as an
Effective Date of 1988 Amendment note under section 164 of this title.
Pub. L. 100-647, title VI, 6254, Nov. 10, 1988, 102 Stat. 3753,
repealed the reporting requirements of section 4997 of former chapter 45
of this title and the related regulations thereunder, effective only for
crude oil removed after December 31, 1987, for which no tax is due or
withheld under former chapter 45.
26 USC CHAPTER 46 -- GOLDEN PARACHUTE PAYMENTS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
4999. Golden parachute payments.
26 USC 4999. Golden parachute payments
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
There is hereby imposed on any person who receives an excess
parachute payment a tax equal to 20 percent of the amount of such
payment.
(b) Excess parachute payment defined
For purposes of this section, the term ''excess parachute payment''
has the meaning given to such term by section 280G(b).
(c) Administrative provisions
(1) Withholding
In the case of any excess parachute payment which is wages (within
the meaning of section 3401) the amount deducted and withheld under
section 3402 shall be increased by the amount of the tax imposed by this
section on such payment.
(2) Other administrative provisions
For purposes of subtitle F, any tax imposed by this section shall be
treated as a tax imposed by subtitle A.
(Added Pub. L. 98-369, div. A, title I, 67(b)(1), July 18, 1984, 98
Stat. 587.)
Section applicable to payments under agreements entered into or
renewed after June 14, 1984, in taxable years ending after such date,
with contracts entered into before June 15, 1984, which are amended
after June 14, 1984, in any significant relevant aspect to be treated as
a contract entered into after June 14, 1984, see section 67(e) of Pub.
L. 98-369, set out as a note under section 280G of this title.
26 USC CHAPTER 47 -- CERTAIN GROUP HEALTH PLANS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5000. Certain group health plans.
1989 -- Pub. L. 101-239, title VI, 6202(b)(4)(A), Dec. 19, 1989,
103 Stat. 2233, struck out ''LARGE'' after ''CERTAIN'' in chapter
heading and ''large'' after ''Certain'' in item 5000.
26 USC 5000. Certain group health plans
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition of tax
There is hereby imposed on any employer or employee organization that
contributes to a nonconforming group health plan a tax equal to 25
percent of the employer's or employee organization's expenses incurred
during the calendar year for each group health plan to which the
employer or employee organization contributes.
(b) Group health plan and large group health plan
For purposes of this section --
(1) Group health plan
The term ''group health plan'' means any plan of, or contributed to
by, an employer (including a self-insured plan) to provide health care
(directly or otherwise) to the employer's employees, former employees,
or the families of such employees or former employees.
(2) Large group health plan
The term ''large group health plan'' means a plan of, or contributed
to by, an employer or employee organization (including a self-insured
plan) to provide health care (directly or otherwise) to the employees,
former employees, the employer, others associated or formerly associated
with the employer in a business relationship, or their families, that
covers employees of at least one employer that normally employed at
least 100 employees on a typical business day during the previous
calendar year.
(c) Nonconforming group health plan
For purposes of this section, the term ''nonconforming group health
plan'' means a group health plan or large group health plan that at any
time during a calendar year does not comply with the requirements of
subparagraphs (A) and (C) or subparagraph (B), respectively, of section
1862(b)(1) of the Social Security Act.
(d) Government entities
For purposes of this section, the term ''employer'' does not include
a Federal or other governmental entity.
(Added Pub. L. 99-509, title IX, 9319(d)(1), Oct. 21, 1986, 100
Stat. 2012; amended Pub. L. 101-239, title VI, 6202(b)(2), Dec. 19,
1989, 103 Stat. 2233.)
Section 1862(b)(1) of the Social Security Act, referred to in subsec.
(c), is classified to section 1395y(b)(1) of Title 42, The Public
Health and Welfare.
1989 -- Pub. L. 101-239, 6202(b)(2)(A), struck out ''large'' after
''Certain'' in section catchline.
Subsec. (a). Pub. L. 101-239, 6202(b)(2)(B), substituted ''group
health plan'' for ''large group health plan'' in two places.
Subsec. (b). Pub. L. 101-239, 6202(b)(2)(C), substituted ''Group
health plan and large'' for ''Large'' in heading and amended text
generally. Prior to amendment, text read as follows: ''For purposes of
this section, the term 'large group health plan' means a plan of, or
contributed to by, an employer or employee organization (including a
self-insured plan) to provide health care (directly or otherwise) to the
employees, former employees, the employer, others associated or formerly
associated with the employer in a business relationship, or their
families, that covers employees of at least one employer that normally
employed at least 100 employees on a typical business day during the
previous calendar year.''
Subsec. (c). Pub. L. 101-239, 6202(b)(2)(C), substituted ''group''
for ''large group'' in heading and amended text generally. Prior to
amendment, text read as follows: ''For purposes of this section, the
term 'nonconforming large group health plan' means a large group health
plan that at any time during a calendar year does not comply with the
requirements of section 1862(b)(4)(A)(i) of the Social Security Act.''
Amendment by Pub. L. 101-239 applicable to items and services
furnished after Dec. 19, 1989, see section 6202(b)(5) of Pub. L.
101-239, set out as a note under section 162 of this title.
Section applicable to items and services furnished on or after Jan.
1, 1987, see section 9319(f) of Pub. L. 99-509, set out as an Effective
Date of 1986 Amendment note under section 1395y of Title 42, The Public
Health and Welfare.
26 USC Subtitle E -- Alcohol, Tobacco, and Certain Other Excise Taxes
TITLE 26 -- INTERNAL REVENUE CODE
Chapter Sec. /1/
51.
Distilled spirits, wines, and beer 5001
52.
Cigars, cigarettes, smokeless tobacco, pipe tobacco, and cigarette
papers and tubes 5701
53.
Machine guns and certain other firearms /2/ 5801
54.
Greenmail 5881
1988 -- Pub. L. 100-647, title V, 5061(c)(4), Nov. 10, 1988, 102
Stat. 3680, substituted ''Cigars, cigarettes, smokeless tobacco, pipe
tobacco, and cigarette papers and tubes'' for ''Tobacco, cigars,
cigarettes, smokeless tobacco, and cigarette papers and tubes'' in item
relating to chapter 52.
Pub. L. 100-647, title I, 1018(u)(16), Nov. 10, 1988, 102 Stat.
3590, inserted ''smokeless tobacco,'' after ''cigarettes,'' in item
relating to chapter 52.
1987 -- Pub. L. 100-203, title X, 10228(c), Dec. 22, 1987, 101
Stat. 1330-418, added item relating to chapter 54.
/1/ Section numbers editorially supplied.
/2/ Chapter heading amended by Pub. L. 90-618 without corresponding
amendment of analysis.
26 USC CHAPTER 51 -- DISTILLED SPIRITS, WINES, AND BEER
TITLE 26 -- INTERNAL REVENUE CODE
Subchapter Sec. /1/
A.
Gallonage and occupational taxes 5001
B.
Qualification requirements for distilled spirits plants 5171
C.
Operation of distilled spirits plants 5201
D.
Industrial use of distilled spirits 5271
E.
General provisions relating to distilled spirits 5291
F.
Bonded and taxpaid wine premises 5351
G.
Breweries 5401
H.
Miscellaneous plants and warehouses 5501
I.
Miscellaneous general provisions 5551
J.
Penalties, seizures, and forfeitures relating to liquors 5601
The provisions of a prior chapter 51, Distilled Spirits, Wines, and
Beer, were set out as:
Subchapter A, Gallonage and occupational taxes, comprising sections
5001 to 5012, 5021 to 5028, 5041 to 5045, 5051 to 5057, 5061 to 5065,
5081 to 5084, 5091 to 5093, 5101 to 5106, 5111 to 5116, 5121 to 5124,
5131 to 5134, and 5141 to 5149.
Subchapter B, Distilleries, comprising sections 5171 to 5180, 5191 to
5197, and 5211 to 5217.
Subchapter C, Internal Revenue bonded warehouses, comprising sections
5231 to 5233 and 5241 to 5252.
Subchapter D, Rectifying plants, comprising sections 5271 to 5275 and
5281 to 5285.
Subchapter E, Industrial alcohol plants, bonded warehouses,
denaturing plants, and denaturation, comprising sections 5301 to 5320
and 5331 to 5334.
Subchapter F, Bonded and taxpaid wine premises, comprising sections
5351 to 5357, 5361 to 5373, 5381 to 5388, 5391, and 5392.
Subchapter G, Breweries, comprising sections 5401 to 5403 and 5411 to
5416.
Subchapter H, Miscellaneous plants and warehouses, comprising
sections 5501, 5502, 5511, 5512, and 5521 to 5523.
Subchapter I, Miscellaneous general provisions, comprising sections
5551 to 5557.
Subchapter J, Penalties, seizures, and forfeitures relating to
liquors, comprising sections 5601 to 5650, 5661 to 5663, 5671 to 5676,
5681 to 5690, and 5691 to 5693.
/1/ Section numbers editorially supplied.
26 USC Subchapter A -- Gallonage and Occupational Taxes
TITLE 26 -- INTERNAL REVENUE CODE
Part
I. Gallonage taxes.
II. Occupational tax.
26 USC PART I -- GALLONAGE TAXES
TITLE 26 -- INTERNAL REVENUE CODE
Subpart
A. Distilled spirits.
(B. Repealed.)
C. Wines.
D. Beer.
E. General provisions.
1979 -- Pub. L. 96-39, title VIII, 807(b)(1), July 26, 1979, 93
Stat. 290, struck out item relating to subpart B ''Rectification''.
26 USC Subpart A -- Distilled Spirits
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5001. Imposition, rate, and attachment of tax.
5002. Definitions.
5003. Cross references to exemptions, etc.
5004. Lien for tax.
5005. Persons liable for tax.
5006. Determination of tax.
5007. Collection of tax on distilled spirits.
5008. Abatement, remission, refund, and allowance for loss or
destruction of distilled spirits.
(5009. Repealed.)
5010. Credit for wine content and for flavors content.
A prior subpart A, comprising sections 5001 to 5012, related to tax
on distilled spirits, prior to the general revision of this chapter by
Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1313.
1980 -- Pub. L. 96-598, 6(b), Dec. 24, 1980, 94 Stat. 3489, added
item 5010.
1979 -- Pub. L. 96-39, title VIII, 807(b)(2), July 26, 1979, 93
Stat. 290, struck out item 5009 ''Drawback''.
26 USC 5001. Imposition, rate, and attachment of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Rate of tax
(1) General
There is hereby imposed on all distilled spirits produced in or
imported into the United States a tax at the rate of $13.50 on each
proof gallon and a proportionate tax at the like rate on all fractional
parts of a proof gallon.
(2) Products containing distilled spirits
All products of distillation, by whatever name known, which contain
distilled spirits, on which the tax imposed by law has not been paid,
and any alcoholic ingredient added to such products, shall be considered
and taxed as distilled spirits.
(3) Imported perfumes containing distilled spirits
There is hereby imposed on all perfumes imported into the United
States containing distilled spirits a tax of $13.50 per wine gallon, and
a proportionate tax at a like rate on all fractional parts of such wine
gallon.
(4) Wines containing more than 24 percent alcohol by volume
Wines containing more than 24 percent of alcohol by volume shall be
taxed as distilled spirits.
(5) Distilled spirits withdrawn free of tax
Any person who removes, sells, transports, or uses distilled spirits,
withdrawn free of tax under section 5214(a) or section 7510, in
violation of laws or regulations now or hereafter in force pertaining
thereto, and all such distilled spirits shall be subject to all
provisions of law relating to distilled spirits subject to tax,
including those requiring payment of the tax thereon; and the person so
removing, selling, transporting, or using the distilled spirits shall be
required to pay such tax.
(6) Denatured distilled spirits or articles
Any person who produces, withdraws, sells, transports, or uses
denatured distilled spirits or articles in violation of laws or
regulations now or hereafter in force pertaining thereto, and all such
denatured distilled spirits or articles shall be subject to all
provisions of law pertaining to distilled spirits that are not
denatured, including those requiring the payment of tax thereon; and
the person so producing, withdrawing, selling, transporting, or using
the denatured distilled spirits or articles shall be required to pay
such tax.
(7) Fruit-flavor concentrates
If any volatile fruit-flavor concentrate (or any fruit mash or juice
from which such concentrate is produced) containing one-half of 1
percent or more of alcohol by volume, which is manufactured free from
tax under section 5511, is sold, transported, or used by any person in
violation of the provisions of this chapter or regulations promulgated
thereunder, such person and such concentrate, mash, or juice shall be
subject to all provisions of this chapter pertaining to distilled
spirits and wines, including those requiring the payment of tax thereon;
and the person so selling, transporting, or using such concentrate,
mash, or juice shall be required to pay such tax.
(8) Imported liqueurs and cordials
Imported liqueurs and cordials, or similar compounds, containing
distilled spirits, shall be taxed as distilled spirits.
(9) Imported distilled spirits withdrawn for beverage purposes
There is hereby imposed on all imported distilled spirits withdrawn
from customs custody under section 5232 without payment of the internal
revenue tax, and thereafter withdrawn from bonded premises for beverage
purposes, an additional tax equal to the duty which would have been paid
had such spirits been imported for beverage purposes, less the duty
previously paid thereon.
(10) Alcoholic compounds from Puerto Rico
Except as provided in section 5314, upon bay rum, or any article
containing distilled spirits, brought from Puerto Rico into the United
States for consumption or sale there is hereby imposed a tax on the
spirits contained therein at the rate imposed on distilled spirits
produced in the United States.
(b) Time of attachment on distilled spirits
The tax shall attach to distilled spirits as soon as this substance
is in existence as such, whether it be subsequently separated as pure or
impure spirits, or be immediately, or at any subsequent time,
transferred into any other substance, either in the process of original
production or by any subsequent process.
(c) Cross reference
For provisions relating to the tax on shipments to the United States
of taxable articles from Puerto Rico and the Virgin Islands, see section
7652.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1314;
amended Pub. L. 86-75, 3(a)(2), (3), June 30, 1959, 73 Stat. 157;
Pub. L. 86-564, title II, 202(a)(4), (5), June 30, 1960, 74 Stat. 290;
Pub. L. 87-72, 3(a)(4), (5), June 30, 1961, 75 Stat. 193; Pub. L.
87-508, 3(a)(3), (4), June 28, 1962, 76 Stat. 114; Pub. L. 88-52,
3(a)(4), (5), June 29, 1963, 77 Stat. 72; Pub. L. 88-348, 2(a)(4),
(5), June 30, 1964, 78 Stat. 237; Pub. L. 89-44, title V, 501(a), June
21, 1965, 79 Stat. 150; Pub. L. 96-39, title VIII, 802, 805(d), July
26, 1979, 93 Stat. 273, 278; Pub. L. 98-369, div. A, title I,
27(a)(1), July 18, 1984, 98 Stat. 507; Pub. L. 101-508, title XI,
11201(a)(1), Nov. 5, 1990, 104 Stat. 1388-415.)
A prior section 5001, acts Aug. 16, 1954, ch. 736, 68A Stat. 595;
Mar. 30, 1955, ch. 18, 3(a)(4), (5), 69 Stat. 14; Mar. 29, 1956, ch.
115, 3(a)(4), (5), 70 Stat. 66; Mar. 29, 1957, Pub. L. 85-12,
3(a)(2), (3), 71 Stat. 9; June 30, 1958, Pub. L. 85-475, 3(a)(2),
(3), 72 Stat. 259, consisted of provisions similar to those comprising
this section, prior to the general revision of this chapter by Pub. L.
85-859. See section 5061(d) of this title.
1990 -- Subsec. (a)(1), (3). Pub. L. 101-508 substituted ''$13.50''
for ''$12.50''.
1984 -- Subsec. (a)(1), (3). Pub. L. 98-369 substituted ''$12.50''
for ''$10.50''.
1979 -- Subsec. (a)(1). Pub. L. 96-39, 802, struck out ''in bond
or'' after ''distilled spirits'' and ''or wine gallon when below proof''
after ''each proof gallon'' and substituted ''a tax'' for ''an internal
revenue tax'' and ''proof gallon'' for ''such proof or wine gallon''.
Subsec. (a)(2). Pub. L. 96-39, 805(d), inserted '', and any
alcoholic ingredient added to such products'' after ''has not been
paid''.
1965 -- Subsec. (a)(1). Pub. L. 89-44 struck out last sentence which
provided that the rate of tax imposed by par. (1) would be $9 on and
after July 1, 1965.
Subsec. (a)(3). Pub. L. 89-44 struck out last sentence which provided
that the rate of tax imposed by par. (3) would be $9 on and after July
1, 1965.
1964 -- Subsec. (a)(1). Pub. L. 88-348 substituted ''July 1, 1965''
for ''July 1, 1964''.
Subsec. (a)(3). Pub. L. 88-348 substituted ''July 1, 1965'' for
''July 1, 1964''.
1963 -- Subsec. (a)(1). Pub. L. 88-52, 3(a)(4), substituted ''July
1, 1964'' for ''July 1, 1963''.
Subsec. (a)(3). Pub. L. 88-52, 3(a)(5), substituted ''July 1, 1964''
for ''July 1, 1963''.
1962 -- Subsec. (a)(1). Pub. L. 87-508, 3(a)(3), substituted ''July
1, 1963'' for ''July 1, 1962''.
Subsec. (a)(3). Pub. L. 87-508, 3(a)(4), substituted ''July 1,
1963'' for ''July 1, 1962''.
1961 -- Subsec. (a)(1). Pub. L. 87-72, 3(a)(4), substituted ''July
1, 1962'' for ''July 1, 1961''.
Subsec. (a)(3). Pub. L. 87-72, 3(a)(5), substituted ''July 1, 1962''
for ''July 1, 1961''.
1960 -- Subsec. (a)(1). Pub. L. 86-564, 202(a)(4), substituted
''July 1, 1961'' for ''July 1, 1960''.
Subsec. (a)(3). Pub. L. 86-564, 202(a)(5), substituted ''July 1,
1961'' for ''July 1, 1960''.
1959 -- Subsec. (a)(1). Pub. L. 86-75, 3(a)(2), substituted ''July
1, 1960'' for ''July 1, 1959''.
Subsec. (a)(3). Pub. L. 86-75, 3(a)(3), substituted ''July 1, 1960''
for ''July 1, 1959''.
Section 11201(d) of Pub. L. 101-508 provided that: ''The amendments
made by this section (amending this section and sections 5010, 5041,
5051, and 5061 of this title) shall take effect on January 1, 1991.''
Section 27(d) of Pub. L. 98-369 provided that:
''(1) In general. -- Except as provided in paragraph (2), the
amendments made by this section (amending this section and section 5010
of this title and enacting provisions set out as a note under this
section) shall take effect on October 1, 1985.
''(2) Electronic transfer provisions. -- The amendments made by
subsection (c) (amending sections 5061 and 5703 of this title) shall
apply to taxes required to be paid on or after September 30, 1984.''
Section 810 of title VIII of Pub. L. 96-39 provided that: ''The
amendments made by this title (amending this section and sections 5002
to 5008, 5043, 5061, 5064, 5066, 5116, 5171 to 5173, 5175 to 5178, 5180,
5181, 5201 to 5205, 5207, 5211 to 5215, 5221 to 5223, 5231, 5232, 5235,
5241, 5273, 5291, 5301, 5352, 5361 to 5363, 5365, 5381, 5391, 5551,
5601, 5604, 5610, 5612, 5615, 5663, 5681, 5682, and 5691 of this title,
repealing sections 5009, 5021 to 5026, 5081 to 5084, 5174, 5233, 5234,
5251, 5252, 5364, and 5521 to 5523 of this title, and enacting
provisions set out as notes under sections 1, 5061, 5171, and 5173 of
this title) shall take effect on January 1, 1980.''
Amendment by Pub. L. 89-44 applicable on and after July 1, 1965, see
section 701(d) of Pub. L. 89-44, set out as a note under section 5701
of this title.
Section 210(a)(1) of Pub. L. 85-859 provided that: ''The amendments
made by sections 201 and 205 (amending this chapter and repealing acts
Mar. 3, 1877, 114, 19 Stat. 393, and Oct. 18, 1888, ch. 1194, 25 Stat.
560) shall take effect on July 1, 1959, except that any provision having
the effect of a provision contained in such amendments may be made
effective at an earlier date by the promulgation of regulations by the
Secretary or his delegate to effectuate such provision, in which case
the effective date shall be that prescribed in such regulations. The
amendments made by paragraphs (17) and (18) of section 204 (amending
section 7652 of this title) shall take effect on July 1, 1959. Except
as provided in section 206(f), all other provisions of this title
(enacting sections 5849, 5854, 5855, and 7608 of this title, amending
chapter 52 of this title and sections 5801, 5811, 5814, 5821, 5843,
5848, 5851, 6071, 6207, 6422, 7214, 7272, 7301, 7324 to 7326, 7609, and
7655 of this title, and repealing former section 5854 of this title)
shall take effect on the day following the date of the enactment of this
Act (September 2, 1958).''
Section 1(a) of Pub. L. 85-859 provided that: ''This Act (see
Tables for classification) may be cited as the 'Excise Tax Technical
Changes Act of 1958'.''
Section 210(b) of title II of Pub. L. 85-859, as amended by Pub. L.
99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
amendment of any provision of the Internal Revenue Code of 1986
(formerly I.R.C. 1954) by this title (enacting sections 5849, 5854,
5855, and 7608 of this title, amending this chapter, chapter 52 of this
title and sections 5801, 5811, 5814, 5821, 5843, 5848, 5851, 6071, 6207,
6422, 7214, 7272, 7301, 7324 to 7326, 7609, 7652, and 7655 of this
title, and enacting provisions set out as notes under this section and
sections 5006, 5025, 5064, 5175, 5304, and 5601 of this title) shall not
affect any act done or any right accruing or accrued, or any suit or
proceeding had or commenced in any civil cause before such amendment;
but all rights and liabilities under such code prior to such amendment
shall continue, and may be enforced in the same manner, as if such
amendment had not been made.''
Section 210(d) of title II of Pub. L. 85-859 provided that: ''For
the purpose of applying any provision of this title (see Savings
Provision note above) to any occurrence on or after the effective date
of such provision, any reference in this title to another provision
thereof shall also be deemed to be a reference to the corresponding
provision of prior law, when consistent with the purpose of the
provision to be applied.''
Section 205 of Pub. L. 85-859 repealed acts March 3, 1877, ch. 114,
19 Stat. 393 and Oct. 18, 1888, ch. 1194, 25 Stat. 560, which
related to production and warehousing of fruit brandy, and are covered
by this chapter. For effective date of repeal, see section 210(a)(1) of
Pub. L. 85-859, set out as an Effective Date note above.
Section 11201(e) of Pub. L. 101-508 provided that:
''(1) Imposition of tax. --
''(A) In general. -- In the case of any tax-increased article --
''(i) on which tax was determined under part I of subchapter A of
chapter 51 of the Internal Revenue Code of 1986 or section 7652 of such
Code before January 1, 1991, and
''(ii) which is held on such date for sale by any person,
there shall be imposed a tax at the applicable rate on each such
article.
''(B) Applicable rate. -- For purposes of subparagraph (A), the
applicable rate is --
''(i) $1 per proof gallon in the case of distilled spirits,
''(ii) $0.90 per wine gallon in the case of wine described in
paragraph (1), (2), (3), or (5) of section 5041(b) of such Code, and
''(iii) $9 per barrel in the case of beer.
In the case of a fraction of a gallon or barrel, the tax imposed by
subparagraph (A) shall be the same fraction as the amount of such tax
imposed on a whole gallon or barrel.
''(C) Tax-increased article. -- For purposes of this subsection, the
term 'tax-increased article' means distilled spirits, wine described in
paragraph (1), (2), (3), or (5) of section 5041(b) of such Code, and
beer.
''(2) Exception for small domestic producers. --
''(A) In the case of wine held by the producer thereof on January 1,
1991, if a credit would have been allowable under section 5041(c) of
such Code (as added by this section) on such wine had the amendments
made by subsection (b) (amending sections 5041 and 5061 of this title)
applied to all wine removed during 1990 and had the wine so held been
removed for consumption on December 31, 1990, the tax imposed by
paragraph (1) on such wine shall be reduced by the credit which would
have been so allowable.
''(B) In the case of beer held by the producer thereof on January 1,
1991, if the rate of the tax imposed by section 5051 of such Code would
have been determined under subsection (a)(2) thereof had the beer so
held been removed for consumption on December 31, 1990, the tax imposed
by paragraph (1) on such beer shall not apply.
''(C) For purposes of this paragraph, an article shall not be treated
as held by the producer if title thereto had at any time been
transferred to any other person.
''(3) Exception for certain small wholesale or retail dealers. -- No
tax shall be imposed by paragraph (1) on tax- increased articles held on
January 1, 1991, by any dealer if --
''(A) the aggregate liquid volume of tax-increased articles held by
such dealer on such date does not exceed 500 wine gallons, and
''(B) such dealer submits to the Secretary (at the time and in the
manner required by the Secretary) such information as the Secretary
shall require for purposes of this paragraph.
''(4) Credit against tax. -- Each dealer shall be allowed as a credit
against the taxes imposed by paragraph (1) an amount equal to --
''(A) $240 to the extent such taxes are attributable to distilled
spirits,
''(B) $270 to the extent such taxes are attributable to wine, and
''(C) $87 to the extent such taxes are attributable to beer.
Such credit shall not exceed the amount of taxes imposed by paragraph
(1) with respect to distilled spirits, wine, or beer, as the case may
be, for which the dealer is liable.
''(5) Liability for tax and method of payment. --
''(A) Liability for tax. -- A person holding any tax-increased
article on January 1, 1991, to which the tax imposed by paragraph (1)
applies shall be liable for such tax.
''(B) Method of payment. -- The tax imposed by paragraph (1) shall be
paid in such manner as the Secretary shall prescribe by regulations.
''(C) Time for payment. -- The tax imposed by paragraph (1) shall be
paid on or before June 30, 1991.
''(6) Controlled groups. --
''(A) Corporations. -- In the case of a controlled group --
''(i) the 500 wine gallon amount specified in paragraph (3), and
''(ii) the $240, $270, and $87 amounts specified in paragraph (4),
shall be apportioned among the dealers who are component members of
such group in such manner as the Secretary shall by regulations
prescribe. For purposes of the preceding sentence, the term 'controlled
group' has the meaning given to such term by subsection (a) of section
1563 of such Code; except that for such purposes the phrase 'more than
50 percent' shall be substituted for the phrase 'at least 80 percent'
each place it appears in such subsection.
''(B) Nonincorporated dealers under common control. -- Under
regulations prescribed by the Secretary, principles similar to the
principles of subparagraph (A) shall apply to a group of dealers under
common control where 1 or more of such dealers is not a corporation.
''(7) Other laws applicable. --
''(A) In general. -- All provisions of law, including penalties,
applicable to the comparable excise tax with respect to any
tax-increased article shall, insofar as applicable and not inconsistent
with the provisions of this subsection, apply to the floor stocks taxes
imposed by paragraph (1) to the same extent as if such taxes were
imposed by the comparable excise tax.
''(B) Comparable excise tax. -- For purposes of subparagraph (A), the
term 'comparable excise tax' means --
''(i) the tax imposed by section 5001 of such Code in the case of
distilled spirits,
''(ii) the tax imposed by section 5041 of such Code in the case of
wine, and
''(iii) the tax imposed by section 5051 of such Code in the case of
beer.
''(8) Definitions. -- For purposes of this subsection --
''(A) In general. -- Terms used in this subsection which are also
used in subchapter A of chapter 51 of such Code shall have the
respective meanings such terms have in such part.
''(B) Person. -- The term 'person' includes any State or political
subdivision thereof, or any agency or instrumentality of a State or
political subdivision thereof.
''(C) Secretary. -- The term 'Secretary' means the Secretary of the
Treasury or his delegate.
''(9) Treatment of imported perfumes containing distilled spirits.
-- For purposes of this subsection, any article described in section
5001(a)(3) of such Code shall be treated as distilled spirits; except
that the tax imposed by paragraph (1) shall be imposed on a wine gallon
basis in lieu of a proof gallon basis. To the extent provided by
regulations prescribed by the Secretary, the preceding sentence shall
not apply to any article held on January 1, 1991, on the premises of a
retail establishment.''
Section 11218 of Pub. L. 101-508 provided that: ''Notwithstanding
the Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a) or any other
provision of law, any article which is located in a foreign trade zone
on the effective date of any increase in tax under the amendments made
by this part or part I (part I ( 11201-11203) or part II (
11211-11218) of subtitle B of title XI of Pub. L. 101-508, see Tables
for classification) shall be subject to floor stocks taxes imposed by
such parts if --
''(1) internal revenue taxes have been determined, or customs duties
liquidated, with respect to such article before such date pursuant to a
request made under the 1st proviso of section 3(a) of such Act (19
U.S.C. 81c(a)), or
''(2) such article is held on such date under the supervision of a
customs officer pursuant to the 2d proviso of such section 3(a).''
Section 27(b) of Pub. L. 98-369, as amended by Pub. L. 99-514, 2,
title XVIII, 1801(c)(3), Oct. 22, 1986, 100 Stat. 2095, 2786,
provided that:
''(1) Imposition of tax. -- On distilled spirits on which tax was
imposed under section 5001 or 7652 of the Internal Revenue Code of 1986
(formerly I.R.C. 1954) before October 1, 1985, and which were held on
such date for sale by any person, there shall be imposed a tax at the
rate of $2.00 for each proof gallon and a proportionate tax at the like
rate on all fractional parts of a proof gallon.
''(2) Exception for certain small wholesale or retail dealers. -- No
tax shall be imposed by paragraph (1) on distilled spirits held on
October 1, 1985, by any dealer if --
''(A) the aggregate liquid volume of distilled spirits held by such
dealer on such date does not exceed 500 wine gallons, and
''(B) such dealer submits to the Secretary (at the time and in the
manner required by the Secretary) such information as the Secretary
shall require for purposes of this paragraph.
''(3) Credit against tax. -- Each dealer shall be allowed as a credit
against the taxes imposed by paragraph (1) an amount equal to $800.
Such credit shall not exceed the amount of taxes imposed by paragraph
(1) for which the dealer is liable.
''(4) Liability for tax and method of payment. --
''(A) Liability for tax. -- A person holding distilled spirits on
October 1, 1985, to which the tax imposed by paragraph (1) applies shall
be liable for such tax.
''(B) Method of payment. -- The tax imposed by paragraph (1) shall be
paid in such manner as the Secretary shall by regulations prescribe.
''(C) Time for payment. --
''(i) In general. -- Except as provided in clause (ii), the tax
imposed by paragraph (1) shall be paid on or before April 1, 1986.
''(ii) Installment payment of tax in case of small or middle-sized
dealers. -- In the case of any small or middle-sized dealer, the tax
imposed by paragraph (1) may be paid in 3 equal installments due as
follows:
''(I) The first installment shall be paid on or before April 1, 1986.
''(II) The second installment shall be paid on or before July 1,
1986.
''(III) The third installment shall be paid on or before October 1,
1986.
If the taxpayer does not pay any installment under this clause
on or before the date prescribed for its payment, the whole of the
unpaid tax shall be paid upon notice and demand from the Secretary.
''(iii) Small or middle-sized dealer. -- For purposes of clause (ii),
the term 'small or middle-sized dealer' means any dealer if the
aggregate gross sales receipts of such dealer for its most recent
taxable year ending before October 1, 1985, does not exceed $500,000.
''(5) Controlled groups. --
''(A) Controlled groups of corporations. -- In the case of a
controlled group --
''(i) the 500 wine gallon amount specified in paragraph (2),
''(ii) the $800 amount specified in paragraph (3), and
''(iii) the $500,000 amount specified in paragraph (4)(C)(iii),
shall be apportioned among the dealers who are component members of
such group in such manner as the Secretary shall by regulations
prescribe. For purposes of the preceding sentence, the term 'controlled
group' has the meaning given to such term by subsection (a) of section
1563 of the Internal Revenue Code of 1986; except that for such
purposes the phrase 'more than 50 percent' shall be substituted for the
phrase 'at least 80 percent' each place it appears in such subsection.
''(B) Nonincorporated dealers under common control. -- Under
regulations prescribed by the Secretary, principles similar to the
principles of subparagraph (A) shall apply to a group of dealers under
common control where 1 or more of such dealers is not a corporation.
''(6) Other laws applicable. -- All provisions of law, including
penalties, applicable with respect to the taxes imposed by section 5001
of the Internal Revenue Code of 1986 shall, insofar as applicable and
not inconsistent with the provisions of this subsection, apply in
respect of the taxes imposed by paragraph (1) to the same extent as if
such taxes were imposed by such section 5001.
''(7) Definitions and special rules. -- For purposes of this
subsection --
''(A) Dealer. -- The term 'dealer' means --
''(i) any wholesale dealer in liquors (as defined in section 5112(b)
of the Internal Revenue Code of 1986), and
''(ii) any retail dealer in liquors (as defined in section 5122(a) of
such Code).
''(B) Distilled spirits. -- The term 'distilled spirits' has the
meaning given such term by section 5002(a)(8) of the Internal Revenue
Code of 1986.
''(C) Person. -- The term 'person' includes any State or political
subdivision thereof, or any agency or instrumentality of a State or
political subdivision thereof.
''(D) Secretary. -- The term 'Secretary' means the Secretary of the
Treasury or his delegate.
''(E) Treatment of imported perfumes containing distilled spirits.
-- Any article described in section 5001(a)(3) of such Code shall be
treated as distilled spirits; except that the tax imposed by paragraph
(1) shall be imposed on a wine gallon basis in lieu of a proof gallon
basis. To the extent provided in regulations prescribed by the
Secretary, the preceding sentence shall not apply to any article held on
October 1, 1985, on the premises of a retail establishment.
''(F) Treatment of distilled spirits in foreign trade zones. --
Notwithstanding the Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a)
or any other provision of law, distilled spirits which are located in a
foreign trade zone on October 1, 1985, shall be subject to the tax
imposed by paragraph (1) and shall be treated for purposes of this
subsection as held on such date for sale if --
''(i) internal revenue taxes have been determined, or customs duties
liquidated, with respect to such distilled spirits before such date
pursuant to a request made under the first proviso of section 3(a) of
such Act (19 U.S.C. 81c(a)), or
''(ii) such distilled spirits are held on such date under the
supervision of customs pursuant to the second proviso of such section
3(a).
Under regulations prescribed by the Secretary, provisions similar to
sections 5062 and 5064 of such Code shall apply to distilled spirits
with respect to which tax is imposed by paragraph (1) by reason of this
subparagraph.''
Application of part to Puerto Rico and Virgin Islands, see section
5314 of this title.
Collection of tax on distilled spirits, see section 5007 of this
title.
Exemption from rectifying and spirits taxes, see section 5391 of this
title.
Lien for tax, see section 5004 of this title.
Method of collecting tax, see section 5061 of this title.
Persons liable for tax, see section 5005 of this title.
26 USC 5002. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
For purposes of this chapter --
(1) Distilled spirits plant
The term ''distilled spirits plant'' means an establishment which is
qualified under subchapter B to perform any distilled spirits operation.
(2) Distilled spirits operation
The term ''distilled spirits operation'' means any operation for
which qualification is required under subchapter B.
(3) Bonded premises
The term ''bonded premises'', when used with respect to distilled
spirits, means the premises of a distilled spirits plant, or part
thereof, on which distilled spirits operations are authorized to be
conducted.
(4) Distiller
The term ''distiller'' includes any person who --
(A) produces distilled spirits from any source or substance,
(B) brews or makes mash, wort, or wash fit for distillation or for
the production of distilled spirits (other than the making or using of
mash, wort, or wash in the authorized production of wine or beer, or the
production of vinegar by fermentation),
(C) by any process separates alcoholic spirits from any fermented
substance, or
(D) making or keeping mash, wort, or wash, has a still in his
possession or use.
(5) Processor
(A) In general
The term ''processor'', when used with respect to distilled spirits,
means any person who --
(i) manufactures, mixes, or otherwise processes distilled spirits, or
(ii) manufactures any article.
(B) Rectifier, bottler, etc., included
The term ''processor'' includes (but is not limited to) a rectifier,
bottler, and denaturer.
(6) Certain operations not treated as processing
In applying paragraph (5), there shall not be taken into account --
(A) Operations as distiller
Any process which is the operation of a distiller.
(B) Mixing of taxpaid spirits for immediate consumption
Any mixing (after determination of tax) of distilled spirits for
immediate consumption.
(C) Use by apothecaries
Any process performed by an apothecary with respect to distilled
spirits which such apothecary uses exclusively in the preparation or
making up of medicines unfit for use for beverage purposes.
(7) Warehouseman
The term ''warehouseman'', when used with respect to distilled
spirits, means any person who stores bulk distilled spirits.
(8) Distilled spirits
The terms ''distilled spirits'', ''alcoholic spirits'', and
''spirits'' mean that substance known as ethyl alcohol, ethanol, or
spirits of wine in any form (including all dilutions and mixtures
thereof from whatever source or by whatever process produced).
(9) Bulk distilled spirits
The term ''bulk distilled spirits'' means distilled spirits in a
container having a capacity in excess of 1 wine gallon.
(10) Proof spirits
The term ''proof spirits'' means that liquid which contains one-half
its volume of ethyl alcohol of a specific gravity of 0.7939 at 60
degrees Fahrenheit (referring to water at 60 degrees Fahrenheit as
unity).
(11) Proof gallon
The term ''proof gallon'' means a United States gallon of proof
spirits, or the alcoholic equivalent thereof.
(12) Container
The term ''container'', when used with respect to distilled spirits,
means any receptacle, vessel, or form of package, bottle, tank, or
pipeline used, or capable of use, for holding, storing, transferring, or
conveying distilled spirits.
(13) Approved container
The term ''approved container'', when used with respect to distilled
spirits, means a container the use of which is authorized by regulations
prescribed by the Secretary.
(14) Article
Unless another meaning is distinctly expressed or manifestly
intended, the term ''article'' means any substance in the manufacture of
which denatured distilled spirits are used.
(15) Export
The terms ''export'', ''exported'', and ''exportation'' include
shipments to a possession of the United States.
(b) Cross references
(1) For definition of wine gallon, see section 5041(c). /1/
(2) For definition of manufacturer of stills, see section 5102.
(3) For definition of dealer, see section 5112(a).
(4) For definitions of wholesale dealers, see section 5112.
(5) For definitions of retail dealers, see section 5122.
(6) For definitions of general application to this title, see chapter
79.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1315;
amended Pub. L. 89-44, title VIII, 807(a), June 21, 1965, 79 Stat.
164; Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat.
1834; Pub. L. 96-39, title VIII, 805(e), July 26, 1979, 93 Stat. 278.)
Section 5041(c), referred to in subsec. (b)(1), was redesignated
section 5041(d) by Pub. L. 101-508, title XI, 11201(b)(2), Nov. 5,
1990, 104 Stat. 1388-416.
A prior section 5002, act Aug. 16, 1954, ch. 736, 68A Stat. 597,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising subsec. (a)(6), (9), and (11)
of this section were contained in prior sections 5213(a)(1) and 5319(1),
(2), and (7), act Aug. 16, 1954, ch. 736, 68A Stat. 639, 661, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Subsec. (a)(1). Pub. L. 96-39 substituted ''distilled
spirits operation'' for ''operation, or any combination of operations,
for which qualification is required under such subchapter''.
Subsec. (a)(2), (3). Pub. L. 96-39 added par. (2) and redesignated
former par. (2) as (3). Former par. (3), defining ''bottling
premises'', was struck out.
Subsec. (a)(4). Pub. L. 96-39 redesignated par. (5) as (4). Former
par. (4), defining ''bonded warehouseman'', was struck out.
Subsec. (a)(5) to (7). Pub. L. 96-39 added pars. (5) to (7) and
redesignated former pars. (5) to (7) as (4), (8), and (10),
respectively.
Subsec. (a)(8). Pub. L. 96-39 redesignated former par. (6) as (8).
Former par. (8) redesignated (11).
Subsec. (a)(9). Pub. L. 96-39 added par. (9) and redesignated par.
(9) as (12).
Subsec. (a)(10) to (15). Pub. L. 96-39 redesignated former pars.
(7) to (12) as (10) to (15), respectively.
Subsec. (b). Pub. L. 95-39 struck out par. (2) which provided for a
cross reference to section 5082 for a definition of rectifier and
redesignated pars. (3) to (7) as (2) to (6), respectively.
1976 -- Subsec. (a)(10). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary''.
1965 -- Subsec. (a). Pub. L. 89-44 added par. (12).
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section 807(c) of Pub. L. 89-44 provided that: ''The amendments
made by subsections (a) and (b) (amending this section and section 5053
of this title) shall take effect on July 1, 1965.''
section 158.
/1/ See References in Text note below.
26 USC 5003. Cross references to exemptions, etc.
TITLE 26 -- INTERNAL REVENUE CODE
(1) For provisions authorizing the withdrawal of distilled spirits
free of tax for use by Federal or State agencies, see sections
5214(a)(2) and 5313.
(2) For provisions authorizing the withdrawal of distilled spirits
free of tax by nonprofit educational organizations, scientific
universities or colleges of learning, laboratories, hospitals, blood
banks, sanitariums, and charitable clinics, see section 5214(a)(3).
(3) For provisions authorizing the withdrawal of certain imported
distilled spirits from customs custody without payment of tax, see
section 5232.
(4) For provisions authorizing the withdrawal of denatured distilled
spirits free of tax, see section 5214(a)(1).
(5) For provisions exempting from tax distilled spirits for use in
production of vinegar by the vaporizing process, see section 5505(j).
(6) For provisions relating to the withdrawal of wine spirits without
payment of tax for use in the production of wine, see section 5373.
(7) For provisions exempting from tax volatile fruit-flavor
concentrates, see section 5511.
(8) For provisions authorizing the withdrawal of distilled spirits
from bonded premises without payment of tax for export, see section
5214(a)(4).
(9) For provisions authorizing withdrawal of distilled spirits
without payment of tax to customs bonded warehouses for export, see
section 5214(a)(9).
(10) For provisions relating to withdrawal of distilled spirits
without payment of tax as supplies for certain vessels and aircraft, see
19 U.S.C. 1309.
(11) For provisions authorizing regulations for withdrawal of
distilled spirits for use of United States free of tax, see section
7510.
(12) For provisions relating to withdrawal of distilled spirits
without payment of tax to foreign-trade zones, see 19 U.S.C. 81c.
(13) For provisions relating to exemption from tax of taxable
articles going into the possessions of the United States, see section
7653(b).
(14) For provisions authorizing the withdrawal of distilled spirits
without payment of tax for use in certain research, development, or
testing, see section 5214(a)(10).
(15) For provisions authorizing the withdrawal of distilled spirits
without payment of tax for transfer to manufacturing bonded warehouses
for manufacturing for export, see section 5214(a)(6).
(16) For provisions authorizing the withdrawal of articles from the
bonded premises of a distilled spirits plant free of tax when contained
in an article, see section 5214(a)(11).
(17) For provisions relating to allowance for certain losses in bond,
see section 5008(a).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1316;
amended Pub. L. 95-176, 3(c), 4(f), Nov. 14, 1977, 91 Stat. 1365,
1366; Pub. L. 96-39, title VIII, 807(a)(1), July 26, 1979, 93 Stat.
280.)
A prior section 5003, act Aug. 16, 1954, ch. 736, 68A Stat. 597,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Par. (9). Pub. L. 96-39, 807(a)(1)(A), struck out ''section
5522(a) and'' before ''section 5214(a)(9)''.
Pars. (15) to (17). Pub. L. 96-39, 807(a)(1)(B), added pars. (15)
and (16) and redesignated former par. (15) as (17).
1977 -- Par. (9). Pub. L. 95-176, 3(c), struck out
''manufacturing'' after ''customs'' and inserted reference to section
5214(a)(9).
Par. (14). Pub. L. 95-176, 4(f), substituted ''withdrawal of
distilled spirits without payment of tax for use in certain research,
development, or testing, see section 5214(a)(10)'' for ''removal of
samples free of tax for making tests or laboratory analyses, see section
5214(a)(9)''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section 7 of Pub. L. 95-176 provided that: ''The amendments made by
this Act (amending this section and sections 5004, 5005, 5008, 5025,
5062, 5066, 5175, 5178, 5205, 5207, 5214, 5215, and 5234 of this title)
shall take effect on the first day of the first calendar month which
begins more than 90 days after the date of the enactment of this Act
(Nov. 14, 1977).''
26 USC 5004. Lien for tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Distilled spirits subject to lien
(1) General
The tax imposed by section 5001(a)(1) shall be a first lien on the
distilled spirits from the time the spirits are in existence as such
until the tax is paid.
(2) Exceptions
The lien imposed by paragraph (1), or any similar lien imposed on the
spirits under prior provisions of internal revenue law, shall terminate
in the case of distilled spirits produced on premises qualified under
internal revenue law for the production of distilled spirits when such
distilled spirits are --
(A) withdrawn from bonded premises on determination of tax; or
(B) withdrawn from bonded premises free of tax under provisions of
section 5214(a)(1), (2), (3), (11), or (12), or section 7510; or
(C) exported, deposited in a foreign-trade zone, used in the
production of wine, laden as supplies upon, or used in the maintenance
or repair of, certain vessels or aircraft, deposited in a customs bonded
warehouse, or used in certain research, development, or testing, as
provided by law.
(b) Cross reference
For provisions relating to extinguishing of lien in case of
redistillation, see section 5223(e).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1317;
amended Pub. L. 89-44, title VIII, 805(f)(1), June 21, 1965, 79 Stat.
161; Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat.
1834; Pub. L. 95-176, 4(c), Nov. 14, 1977, 91 Stat. 1366; Pub. L.
96-39, title VIII, 807(a)(2), July 26, 1979, 93 Stat. 280; Pub. L.
96-223, title II, 232(e)(2)(C), Apr. 2, 1980, 94 Stat. 280.)
A prior section 5004, act Aug. 16, 1954, ch. 736, 68A Stat. 598,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising subsec. (b)(1) of this
section were contained in prior section 5007(e)(1), act Aug. 16, 1954,
ch. 736, 68A Stat. 600, prior to the general revision of this chapter
by Pub. L. 85-859.
1980 -- Subsec. (a)(2)(B). Pub. L. 96-223 substituted ''(11), or
(12),'' for ''or (11),''.
1979 -- Subsec. (a)(2)(B). Pub. L. 96-39, 807(a)(2)(C), substituted
''(3), or (11)'' for ''or (3)''.
Subsecs. (b), (c). Pub. L. 96-39, 807(a)(2)(A), (B), redesignated
subsec. (c) as (b). Former subsec. (b), relating to other property
subject to lien, was repealed.
1977 -- Subsec. (a)(2). Pub. L. 95-176 struck out reference to par.
(9) of section 5214(a) in subpar. (B), and in subpar. (C) substituted
''a customs bonded warehouse'' for ''customs manufacturing bonded
warehouses'' and provided for termination of the lien for tax when the
distilled spirits are used in certain research, development, or testing.
1976 -- Subsec. (b)(3)(B), (4). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'', wherever appearing.
1965 -- Subsec. (c). Pub. L. 89-44 substituted ''5223(e)'' for
''5223(d)''.
Amendment by Pub. L. 96-223 effective on the first day of the first
calendar month beginning more than 60 days after Apr. 2, 1980, see
section 232(h)(3) of Pub. L. 96-223, set out as an Effective Date note
under section 5181 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 95-176 effective on first day of first calendar
month beginning more than 90 days after Nov. 14, 1977, see section 7 of
Pub. L. 95-176, set out as a note under section 5003 of this title.
Section 805(g)(2) of Pub. L. 89-44 provided that: ''The amendments
made by subsections (b), (d), and (f) (other than paragraph (6))
(amending this section and sections 5025, 5083, 5223, and 5234 of this
title), shall take effect on October 1, 1965.''
Application of part to Puerto Rico and Virgin Islands, see section
5314 of this title.
Lien for taxes generally, see section 6321 et seq. of this title.
26 USC 5005. Persons liable for tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
The distiller or importer of distilled spirits shall be liable for
the taxes imposed thereon by section 5001(a)(1).
(b) Domestic distilled spirits
(1) Liability of persons interested in distilling
Every proprietor or possessor of, and every person in any manner
interested in the use of, any still, distilling apparatus, or
distillery, shall be jointly and severally liable for the taxes imposed
by law on the distilled spirits produced therefrom.
(2) Exception
A person owning or having the right of control of not more than 10
percent of any class of stock of a corporate proprietor of a distilled
spirits plant shall not be deemed to be a person liable for the tax for
which such proprietor is liable under the provisions of paragraph (1).
This exception shall not apply to an officer or director of such
corporate proprietor.
(c) Proprietors of distilled spirits plants
(1) Bonded storage
Every person operating bonded premises of a distilled spirits plant
shall be liable for the internal revenue tax on all distilled spirits
while the distilled spirits are stored on such premises, and on all
distilled spirits which are in transit to such premises (from the time
of removal from the transferor's bonded premises) pursuant to
application made by him. Such liability for the tax on distilled
spirits shall continue until the distilled spirits are transferred or
withdrawn from bonded premises as authorized by law, or until such
liability for tax is relieved by reason of the provisions of section
5008(a). Nothing in this paragraph shall relieve any person from any
liability imposed by subsection (a) or (b).
(2) Transfers in bond
When distilled spirits are transferred in bond in accordance with the
provisions of section 5212, persons liable for the tax on such spirits
under subsection (a) or (b), or under any similar prior provisions of
internal revenue law, shall be relieved of such liability, if
proprietors of transferring and receiving premises are independent of
each other and neither has a proprietary interest, directly or
indirectly, in the business of the other, and all persons liable for the
tax under subsection (a) or (b), or under any similar prior provisions
of internal revenue law, have divested themselves of all interest in the
spirits so transferred. Such relief from liability shall be effective
from the time of removal from the transferor's bonded premises, or from
the time of divestment of interest, whichever is later.
(d) Withdrawals free of tax
All persons liable for the tax under subsection (a) or (b), or under
any similar prior provisions of internal revenue law, shall be relieved
of such liability as to distilled spirits withdrawn free of tax under
the provisions of section 5214(a)(1), (2), (3), (11), or (12), or under
section 7510, at the time such spirits are so withdrawn from bonded
premises.
(e) Withdrawals without payment of tax
(1) Liability for tax
Any person who withdraws distilled spirits from the bonded premises
of a distilled spirits plant without payment of tax, as provided in
section 5214(a)(4), (5), (6), (7), (8), (9), (10), or (13), shall be
liable for the internal revenue tax on such distilled spirits, from the
time of such withdrawal; and all persons liable for the tax on such
distilled spirits under subsection (a) or (b), or under any similar
prior provisions of internal revenue law, shall, at the time of such
withdrawal, be relieved of any such liability on the distilled spirits
so withdrawn if the person withdrawing such spirits and the person, or
persons, liable for the tax under subsection (a) or (b), or under any
similar prior provisions of internal revenue law, are independent of
each other and neither has a proprietary interest, directly or
indirectly, in the business of the other, and all persons liable for the
tax under subsection (a) or (b), or under any similar prior provisions
of internal revenue law, have divested themselves of all interest in the
spirits so withdrawn.
(2) Relief from liability
All persons liable for the tax on distilled spirits under paragraph
(1) of this subsection, or under subsection (a) or (b), or under any
similar prior provisions of internal revenue law, shall be relieved of
any such liability at the time, as the case may be, the distilled
spirits are exported, deposited in a foreign-trade zone, used in the
production of wine, used in the production of nonbeverage wine or wine
products, deposited in customs bonded warehouses, laden as supplies
upon, or used in the maintenance or repair of, certain vessels or
aircraft, or used in certain research, development, or testing, as
provided by law.
(f) Cross references
(1) For provisions requiring bond covering operations at, and
withdrawals from, distilled spirits plants, see section 5173.
(2) For provisions relating to transfer of tax liability to
redistiller in case of redistillation, see section 5223.
(3) For liability for tax on denatured distilled spirits, articles,
and volatile fruit-flavor concentrates, see section 5001(a)(6) and (7).
(4) For liability for tax on distilled spirits withdrawn free of tax,
see section 5001(a)(5).
(5) For liability of wine producer for unlawfully using wine spirits
withdrawn for the production of wine, see section 5391.
(6) For provisions relating to transfer of tax liability for wine,
see section 5043(a)(1)(A).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1318;
amended Pub. L. 94-455, title XIX, 1905(a)(1), Oct. 4, 1976, 90 Stat.
1818; Pub. L. 95-176, 4(b), (d), Nov. 14, 1977, 91 Stat. 1366; Pub.
L. 96-39, title VIII, 807(a)(3), July 26, 1979, 93 Stat. 280; Pub. L.
96-223, title II, 232(e)(2)(D), Apr. 2, 1980, 94 Stat. 280; Pub. L.
98-369, div. A, title IV, 455(b), July 18, 1984, 98 Stat. 823.)
A prior section 5005, acts Aug. 16, 1954, ch. 736, 68A Stat. 599;
Sept. 2, 1958, Pub. L. 85-859, title II, 206(d), 72 Stat. 1431,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising subsec. (c)(1), (2) of this
section were contained in prior sections 5194(f), 5217(a), and 5232(a),
act Aug. 16, 1954, ch. 736, 68A Stat. 634, 641, 643, prior to the
general revision of this chapter by Pub. L. 85-859.
1984 -- Subsec. (e)(1). Pub. L. 98-369, 455(b)(1), substituted
''(10), or (13)'' for ''or (10)''.
Subsec. (e)(2). Pub. L. 98-369, 455(b)(2), inserted ''used in the
production of nonbeverage wine or wine products,''.
1980 -- Subsec. (d). Pub. L. 96-223 substituted ''(11), or (12),''
for ''or (11),''.
1979 -- Subsec. (c)(3). Pub. L. 96-39, 807(a)(3)(A), struck out
par. (3) which related to liability for taxes with regard to
withdrawals of distilled spirits from the bonded premises of a distilled
spirits plant.
Subsec. (d). Pub. L. 96-39, 807(a)(3)(B), substituted ''(3), or
(11)'' for ''or (3)''.
Subsec. (f)(1). Pub. L. 96-39, 807(a)(3)(C), substituted ''requiring
bond covering operations at, and withdrawals from, distilled spirits
plants'' for ''conditioning warehousing bonds on the payment of the
tax'' and ''5173'' for ''5173(c)''.
Subsec. (f)(6). Pub. L. 96-39, 807(a)(3)(D), added par. (6).
1977 -- Subsec. (d). Pub. L. 95-176, 4(d)(1), struck out reference
to par. (9) of section 5214(a).
Subsec. (e)(1). Pub. L. 95-176, 4(d)(2), inserted reference to pars.
(9) and (10) of section 5214(a).
Subsec. (e)(2). Pub. L. 95-176, 4(b), substituted ''customs bonded
warehouses'' for ''customs manufacturing bonded warehouses'' and
provided for relief from liability for tax on distilled spirits used in
certain research, development, or testing.
1976 -- Subsec. (c)(2). Pub. L. 94-455 substituted ''Such relief
from liability shall be effective from the time of removal from the
transferor's bonded premises, or from the time of divestment of
interest, whichever is later.'' for ''Such liability for the tax on
distilled spirits shall continue until the distilled spirits are
transferred or withdrawn from bonded premises as authorized by law, or
until such liability for tax is relieved by reason of the provisions of
section 5008(a). Nothing in this paragraph shall relieve any person
from any liability imposed by subsection (a) or (b).''.
Amendment by Pub. L. 98-369 effective July 18, 1984, see section
456(c) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by Pub. L. 96-223 effective on first day of first calendar
month beginning more than 60 days after Apr. 2, 1980, see section
232(h)(3) of Pub. L. 96-223, set out as an Effective Date note under
section 5181 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 95-176 effective on first day of first calendar
month beginning more than 90 days after Nov. 14, 1977, see section 7 of
Pub. L. 95-176, set out as a note under section 5003 of this title.
Section 1905(d) of Pub. L. 94-455 provided that: ''The amendments
made by this section (amending this section and sections 5007 to 5009,
5025, 5026, 5043, 5054, 5061, 5105, 5111, 5113, 5114, 5117, 5121, 5122,
5131, 5142, 5148, 5171, 5174, 5177, 5179, 5214, 5222, 5232 to 5234,
5272, 5314, 5362, 5368, 5392, 5505, 5551, 5601, 5662, 5685, 5701, 5703,
5704, 5712, 5723, 5751, 5752, 5762, and 5763 of this title and repealing
sections 5104, 5144, 5315, 5676, and 5689 of this title) shall take
effect on the first day of the first month which begins more than 90
days after the date of the enactment of this Act (Oct. 4, 1976).''
Application of part to Puerto Rico and Virgin Islands, see section
5314 of this title.
26 USC 5006. Determination of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirements
(1) In general
Except as otherwise provided in this section, the tax on distilled
spirits shall be determined when the spirits are withdrawn from bond.
Such tax shall be determined by such means as the Secretary shall by
regulations prescribe, and with the use of such devices and apparatus
(including but not limited to tanks and pipelines) as the Secretary may
require. The tax on distilled spirits withdrawn from the bonded
premises of a distilled spirits plant shall be determined upon
completion of the gauge for determination of tax and before withdrawal
from bonded premises, under such regulations as the Secretary shall
prescribe.
(2) Distilled spirits not accounted for
If the Secretary finds that the distiller has not accounted for all
the distilled spirits produced by him, he shall, from all the evidence
he can obtain, determine what quantity of distilled spirits was actually
produced by such distiller, and an assessment shall be made for the
difference between the quantity reported and the quantity shown to have
been actually produced at the rate of tax imposed by law for every proof
gallon.
(b) Taxable loss
(1) On original quantity
Where there is evidence satisfactory to the Secretary that there has
been any loss of distilled spirits from any cask or other package
deposited on bonded premises, other than a loss which by reason of
section 5008(a) is not taxable, the Secretary may require the withdrawal
from bonded premises of such distilled spirits, and direct the officer
designated by him to collect the tax accrued on the original quantity of
distilled spirits entered for deposit on bonded premises in such cask or
package; except that, under regulations prescribed by the Secretary,
when the extent of any loss from causes other than theft or unauthorized
voluntary destruction can be established by the proprietor to the
satisfaction of the Secretary an allowance of the tax on the loss so
established may be credited against the tax on the original quantity.
If such tax is not paid on demand it shall be assessed and collected as
other taxes are assessed and collected.
(2) Alternative method
Where there is evidence satisfactory to the Secretary that there has
been access, other than is authorized by law, to the contents of casks
or packages stored on bonded premises, and the extent of such access is
such as to evidence a lack of due diligence or a failure to employ
necessary and effective controls on the part of the proprietor, the
Secretary (in lieu of requiring the casks or packages to which such
access has been had to be withdrawn and tax paid on the original
quantity of distilled spirits entered for deposit on bonded premises in
such casks or packages as provided in paragraph (1)) may assess an
amount equal to the tax on 5 proof gallons of distilled spirits at the
prevailing rate on each of the total number of such casks or packages as
determined by him.
(3) Application of subsection
The provisions of this subsection shall apply to distilled spirits
which are filled into casks or packages, as authorized by law, after
entry and deposit on bonded premises, whether by recasking, filling from
storage tanks, consolidation of packages, or otherwise; and the
quantity filled into such casks or packages shall be deemed to be the
original quantity for the purpose of this subsection, in the case of
loss from such casks or packages.
(c) Distilled spirits not bonded
(1) General
The tax on any distilled spirits, removed from the place where they
were distilled and (except as otherwise provided by law) not deposited
in storage on bonded premises of a distilled spirits plant, shall, at
any time within the period of limitation provided in section 6501, when
knowledge of such fact is obtained by the Secretary, be assessed on the
distiller of such distilled spirits (or other person liable for the tax)
and payment of such tax immediately demanded and, on the neglect or
refusal of payment, the Secretary shall proceed to collect the same by
distraint. This paragraph shall not exclude any other remedy or
proceeding provided by law.
(2) Production at other than qualified plants
Except as otherwise provided by law, the tax on any distilled spirits
produced in the United States at any place other than a qualified
distilled spirits plant shall be due and payable immediately upon
production.
(d) Unlawfully imported distilled spirits
Distilled spirits smuggled or brought into the United States
unlawfully shall, for purposes of this chapter, be held to be imported
into the United States, and the internal revenue tax shall be due and
payable at the time of such importation.
(e) Cross reference
For provisions relating to removal of distilled spirits from bonded
premises on determination of tax, see section 5213.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1320;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 804(a), 807(a)(4), July 26,
1979, 93 Stat. 274, 280.)
A prior section 5006, acts Aug. 16, 1954, ch. 736, 68A Stat. 599;
Sept. 2, 1958, Pub. L. 85-859, title II, 206(a), 72 Stat. 1431,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising subsecs. (a)(2)(A), (3) of
this section were contained in prior sections 5007(e)(1) and 5232(a),
act Aug. 16, 1954, ch. 736, 68A Stat. 600, 643, prior to the general
revision of this chapter by Pub. L. 85-859.
1979 -- Subsec. (a)(1). Pub. L. 96-39, 804(a), struck out
''internal revenue'' after ''provided in this section, the'' and
''storage, gauging, and bottling'' after ''but not limited to''.
Subsec. (a)(2), (3). Pub. L. 96-39, 804(a), redesignated par. (3)
as (2). Former par. (2), relating to distilled spirits entered for
storage, was struck out.
Subsec. (b)(1). Pub. L. 96-39, 807(a)(4)(A), (B), substituted ''on
bonded premises'' for ''in storage in internal revenue bond'' in two
places and ''; except'' for '', notwithstanding that the time specified
in any bond given for the withdrawal of the spirits entered in storage
in such cask or package has not expired, except''.
Subsec. (b)(2), (3). Pub. L. 96-39, 807(a)(4)(B), substituted ''on
bonded premises'' for ''in storage in internal revenue bond''.
1976 -- Subsecs. (a) to (c). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section 206(f) of Pub. L. 85-859, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided:
''(1) The amendments made by this section (amending this section and
sections 5005, 5232, 5242, and 5243 of this title) shall apply with
respect to:
''(A) distilled spirits which on the date of the enactment of this
Act (Sept. 2, 1958) are in internal revenue bonded warehouses or are in
transit to or between such warehouses, and in respect of which the
8-year bonding period has not expired before the date of enactment of
this Act; and
''(B) distilled spirits which after the date of the enactment of this
Act (Sept. 2, 1958) are entered for deposit in an internal revenue
bonded warehouse.
''(2) If the 8 years from the date of original entry of any distilled
spirits for deposit in internal revenue bonded warehouses expires at any
time during the 10-day period which begins on the date of the enactment
of this Act (Sept. 2, 1958), the amendments made by this section shall
apply with respect to such spirits if (and only if) before the close of
such 10-day period there is filed with the Secretary of the Treasury or
his delegate either --
''(A) a consent of surety which changes (for periods on and after the
date of the enactment of this Act) the condition based on the withdrawal
of spirits from the internal revenue bonded warehouse within 8 years
from the date of original entry for deposit to a condition based on the
withdrawal of spirits from the internal revenue bonded warehouse within
20 years from the date of original entry for deposit, or
''(B) a bond which applies to periods on and after the date of the
enactment of this Act and which satisfies the requirements of the
Internal Revenue Code of 1986 (formerly I.R.C. 1954), as amended by this
section, and is conditioned on the withdrawal of spirits from the
internal revenue bonded warehouse within 20 years from the date of
original entry for deposit.''
26 USC 5007. Collection of tax on distilled spirits
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax on distilled spirits removed from bonded premises
The tax on domestic distilled spirits and on distilled spirits
removed from customs custody under section 5232 shall be paid in
accordance with section 5061.
(b) Collection of tax on imported distilled spirits and perfumes
containing distilled spirits
(1) Distilled spirits
The internal revenue tax imposed by section 5001(a)(1) and (2) upon
imported distilled spirits shall be collected by the Secretary and
deposited as internal revenue collections, under such regulations as the
Secretary may prescribe. Section 5688 shall be applicable to the
disposition of imported spirits.
(2) Perfumes containing distilled spirits
The internal revenue tax imposed by section 5001(a)(3) upon imported
perfumes containing distilled spirits shall be collected by the
Secretary and deposited as internal revenue collections, under such
regulations as the Secretary may prescribe.
(c) Cross references
(1) For authority of the Secretary to make determinations and
assessments of internal revenue taxes and penalties, see section
6201(a).
(2) For authority to assess tax on distilled spirits not bonded, see
section 5006(c).
(3) For provisions relating to payment of tax, under certain
conditions, on distilled spirits withdrawn free of tax, denatured
distilled spirits, articles, and volatile fruit-flavor concentrates, see
section 5001(a)(5), (6), and (7).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1322;
amended Pub. L. 94-455, title XIX, 1905(b)(2)(A), 1906(b)(13)(A),
Oct. 4, 1976, 90 Stat. 1822, 1834; Pub. L. 96-39, title VIII,
807(a)(5), July 26, 1979, 93 Stat. 280.)
A prior section 5007, act Aug. 16, 1954, ch. 736, 68A Stat. 600,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Prior section 5007(c) related to ''payment of tax on alcoholic
compounds from Puerto Rico and Virgin Islands''. See section 7652 of
this title.
Prior section 5007(e)(1) related to ''assessment for deficiencies in
production and excess of materials used'' and ''requirement''. See
sections 5004(b)(1) and 5006(a)(3) of this title.
Prior section 5007(e)(2) related to ''relief from assessment for
deficiencies in production and excess of materials used'' and is
obsolete.
1979 -- Subsec. (a). Pub. L. 96-39 struck out ''(1) General'' before
''The tax on domestic'' and par. (2) which related to distilled spirits
withdrawn to bottling premises under withdrawal bond.
1976 -- Subsec. (a)(2). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (b)(1). Pub. L. 94-455, 1905(b)(2)(A), 1906(b)(13)(A),
struck out second sentence ''Such tax shall be in addition to any
customs duty imposed under the Tariff Act of 1930 (46 Stat. 590; 19
U.S.C., chapter 4), or any subsequent act.'' and ''or his delegate''
after ''Secretary'' wherever appearing.
Subsecs. (b)(2), (c)(1). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary'' wherever appearing.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by section 1905(b)(2)(A) of Pub. L. 94-455 effective on
first day of first month which begins more than 90 days after Oct. 4,
1976, see section 1905(d) of Pub. L. 94-455, set out as a note under
section 5005 of this title.
26 USC 5008. Abatement, remission, refund, and allowance for loss or
destruction of distilled spirits
TITLE 26 -- INTERNAL REVENUE CODE
(a) Distilled spirits lost or destroyed in bond
(1) Extent of loss allowance
No tax shall be collected in respect of distilled spirits lost or
destroyed while in bond, except that such tax shall be collected --
(A) Theft
In the case of loss by theft, unless the Secretary finds that the
theft occurred without connivance, collusion, fraud, or negligence on
the part of the proprietor of the distilled spirits plant, owner,
consignor, consignee, bailee, or carrier, or the employees or agents of
any of them;
(B) Voluntary destruction
In the case of voluntary destruction, unless such destruction is
carried out as provided in subsection (b); and
(C) Unexplained shortage
In the case of an unexplained shortage of bottled distilled spirits.
(2) Proof of loss
In any case in which distilled spirits are lost or destroyed, whether
by theft or otherwise, the Secretary may require the proprietor of the
distilled spirits plant or other person liable for the tax to file a
claim for relief from the tax and submit proof as to the cause of such
loss. In every case where it appears that the loss was by theft, the
burden shall be upon the proprietor of the distilled spirits plant or
other person responsible for the distilled spirits tax to establish to
the satisfaction of the Secretary that such loss did not occur as the
result of connivance, collusion, fraud, or negligence on the part of the
proprietor of the distilled spirits plant, owner, consignor, consignee,
bailee, or carrier, or the employees or agents of any of them.
(3) Refund of tax
In any case where the tax would not be collectible by virtue of
paragraph (1), but such tax has been paid, the Secretary shall refund
such tax.
(4) Limitations
Except as provided in paragraph (5), no tax shall be abated,
remitted, credited, or refunded under this subsection where the loss
occurred after the tax was determined (as provided in section 5006(a)).
The abatement, remission, credit, or refund of taxes provided for by
paragraphs (1) and (3) in the case of loss of distilled spirits by theft
shall only be allowed to the extent that the claimant is not indemnified
against or recompensed in respect of the tax for such loss.
(5) Applicability
The provisions of this subsection shall extend to and apply in
respect of distilled spirits lost after the tax was determined and
before completion of the physical removal of the distilled spirits from
the bonded premises.
(b) Voluntary destruction
The proprietor of the distilled spirits plant or other persons liable
for the tax imposed by this chapter or by section 7652 with respect to
any distilled spirits in bond may voluntarily destroy such spirits, but
only if such destruction is under such supervision and under such
regulations as the Secretary may prescribe.
(c) Distilled spirits returned to bonded premises
(1) In general
Whenever any distilled spirits withdrawn from bonded premises on
payment or determination of tax are returned to the bonded premises of a
distilled spirits plant under section 5215(a), the Secretary shall abate
or (without interest) credit or refund the tax imposed under section
5001(a)(1) (or the tax equal to such tax imposed under section 7652) on
the spirits so returned.
(2) Claim must be filed within 6 months of return of spirits
No allowance under paragraph (1) may be made unless claim therefor is
filed within 6 months of the date of the return of the spirits. Such
claim may be filed only by the proprietor of the distilled spirits plant
to which the spirits were returned, and shall be filed in such form as
the Secretary may by regulations prescribe.
(d) Distilled spirits withdrawn without payment of tax
The provisions of subsection (a) shall be applicable to loss of
distilled spirits occurring during transportation from bonded premises
of a distilled spirits plant to --
(1) the port of export, in case of withdrawal under section
5214(a)(4);
(2) the customs manufacturing bonded warehouse, in case of withdrawal
under section 5214(a)(6);
(3) the vessel or aircraft, in case of withdrawal under section
5214(a)(7);
(4) the foreign-trade zone, in case of withdrawal under section
5214(a)(8); and
(5) the customs bonded warehouse in the case of withdrawal under
sections 5066 and 5214(a)(9).
The provisions of subsection (a) shall be applicable to loss of
distilled spirits withdrawn from bonded premises without payment of tax
under section 5214(a)(10) for certain research, development, or testing,
until such distilled spirits are used as provided by law.
(e) Other laws applicable
All provisions of law, including penalties, applicable in respect of
the internal revenue tax on distilled spirits, shall, insofar as
applicable and not inconsistent with subsection (c), be applicable to
the credits or refunds provided for under such subsection to the same
extent as if such credits or refunds constituted credits or refunds of
such tax.
(f) Cross reference
For provisions relating to allowance for loss in case of wine spirits
withdrawn for use in wine production, see section 5373(b)(3).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1323;
amended Pub. L. 89-44, title VIII, 805(a), June 21, 1965, 79 Stat.
160; Pub. L. 90-630, 1, Oct. 22, 1968, 82 Stat. 1328; Pub. L.
91-659, 1, 2(a), (b), Jan. 8, 1971, 84 Stat. 1964; Pub. L. 94-273,
47, Apr. 21, 1976, 90 Stat. 382; Pub. L. 94-455, title XIX,
1905(a)(2), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1818, 1834; Pub. L.
95-176, 2(f), 4(e), Nov. 14, 1977, 91 Stat. 1364, 1366; Pub. L.
96-39, title VIII, 807(a)(6), July 26, 1979, 93 Stat. 281.)
A prior section 5008, act Aug. 16, 1954, ch. 736, 68A Stat. 602,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859. See sections
5205(a), (g) and 5604(a)(1) of this title.
Provisions similar to those comprising subsecs. (a)(1) to (4) and
(f)(1), (2) of this section were contained in prior sections 5011(a)(1)
to (4), 5023, 5247(e) and 5522(b), act Aug. 16, 1954, ch. 736, 68A
Stat. 604, 606, 648, 679, prior to the general revision of this chapter
by Pub. L. 85-859.
1979 -- Subsec. (a)(1)(C). Pub. L. 96-39, 807(a)(6)(A), added
subpar. (C).
Subsec. (a)(5). Pub. L. 96-39, 807(a)(6)(B), substituted ''before''
for ''prior to the completion'' and struck out provisions relating to
the applicability of this subsection where the loss occurred after the
time prescribed for the withdrawal of the distilled spirits from the
bonded premises under section 5006(a)(2) and relating to the
applicability of this paragraph to any loss of distilled spirits for
which abatement, remission, credit, or refund of tax is allowed under
subsec. (c).
Subsec. (b). Pub. L. 96-39, 807(a)(6)(C), struck out ''(1) Distilled
spirits in bond'' before ''The proprietor of'' and provisions relating
to distilled spirits withdrawn for rectification or bottling.
Subsec. (c). Pub. L. 96-39, 807(a)(6)(C), added subsec. (c).
Former subsec. (c), which related to loss of distilled spirits
withdrawn from bond for rectification or bottling, was struck out.
Subsec. (d). Pub. L. 96-39, 807(a)(6)(D), redesignated subsec. (f)
as (d). Former subsec. (d), which related to distilled spirits
returned to bonded premises, was struck out.
Subsec. (e). Pub. L. 96-39, 807(a)(6)(D), (E), redesignated subsec.
(g) as (e) and substituted ''subsection (c)'' for ''subsections (b)(2),
(c), and (d)'' and ''under such subsection'' for ''under such
subsections''. Former subsec. (e), which related to samples of
distilled spirits used for analysis or testing by United States, was
struck out.
Subsec. (f). Pub. L. 96-39, 807(a)(6)(D), redesignated subsec. (h)
as (f). Former subsec. (f) redesignated (d).
Subsecs. (g), (h). Pub. L. 96-39, 807(a)(6)(D), redesignated
subsecs. (g) and (h) as (e) and (f), respectively.
1977 -- Subsec. (d). Pub. L. 95-176, 2(f), reenacted par. (1) and
substituted heading ''General'' for ''Allowance of tax'' and ''(or the
tax equal to such tax imposed under section 7652)'' for ''or under
section 7652''; added pars. (2) and (3); and redesignated as par.
(4) provisions of former par. (2) and inserted reference to allowance
of claims under par. (2) or (3).
Subsec. (f)(5). Pub. L. 95-176, 4(e), added par. (5).
1976 -- Subsec. (b)(1). Pub. L. 94-455, 1905(a)(2)(A),
1906(b)(13)(A), inserted ''or by section 7652'' after ''tax imposed by
this chapter'' and struck out ''or his delegate'' after ''Secretary''.
Subsec. (b)(2). Pub. L. 94-455, 1905(a)(2)(B), 1906(b)(13)(A),
struck out ''or his delegate'' after ''Secretary'' and inserted '', or
under section 7652'' after ''under subpart B of this part''.
Subsec. (c)(1). Pub. L. 94-455, 1905(a)(2)(C), 1906(b)(13)(A),
struck out ''or his delegate'' after ''Secretary'' wherever appearing
and inserted ''or under section 7652'' after ''under section
5001(a)(1)''.
Subsec. (c)(2), (3). Pub. L. 94-273 substituted ''computation year''
for ''fiscal year'' wherever appearing.
Subsec. (c)(5). Pub. L. 94-455, 1906(b)(13)(A), struck out ''or his
delegate'' after ''Secretary''.
Subsec. (d)(1). Pub. L. 94-455, 1905(a)(2)(C), (D), 1906(b)(13)(A),
struck out ''on or after July 1, 1959,'' after ''from bonded premises,''
and ''or his delegate'' after ''Secretary'' and inserted ''or under
section 7652'' after ''under section 5001(a)(1)''.
1971 -- Subsec. (b)(2). Pub. L. 91-659, 2(a), struck out condition
that the distilled spirits can be destroyed only before bottling and
permitted destruction after completion of bottling so long as the
distilled spirits are on the bottling premises and added taxes imposed
under subpart B of this Part as additional taxes which can be claimed
for abatement, remission, credit or refund.
Subsec. (c)(1)(A). Pub. L. 91-659, 1, added cl. (iii).
Subsec. (c)(5). Pub. L. 91-659, 2(b), permits distilled spirits
returned to bottling premises to be treated for purposes of the various
loss provisions as though they had not been removed from the bottling
premises.
1968 -- Subsec. (c)(1). Pub. L. 90-630 inserted provisions allowing
abatement, remission, and refund if the casualty loss occurs after
completion of the packaging but before the spirits have been removed
from the premises of the distilled spirits plant to which the spirits
were removed from bond.
1965 -- Subsec. (d)(2). Pub. L. 89-44 struck out final clause
prohibiting the allowance of a claim in respect to any distilled spirits
withdrawn from bonded premises of a distilled spirits plant more than 6
months prior to the date of such return.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 95-176 effective on first day of first calendar
month beginning more than 90 days after Nov. 14, 1977, see section 7 of
Pub. L. 95-176, set out as a note under section 5003 of this title.
Amendment by section 1905(a)(2) of Pub. L. 94-455 effective on first
day of first month which begins more than 90 days after Oct. 4, 1976,
see section 1905(d) of Pub. L. 94-455, set out as a note under section
5005 of this title.
Amendment by Pub. L. 91-659 effective on first day of first calendar
month which begins more than 90 days after Jan. 8, 1971, see section 6
of Pub. L. 91-659, set out as an Effective Date note under section 5066
of this title.
Section 4 of Pub. L. 90-630 provided that:
''(a) For purposes of subsection (b), the effective date of this Act
is the first day of the first calendar month which begins more than 90
days after the date of the enactment of this Act (Oct. 22, 1968).
''(b) The amendments made by the first section of this Act (amending
this section) shall apply only to losses sustained on or after such
effective date. The amendments made by section 2 (amending section 5062
of this title and section 1313 of Title 19, Customs Duties) shall apply
only to articles exported on or after such effective date. The
amendments made by section 3 (amending section 5232 of this title) shall
apply only to withdrawals from customs custody on or after such
effective date.''
Section 805(g)(1) of Pub. L. 89-44 provided that: ''The amendments
made by subsections (a), (c), (e), and (f)(6) (amending this section and
sections 5062, 5215, and 5608 of this title) shall take effect on July
1, 1965.''
Subsec. (c)(1) of this section to be treated as including a reference
to section 5041 of this title with respect to distilled spirits returned
to the bonded premises of distilled spirits plants during 1980, see
section 808(d) of Pub. L. 96-39, set out as a note under section 5061
of this title.
26 USC ( 5009. Repealed. Pub. L. 96-39, title VIII, 807(a)(7), July
26, 1979, 93 Stat. 281)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72
Stat. 1327; amended Pub. L. 94-455, title XIX, 1905(a)(3),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1818, 1834, related to drawback
on exportation of distilled spirits in casks or packages.
A prior section 5009, act Aug. 16, 1954, ch. 736, 68A Stat. 603,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859. See sections
5205(c)(1), (f), (i)(4) and 5206(c) of this title.
Repeal effective Jan. 1, 1980, see section 810 of Pub. L. 96-39,
set out as an Effective Date of 1979 Amendment note under section 5001
of this title.
26 USC 5010. Credit for wine content and for flavors content
TITLE 26 -- INTERNAL REVENUE CODE
(a) Allowance of credit
(1) Wine content
On each proof gallon of the wine content of distilled spirits, there
shall be allowed a credit against the tax imposed by section 5001 (or
7652) equal to the excess of --
(A) $13.50, over
(B) the rate of tax which would be imposed on the wine under section
5041(b) but for its removal to bonded premises.
(2) Flavors content
On each proof gallon of the flavors content of distilled spirits,
there shall be allowed a credit against the tax imposed by section 5001
(or 7652) equal to $13.50.
(3) Fractional part of proof gallon
In the case of any fractional part of a proof gallon of the wine
content, or of the flavors content, of distilled spirits, a
proportionate credit shall be allowed.
(b) Time for determining and allowing credit
(1) In general
The credit allowable by subsection (a) --
(A) shall be determined at the same time the tax is determined under
section 5006 (or 7652) on the distilled spirits containing the wine or
flavors, and
(B) shall be allowable at the time the tax imposed by section 5001
(or 7652) on such distilled spirits is payable as if the credit
allowable by this section constituted a reduction in the rate of tax.
(2) Determination of content in the case of imports
For purposes of this section, the wine content, and the flavors
content, of imported distilled spirits shall be established by such
chemical analysis, certification, or other methods as may be set forth
in regulations prescribed by the Secretary.
(c) Definitions
For purposes of this section --
(1) Wine content
(A) In general
The term ''wine content'' means alcohol derived from wine.
(B) Wine
The term ''wine'' --
(i) means wine on which tax would be imposed by paragraph (1), (2),
or (3) of section 5041(b) but for its removal to bonded premises, and
(ii) does not include any substance which has been subject to
distillation at a distilled spirits plant after receipt in bond.
(2) Flavors content
(A) In general
Except as provided in subparagraph (B), the term ''flavors content''
means alcohol derived from flavors of a type for which drawback is
allowable under section 5134.
(B) Exceptions
The term ''flavors content'' does not include --
(i) alcohol derived from flavors made at a distilled spirits plant,
(ii) alcohol derived from flavors distilled at a distilled spirits
plant, and
(iii) in the case of any distilled spirits product, alcohol derived
from flavors to the extent such alcohol exceeds (on a proof gallon
basis) 2 1/2 percent of the finished product.
(Added Pub. L. 96-598, 6(a), Dec. 24, 1980, 94 Stat. 3488; amended
Pub. L. 98-369, div. A, title I, 27(a)(2), July 18, 1984, 98 Stat. 507;
Pub. L. 100-647, title V, 5063(a), Nov. 10, 1988, 102 Stat. 3681;
Pub. L. 101-508, title XI, 11201(a)(2), Nov. 5, 1990, 104 Stat.
1388-415.)
A prior section 5010, act Aug. 16, 1954, ch. 736, 68A Stat. 603,
related to miscellaneous stamp provisions, prior to the general revision
of this chapter by Pub. L. 85-859.
A prior section 5011, act Aug. 16, 1954, ch. 736, 68A Stat. 604,
related to abatement, remission, refund and allowance for loss or
destruction of distilled spirits, prior to the general revision of this
chapter by Pub. L. 85-859.
A prior section 5012, act Aug. 16, 1954, ch. 736, 68A Stat. 605,
related to drawback on exportation of distilled spirits, prior to the
general revision of this chapter by Pub. L. 85-859.
1990 -- Subsec. (a)(1), (2). Pub. L. 101-508 substituted ''$13.50''
for ''$12.50''.
1988 -- Subsec. (c)(2)(B). Pub. L. 100-647 added cl. (ii) and
redesignated former cl. (ii) as (iii).
1984 -- Subsec. (a)(1), (2). Pub. L. 98-369 substituted ''$12.50''
for ''$10.50''.
Amendment by Pub. L. 101-508 effective Jan. 1, 1991, see section
11201(d) of Pub. L. 101-508, set out as a note under section 5001 of
this title.
Section 5063(b) of Pub. L. 100-647 provided that: ''The amendments
made by this section (amending this section) shall apply with respect to
distilled spirits withdrawn from bond after the date of the enactment of
this Act (Nov. 10, 1988).''
Amendment by Pub. L. 98-369 effective Oct. 1, 1985, see section
27(d)(1) of Pub. L. 98-369, set out as a note under section 5001 of
this title.
Section 6(c) of Pub. L. 96-598 provided that: ''The amendments made
by subsections (a) and (b) (enacting this section) shall take effect on
January 1, 1980.''
26 USC (Subpart B -- Repealed)
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 5021 to 5026. Repealed. Pub. L. 96-39, title VIII, 803(a),
July 26, 1979, 93 Stat. 274)
TITLE 26 -- INTERNAL REVENUE CODE
Section 5021, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1328, provided for imposition of a tax on rectified distilled
spirits or wines.
A prior section 5021, act Aug. 16, 1954, ch. 736, 68A Stat. 606,
related to imposition and rate of tax, prior to the general revision of
this chapter by Pub. L. 85-859.
Section 5022, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1328; amended Pub. L. 86-75, 3(a)(4), June 30, 1959, 73
Stat. 157; Pub. L. 86-564, title II, 202(a)(6), June 30, 1960, 74
Stat. 290; Pub. L. 87-72, 3(a)(6), June 30, 1961, 75 Stat. 193;
Pub. L. 87-508, 3(a)(5), June 28, 1962, 76 Stat. 114; Pub. L. 88-52,
3(a)(6), June 29, 1963, 77 Stat. 72; Pub. L. 88-348, 2(a)(6), June
30, 1964, 78 Stat. 237; Pub. L. 89-44, title V, 501(b), June 21,
1965, 79 Stat. 150, imposed a tax on cordials and liqueurs containing
wine.
A prior section 5022, acts Aug. 16, 1954, ch. 736, 68A Stat. 606;
Mar. 30, 1955, ch. 18, 3(a)(6), 69 Stat. 14; Mar. 29, 1956, ch.
115, 3(a)(6), 70 Stat. 66; Mar. 29, 1957, Pub. L. 85-12, 3(a)(4),
71 Stat. 9; June 30, 1958, Pub. L. 85-475, 3(a)(4), 72 Stat. 259,
imposed a tax on cordials and liqueurs containing wine, prior to the
general revision of this chapter by Pub. L. 85-859.
Section 5023, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1328, imposed a tax on the blending of beverage rums and
brandies.
A prior section 5023, act Aug. 16, 1954, ch. 736, 68A Stat. 606,
imposed a tax on blending of beverage brandies, prior to the general
revision of this chapter by Pub. L. 85-859.
Section 5024, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1328, indicated the sources for the definitions of
''rectifier'', ''products of rectification'', and ''distilled spirits''
and referred to other definitions relating to distilled spirits as well
as other definitions of general application to this title.
A prior section 5024, act Aug. 16, 1954, ch. 736, 68A Stat. 607,
defined ''rectifier'' and ''products of rectification'', prior to the
general revision of this chapter by Pub. L. 85-859.
Section 5025, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1328; amended Pub. L. 89-44, title VIII, 805(b),
(f)(2)-(5), June 21, 1965, 79 Stat. 161; Pub. L. 94-455, title XIX,
1905(a)(4), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1818, 1834; Pub.
L. 95-176, 5(b), 6, Nov. 14, 1977, 91 Stat. 1366, 1367, enumerated
12 exemptions from the rectification tax.
A prior section 5025, act Aug. 16, 1954, ch. 736, 68A Stat. 607,
related to exemption from rectification tax, prior to the general
revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising section 5025(e)(1), (2), (4)
of this title were contained in former sections 5023, 5217(a), and 5306
of this title, act Aug. 16, 1954, ch. 736, 68A Stat. 606, 641, 657,
prior to the general revision of this chapter by Pub. L. 85-859.
Section 5026, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1330; Pub. L. 94-455, title XIX, 1905(b)(2)(B),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1822, 1834, related to the
determination and collection of the rectification tax.
A prior section 5026, act Aug. 16, 1954, ch. 736, 68A Stat. 608,
related to determination and collection of rectification tax, prior to
the general revision of this chapter by Pub. L. 85-859.
A prior section 5027, act Aug. 16, 1954, ch. 736, 68A Stat. 609,
related to stamp provisions applicable to rectifiers, prior to the
general revision of this chapter by Pub. L. 85-859.
A prior section 5028, act Aug. 16, 1954, ch. 736, 68A Stat. 609,
related to cross references for penalty provisions, prior to the general
revision of this chapter by Pub. L. 85-859.
Repeal effective Jan. 1, 1980, see section 810 of Pub. L. 96-39,
set out as an Effective Date of 1979 Amendment note under section 5001
of this title.
26 USC Subpart C -- Wines
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5041. Imposition and rate of tax.
5042. Exemption from tax.
5043. Collection of taxes on wines.
5044. Refund of tax on unmerchantable wine.
5045. Cross references.
A prior subpart C, comprising sections 5041 to 5045, related to
wines, prior to the general revision of this chapter by Pub. L.
85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1313.
26 USC 5041. Imposition and rate of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Imposition
There is hereby imposed on all wines (including imitation,
substandard, or artificial wine, and compounds sold as wine) having not
in excess of 24 percent of alcohol by volume, in bond in, produced in,
or imported into, the United States, taxes at the rates shown in
subsection (b), such taxes to be determined as of the time of removal
for consumption or sale. All wines containing more than 24 percent of
alcohol by volume shall be classed as distilled spirits and taxed
accordingly. Still wines shall include those wines containing not more
than 0.392 gram of carbon dioxide per hundred milliliters of wine;
except that the Secretary may by regulations prescribe such tolerances
to this maximum limitation as may be reasonably necessary in good
commercial practice.
(b) Rates of tax
(1) On still wines containing not more than 14 percent of alcohol by
volume, $1.07 per wine gallon;
(2) On still wines containing more than 14 percent and not exceeding
21 percent of alcohol by volume, $1.57 per wine gallon;
(3) On still wines containing more than 21 percent and not exceeding
24 percent of alcohol by volume, $3.15 per wine gallon;
(4) On champagne and other sparkling wines, $3.40 per wine gallon;
and
(5) On artificially carbonated wines, $3.30 per wine gallon.
(c) Credit for small domestic producers
(1) Allowance of credit
Except as provided in paragraph (2), in the case of a person who
produces not more than 250,000 wine gallons of wine during the calendar
year, there shall be allowed as a credit against any tax imposed by this
title (other than chapters 2, 21, and 22) of 90 cents per wine gallon on
the 1st 100,000 wine gallons of wine (other than wine described in
subsection (b)(4)) which are removed during such year for consumption or
sale and which have been produced at qualified facilities in the United
States.
(2) Reduction in credit
The credit allowable by paragraph (1) shall be reduced (but not below
zero) by 1 percent for each 1,000 wine gallons of wine produced in
excess of 150,000 wine gallons of wine during the calendar year.
(3) Time for determining and allowing credit
The credit allowable by paragraph (1) --
(A) shall be determined at the same time the tax is determined under
subsection (a) of this section, and
(B) shall be allowable at the time any tax described in paragraph (1)
is payable as if the credit allowable by this subsection constituted a
reduction in the rate of such tax.
(4) Controlled groups
Rules similar to rules of section 5051(a)(2)(B) shall apply for
purposes of this subsection.
(5) Denial of deduction
Any deduction under subtitle A with respect to any tax against which
a credit is allowed under this subsection shall only be for the amount
of such tax as reduced by such credit.
(6) Regulations
The Secretary may prescribe such regulations as may be necessary to
prevent the credit provided in this subsection from benefiting any
person who produces more than 250,000 wine gallons of wine during a
calendar year and to assure proper reduction of such credit for persons
producing more than 150,000 wine gallons of wine during a calendar year.
(d) Wine gallon
For the purpose of this chapter, the term ''wine gallon'' means a
United States gallon of liquid measure equivalent to the volume of 231
cubic inches. On lesser quantities the tax shall be paid
proportionately (fractions of less than one-tenth gallon being converted
to the nearest one-tenth gallon, and five-hundredths gallon being
converted to the next full one-tenth gallon).
(e) Tolerances
Where the Secretary finds that the revenue will not be endangered
thereby, he may by regulation prescribe tolerances (but not greater than
1/2 of 1 percent) for bottles and other containers, and, if such
tolerances are prescribed, no assessment shall be made and no tax shall
be collected for any excess in any case where the contents of a bottle
or other container are within the limit of the applicable tolerance
prescribed.
(f) Illegally produced wine
Notwithstanding subsection (a), any wine produced in the United
States at any place other than the bonded premises provided for in this
chapter shall (except as provided in section 5042 in the case of
tax-free production) be subject to tax at the rate prescribed in
subsection (b) at the time of production and whether or not removed for
consumption or sale.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1331;
amended Pub. L. 86-75, 3(a)(5), June 30, 1959, 73 Stat. 157; Pub. L.
86-564, title II, 202(a)(7), June 30, 1960, 74 Stat. 290; Pub. L.
87-72, 3(a)(7), June 30, 1961, 75 Stat. 193; Pub. L. 87-508, 3(a)(6),
June 28, 1962, 76 Stat. 114; Pub. L. 88-52, 3(a)(7), June 29, 1963, 77
Stat. 72; Pub. L. 88-348, 2(a)(7), June 30, 1964, 78 Stat. 237; Pub.
L. 89-44, title V, 501(c), title VIII, 806(a), June 21, 1965, 79 Stat.
150, 162; Pub. L. 93-490, 6(a), Oct. 26, 1974, 88 Stat. 1468; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub.
L. 100-647, title VI, 6101(a), Nov. 10, 1988, 102 Stat. 3710; Pub. L.
101-508, title XI, 11201(b)(1), (2), Nov. 5, 1990, 104 Stat. 1388-415,
1388-416.)
A prior section 5041, acts Aug. 16, 1954, ch. 736, 68A Stat. 609;
Mar. 30, 1955, ch. 18, 3(a)(7), 69 Stat. 14; Mar. 29, 1956, ch.
115, 3(a)(7), 70 Stat. 66; Mar. 29, 1957, Pub. L. 85-12, 3(a)(5),
71 Stat. 9; June 30, 1958, Pub. L. 85-475, 3(a)(5), 72 Stat. 259,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1990 -- Subsec. (b)(1). Pub. L. 101-508, 11201(b)(1)(A),
substituted ''$1.07'' for ''17 cents''.
Subsec. (b)(2). Pub. L. 101-508, 11201(b)(1)(B), substituted
''$1.57'' for ''67 cents''.
Subsec. (b)(3). Pub. L. 101-508, 11201(b)(1)(C), substituted
''$3.15'' for ''$2.25''.
Subsec. (b)(5). Pub. L. 101-508, 11201(b)(1)(D), substituted
''$3.30'' for ''$2.40''.
Subsecs. (c) to (f). Pub. L. 101-508, 11201(b)(2), added subsec.
(c) and redesignated former subsecs. (c) to (e) as (d) to (f),
respectively.
1988 -- Subsecs. (d), (e). Pub. L. 100-647 added subsec. (d) and
redesignated former subsec. (d) as (e).
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
1974 -- Subsec. (a). Pub. L. 93-490 substituted ''0.392'' for
''0.277''.
1965 -- Subsec. (a). Pub. L. 89-44, 806(a), substituted ''0.277''
for ''0.256''.
Subsec. (b). Pub. L. 89-44, 501(c)(1)-(5), struck out provisions at
end of each par. setting out a specified reduced rate to be applied on
and after July 1, 1965.
1964 -- Subsec. (b). Pub. L. 88-348 substituted ''July 1, 1965'' for
''July 1, 1964'' in five places.
1963 -- Subsec. (b). Pub. L. 88-52 substituted ''July 1, 1964'' for
''July 1, 1963'' in five places.
1962 -- Subsec. (b). Pub. L. 87-508 substituted ''July 1, 1963'' for
''July 1, 1962'' in five places.
1961 -- Subsec. (b). Pub. L. 87-72 substituted ''July 1, 1962'' for
''July 1, 1961'' in five places.
1960 -- Subsec. (b). Pub. L. 86-564 substituted ''July 1, 1961'' for
''July 1, 1960'' in five places.
1959 -- Subsec. (b). Pub. L. 86-75 substituted ''July 1, 1960'' for
''July 1, 1959'' in five places.
Amendment by Pub. L. 101-508 effective Jan. 1, 1991, see section
11201(d) of Pub. L. 101-508, set out as a note under section 5001 of
this title.
Section 6101(b) of Pub. L. 100-647 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to wine
removed after December 31, 1988.''
Section 6(b) of Pub. L. 93-490 provided that: ''The amendment made
by this section (amending this section) shall take effect on the first
day of the first calendar month which begins more than 90 days after the
date of enactment of this Act (Oct. 26, 1974).''
Amendment by section 501(c) of Pub. L. 89-44 applicable on and after
July 1, 1965, see section 701(d) of Pub. L. 89-44, set out as a note
under section 5701 of this title.
Section 806(d)(1) of Pub. L. 89-44 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect on July
1, 1965.''
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Imposition of tax on wine, exception for small domestic producers,
exception for certain small wholesale or retail dealers, credit against
tax, liability for tax and method of payment, controlled groups, other
laws applicable, and definitions, see section 11201(e) of Pub. L.
101-508, set out as a note under section 5001 of this title.
Loss or destruction of wine not taxable under this section, see
section 5370 of this title.
Penalty for failure to pay tax imposed on wine, see section 5661 of
this title.
26 USC 5042. Exemption from tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax-free production
(1) Cider
Subject to regulations prescribed by the Secretary, the
noneffervescent product of the normal alcoholic fermentation of apple
juice only, which is produced at a place other than a bonded wine cellar
and without the use of preservative methods or materials, and which is
sold or offered for sale as cider and not as wine or as a substitute for
wine, shall not be subject to tax as wine nor to the provisions of
subchapter F.
(2) Wine for personal or family use
Subject to regulations prescribed by the Secretary --
(A) Exemption
Any adult may, without payment of tax, produce wine for personal or
family use and not for sale.
(B) Limitation
The aggregate amount of wine exempt from tax under this paragraph
with respect to any household shall not exceed --
(i) 200 gallons per calendar year if there are 2 or more adults in
such household, or
(ii) 100 gallons per calendar year if there is only 1 adult in such
household.
(C) Adults
For purposes of this paragraph, the term ''adult'' means an
individual who has attained 18 years of age, or the minimum age (if any)
established by law applicable in the locality in which the household is
situated at which wine may be sold to individuals, whichever is greater.
(3) Experimental wine
Subject to regulations prescribed by the Secretary, any scientific
university, college of learning, or institution of scientific research
may produce, receive, blend, treat, and store wine, without payment of
tax, for experimental or research use but not for consumption (other
than organoleptical tests) or sale, and may receive such wine spirits
without payment of tax as may be necessary for such production.
(b) Cross references
(1) For provisions relating to exemption of tax on losses of wine
(including losses by theft or authorized destruction), see section 5370.
(2) For provisions exempting from tax samples of wine, see section
5372.
(3) For provisions authorizing withdrawals of wine free of tax or
without payment of tax, see section 5362.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1331;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 95-458, 2(a), Oct. 14, 1978, 92 Stat. 1255.)
A prior section 5042, act Aug. 16, 1954, ch. 736, 68A Stat. 610,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1978 -- Subsec. (a)(2). Pub. L. 95-458 substituted in heading ''Wine
for personal or family use'' for ''Family wine'' and in text provision
permitting an adult to produce 200 gallons of wine per calendar year if
there are 2 or more adults in the household or 100 gallons of wine per
calendar year if there is one adult in the household for provision which
permitted the duly registered head of any family to produce an amount of
wine not exceeding 200 gallons of wine per annum.
1976 -- Subsec. (a)(1) to (3). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Section 2(c) of Pub. L. 95-458 provided that: ''The amendments made
by this section (amending this section and sections 5051, 5053, 5054,
5092, 5222, and 5674 of this title) shall take effect on the first day
of the first calendar month which begins more than 90 days after the
date of the enactment of this Act (Oct. 14, 1978).''
26 USC 5043. Collection of taxes on wines
TITLE 26 -- INTERNAL REVENUE CODE
(a) Persons liable for payment
The taxes on wine provided for in this subpart shall be paid --
(1) Bonded wine cellars
In the case of wines removed from any bonded wine cellar, by the
proprietor of such bonded wine cellar; except that --
(A) in the case of any transfer of wine in bond as authorized under
the provisions of section 5362(b), the liability for payment of the tax
shall become the liability of the transferee from the time of removal of
the wine from the transferor's premises, and the transferor shall
thereupon be relieved of such liability; and
(B) in the case of any wine withdrawn by a person other than such
proprietor without payment of tax as authorized under the provisions of
section 5362(c), the liability for payment of the tax shall become the
liability of such person from the time of the removal of the wine from
the bonded wine cellar, and such proprietor shall thereupon be relieved
of such liability.
(2) Foreign wine
In the case of foreign wines, by the importer thereof.
(3) Other wines
Immediately, in the case of any wine produced, imported, received,
removed, or possessed otherwise than as authorized by law, by any person
producing, importing, receiving, removing, or possessing such wine; and
all such persons shall be jointly and severally liable for such tax with
each other as well as with any proprietor, transferee, or importer who
may be liable for the tax under this subsection.
(b) Payment of tax
The taxes on wines shall be paid in accordance with section 5061.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1332;
amended Pub. L. 94-455, title XIX, 1905(b)(2)(C), Oct. 4, 1976, 90
Stat. 1822; Pub. L. 96-39, title VIII, 807(a)(8), July 26, 1979, 93
Stat. 281.)
A prior section 5043, act Aug. 16, 1954, ch. 736, 68A Stat. 610,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Subsec. (a)(1)(A). Pub. L. 96-39 struck out ''between bonded
wine cellars'' after ''transfer of wine in bond''.
1976 -- Subsec. (b). Pub. L. 94-455 substituted ''The taxes'' for
''Except as provided in subsection (a)(3), the taxes''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
26 USC 5044. Refund of tax on unmerchantable wine
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
In the case of any wine produced in the United States and returned to
bond as unmerchantable under section 5361 --
(1) any tax imposed by section 5041 shall, if paid, be refunded or
credited, without interest, to the proprietor of the bonded wine cellar
to which such wine is delivered; or
(2) if any tax so imposed has not been paid, the person liable for
the tax may be relieved of liability therefor,
under such regulations as the Secretary may prescribe. Such
regulations may provide that claim for refund or credit under paragraph
(1), or relief from liability under paragraph (2), may be made only with
respect to minimum quantities specified in such regulations. The burden
of proof in all such cases shall be on the applicant.
(b) Date of filing
No claim under subsection (a) shall be allowed unless filed within 6
months after the date of the return of the wine to bond.
(c) Status of wine returned to bond
All provisions of this chapter applicable to wine in bond on the
premises of a bonded wine cellar and to removals thereof shall be
applicable to wine returned to bond under the provisions of this
section.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1332;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5044, act Aug. 16, 1954, ch. 736, 68A Stat. 611,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
26 USC 5045. Cross references
TITLE 26 -- INTERNAL REVENUE CODE
For provisions relating to the establishment and operation of
wineries, see subchapter F, and for penalties pertaining to wine, see
subchapter J.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1333.)
A prior section 5045, act Aug. 16, 1954, ch. 736, 68A Stat. 611,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
26 USC Subpart D -- Beer
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5051. Imposition and rate of tax.
5052. Definitions.
5053. Exemptions.
5054. Determination and collection of tax on beer.
5055. Drawback of tax.
5056. Refund and credit of tax, or relief from liability.
A prior subpart D, comprising sections 5051 to 5057 of this title,
related to beer, prior to the general revision of this chapter by Pub.
L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1313.
26 USC 5051. Imposition and rate of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Rate of tax
(1) In general
A tax is hereby imposed on all beer brewed or produced, and removed
for consumption or sale, within the United States, or imported into the
United States. Except as provided in paragraph (2), the rate of such
tax shall be $18 for every barrel containing not more than 31 gallons
and at a like rate for any other quantity or for fractional parts of a
barrel.
(2) Reduced rate for certain domestic production
(A) $7 a barrel rate
In the case of a brewer who produces not more than 2,000,000 barrels
of beer during the calendar year, the per barrel rate of the tax imposed
by this section shall be $7 on the first 60,000 barrels of beer which
are removed in such year for consumption or sale and which have been
brewed or produced by such brewer at qualified breweries in the United
States.
(B) Controlled groups
In the case of a controlled group, the 2,000,000 barrel quantity
specified in subparagraph (A) shall be applied to the controlled group,
and the 60,000 barrel quantity specified in subparagraph (A) shall be
apportioned among the brewers who are component members of such group in
such manner as the Secretary or his delegate shall by regulations
prescribed. For purposes of the preceding sentence, the term
''controlled group'' has the meaning assigned to it by subsection (a) of
section 1563, except that for such purposes the phrase ''more than 50
percent'' shall be substituted for the phrase ''at least 80 percent'' in
each place it appears in such subsection. Under regulations prescribed
by the Secretary or his delegate, principles similar to the principles
of the preceding two sentences shall be applied to a group of brewers
under common control where one or more of the brewers is not a
corporation.
(C) Regulations
The Secretary may prescribe such regulations as may be necessary to
prevent the reduced rates provided in this paragraph from benefiting any
person who produces more than 2,000,000 barrels of beer during a
calendar year.
(3) Tolerances
Where the Secretary or his delegate finds that the revenue will not
be endangered thereby, he may by regulations prescribe tolerances for
barrels and fractional parts of barrels, and, if such tolerances are
prescribed, no assessment shall be made and no tax shall be collected
for any excess in any case where the contents of a barrel or a
fractional part of a barrel are within the limit of the applicable
tolerance prescribed.
(b) Assessment on materials used in production in case of fraud
Nothing contained in this subpart or subchapter G shall be construed
to authorize an assessment on the quantity of materials used in
producing or purchased for the purpose of producing beer, nor shall the
quantity of materials so used or purchased be evidence, for the purpose
of taxation, of the quantity of beer produced; but the tax on all beer
shall be paid as provided in section 5054, and not otherwise; except
that this subsection shall not apply to cases of fraud, and nothing in
this subsection shall have the effect to change the rules of law
respecting evidence in any prosecution or suit.
(c) Illegally produced beer
The production of any beer at any place in the United States shall be
subject to tax at the rate prescribed in subsection (a) and such tax
shall be due and payable as provided in section 5054(a)(3) unless --
(1) such beer is produced in a brewery qualified under the provisions
of subchapter G, or
(2) such production is exempt from tax under section 5053(e)
(relating to beer for personal or family use).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1333;
amended Pub. L. 86-75, 3(a)(6), June 30, 1959, 73 Stat. 157; Pub. L.
86-564, title II, 202(a)(8), June 30, 1960, 74 Stat. 290; Pub. L.
87-72, 3(a)(8), June 30, 1961, 75 Stat. 193; Pub. L. 87-508, 3(a)(7),
June 28, 1962, 76 Stat. 114; Pub. L. 88-52, 3(a)(8), June 29, 1963, 77
Stat. 72; Pub. L. 88-348, 2(a)(8), June 30, 1964, 78 Stat. 237; Pub.
L. 89-44, title V, 501(d), June 21, 1965, 79 Stat. 150; Pub. L.
94-529, 1, Oct. 17, 1976, 90 Stat. 2485; Pub. L. 95-458, 2(b)(2)(A),
Oct. 14, 1978, 92 Stat. 1256; Pub. L. 101-508, title XI, 11201(c),
Nov. 5, 1990, 104 Stat. 1388-416.)
A prior section 5051, act Aug. 16, 1954, ch. 736, 68A Stat. 611,
as amended by acts Mar. 30, 1955, ch. 18, 3(a)(8), 69 Stat. 14;
Mar. 29, 1956, ch. 115, 3(a)(8), 70 Stat. 66; Mar. 29, 1957, Pub.
L. 85-12, 3(a)(6), 71 Stat. 9; June 30, 1958, Pub. L. 85-475,
3(a)(6), 72 Stat. 259, consisted of provisions similar to those
comprising this section, prior to the general revision of this chapter
by Pub. L. 85-859.
1990 -- Subsec. (a)(1). Pub. L. 101-508, 11201(c)(1), substituted
''$18'' for ''$9''.
Subsec. (a)(2)(C). Pub. L. 101-508, 11201(c)(2), added subpar. (C).
1978 -- Subsec. (c). Pub. L. 95-458 added subsec. (c).
1976 -- Subsec. (a). Pub. L. 94-529 reduced the excise tax on beer
for small brewers to $7 per barrel on the first 60,000 barrels produced
in the United States and removed for sale or consumption or sale during
the calendar year, the reduced rate to be applicable only to brewers
producing no more than 2 million barrels of beer in a calendar year, and
inserted provision that if several brewers are members of a controlled
group, the 2-million barrel limit is to be applied to the controlled
group and the 60,000-barrel limit is to be apportioned among the members
of the controlled group in accordance with Treasury Department
regulations promulgated by the Secretary or his delegate.
1965 -- Subsec. (a). Pub. L. 89-44 struck out sentence providing for
the imposition on and after July 1, 1965, of a tax of $8 in lieu of the
tax imposed by the section.
1964 -- Subsec. (a). Pub. L. 88-348 substituted ''July 1, 1965'' for
''July 1, 1964''.
1963 -- Subsec. (a). Pub. L. 88-52 substituted ''July 1, 1964'' for
''July 1, 1963''.
1962 -- Subsec. (a). Pub. L. 87-508 substituted ''July 1, 1963'' for
''July 1, 1962''.
1961 -- Subsec. (a). Pub. L. 87-72 substituted ''July 1, 1962'' for
''July 1, 1961''.
1960 -- Subsec. (a). Pub. L. 86-564 substituted ''July 1, 1961'' for
''July 1, 1960''.
1959 -- Subsec. (a). Pub. L. 86-75 substituted ''July 1, 1960'' for
''July 1, 1959''.
Amendment by Pub. L. 101-508 effective Jan. 1, 1991, see section
11201(d) of Pub. L. 101-508, set out as a note under section 5001 of
this title.
Amendment by Pub. L. 95-458 effective on first day of first calendar
month beginning more than 90 days after Oct. 14, 1978, see section 2(c)
of Pub. L. 95-458, set out as a note under section 5042 of this title.
Section 2 of Pub. L. 94-529 provided that: ''The amendment made by
the first section of this Act (amending this section) shall take effect
on the first day of the first calendar year which begins after the date
of the enactment of this Act (Oct. 17, 1976).''
Amendment by Pub. L. 89-44 applicable on and after July 1, 1965, see
section 701(d) of Pub. L. 89-44, set out as a note under section 5701
of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Imposition of tax on beer, exception for small domestic producers,
exception for certain small wholesale or retail dealers, credit against
tax, liability for tax and method of payment, controlled groups, other
laws applicable, and definitions, see section 11201(e) of Pub. L.
101-508, set out as a note under section 5001 of this title.
Method of collecting tax, see section 5061 of this title.
Penalty and forfeiture for evasion of beer tax, see section 5671 of
this title.
26 USC 5052. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Beer
For purposes of this chapter (except when used with reference to
distilling or distilling material) the term beer means beer, ale,
porter, stout, and other similar fermented beverages (including sake or
similar products) of any name or description containing one-half of 1
percent or more of alcohol by volume, brewed or produced from malt,
wholly or in part, or from any substitute therefor.
(b) Gallon
For purposes of this subpart, the term gallon means the liquid
measure containing 231 cubic inches.
(c) Removed for consumption of sale
Except as provided for in the case of removal of beer without payment
of tax, the term ''removed for consumption or sale'', for the purposes
of this subpart means --
(1) Sale of beer
The sale and transfer of possession of beer for consumption at the
brewery; or
(2) Removals
Any removal of beer from the brewery.
(d) Brewer
For definition of brewer, see section 5092.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1333;
amended Pub. L. 91-673, 1(b), Jan. 12, 1971, 84 Stat. 2056.)
A prior section 5052, act Aug. 16, 1954, ch. 736, 68A Stat. 612,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1971 -- Subsec. (c)(2). Pub. L. 91-673 struck out proviso that
removal of beer shall not include beer returned to the brewery on the
same day such beer is removed from the brewery.
Amendment by Pub. L. 91-673 effective on first day of first calendar
month which begins more than 90 days after Jan. 12, 1971, see section 5
of Pub. L. 91-673, set out as a note under section 5056 of this title.
26 USC 5053. Exemptions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Removals for export
Beer may be removed from the brewery, without payment of tax, for
export, in such containers and under such regulations, and on the giving
of such notices, entries, and bonds and other security, as the Secretary
may by regulations prescribe.
(b) Removals when unfit for beverage use
When beer has become sour or damaged, so as to be incapable of use as
such, a brewer may remove the same from his brewery without payment of
tax, for manufacturing purposes, under such regulations as the Secretary
may prescribe.
(c) Removals for laboratory analysis
Beer may be removed from the brewery, without payment of tax, for
laboratory analysis, subject to such limitations and under such
regulations as the Secretary may prescribe.
(d) Removals for research, development, or testing
Under such conditions and regulations as the Secretary may prescribe,
beer may be removed from the brewery without payment of tax for use in
research, development, or testing (other than consumer testing or other
market analysis) of processes, systems, materials, or equipment relating
to beer or brewery operations.
(e) Beer for personal or family use
Subject to regulation prescribed by the Secretary, any adult may,
without payment of tax, produce beer for personal or family use and not
for sale. The aggregate amount of beer exempt from tax under this
subsection with respect to any household shall not exceed --
(1) 200 gallons per calendar year if there are 2 or more adults in
such household, or
(2) 100 gallons per calendar year if there is only 1 adult in such
household.
For purposes of this subsection, the term ''adult'' means an
individual who has attained 18 years of age, or the minimum age (if any)
established by law applicable in the locality in which the household is
situated at which beer may be sold to individuals, whichever is greater.
(f) Removal as supplies for certain vessels and aircraft
For exemption as to supplies for certain vessels and aircraft, see
section 309 of the Tariff Act of 1930, as amended (19 U.S.C. 1309).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1334;
amended Pub. L. 89-44, title VIII, 807(b), June 21, 1965, 79 Stat.
164; Pub. L. 91-673, 2, Jan. 12, 1971, 84 Stat. 2056; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub.
L. 95-458, 2(b)(1), Oct. 14, 1978, 92 Stat. 1255.)
A prior section 5053, act Aug. 16, 1954, ch. 736, 68A Stat. 612,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1978 -- Subsecs. (e), (f). Pub. L. 95-458 added subsec. (e) and
redesignated former subsec. (e) as (f).
1976 -- Subsecs. (a) to (d). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
1971 -- Subsecs. (d), (e). Pub. L. 91-673 added subsec. (d) and
redesignated former subsec. (d) as (e).
1965 -- Subsec. (a). Pub. L. 89-44 struck out ''to a foreign
country'' after ''export''.
Amendment by Pub. L. 95-458 effective on first day of first calendar
month beginning more than 90 days after Oct. 14, 1978, see section 2(c)
of Pub. L. 95-458, set out as a note under section 5042 of this title.
Amendment by Pub. L. 91-673 effective on first day of first calendar
month which begins more than 90 days after Jan. 12, 1971, see section 5
of Pub. L. 91-673, set out as a note under section 5056 of this title.
Amendment by Pub. L. 89-44 effective July 1, 1965, see section
807(c) of Pub. L. 89-44, set out as a note under section 5002 of this
title.
26 USC 5054. Determination and collection of tax on beer
TITLE 26 -- INTERNAL REVENUE CODE
(a) Time of determination
(1) Beer produced in the United States
Except as provided in paragraph (3), the tax imposed by section 5051
on beer produced in the United States shall be determined at the time it
is removed for consumption or sale, and shall be paid by the brewer
thereof in accordance with section 5061.
(2) Beer imported into the United States
Except as provided in paragraph (4), the tax imposed by section 5051
on beer imported into the United States shall be determined at the time
of the importation thereof, or, if entered for warehousing, at the time
of removal from the 1st such warehouse.
(3) Illegally produced beer
The tax on any beer produced in the United States shall be due and
payable immediately upon production unless --
(A) such beer is produced in a brewery qualified under the provisions
of subchapter G, or
(B) such production is exempt from tax under sections /1/ 5053(e)
(relating to beer for personal or family use).
(4) Unlawfully imported beer
Beer smuggled or brought into the United States unlawfully shall, for
purposes of this chapter, be held to be imported into the United States,
and the internal revenue tax shall be due and payable at the time of
such importation.
(b) Tax on returned beer
Beer which has been removed for consumption or sale and is thereafter
returned to the brewery shall be subject to all provisions of this
chapter relating to beer prior to removal for consumption or sale,
including the tax imposed by section 5051. The tax on any such returned
beer which is again removed for consumption or sale shall be determined
and paid without respect to the tax which was determined at the time of
prior removal of the beer for consumption or sale.
(c) Applicability of other provisions of law
All administrative and penal provisions of this title, insofar as
applicable, shall apply to any tax imposed by section 5051.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1334;
amended Pub. L. 94-455, title XIX, 1905(a)(5), 1906(b)(13)(A), Oct.
4, 1976, 90 Stat. 1818, 1834; Pub. L. 95-458, 2(b)(2)(B), Oct. 14,
1978, 92 Stat. 1256; Pub. L. 99-509, title VIII, 8011(b)(2), Oct. 21,
1986, 100 Stat. 1953; Pub. L. 100-647, title I, 1018(u)(19), Nov. 10,
1988, 102 Stat. 3591.)
A prior section 5054, act Aug. 16, 1954, ch. 736, 68A Stat. 613,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising subsecs. (a)(1), (2) and (b)
to (d) of this section were contained in prior sections 5055 and
5057(a), act Aug. 16, 1954, ch. 736, 68A Stat. 613, prior to the
general revision of this chapter by Pub. L. 85-859.
1988 -- Subsec. (a)(2). Pub. L. 100-647 added period at end.
1986 -- Subsec. (a)(2). Pub. L. 99-509 substituted ''if entered for
warehousing, at the time of removal from the 1st such warehouse'' for
''if entered into customs custody, at the time of removal from such
custody, and shall be paid under such regulations as the Secretary shall
prescribe.''.
1978 -- Subsec. (a)(3). Pub. L. 95-458 inserted provision excluding
from tax the beer exempt from tax under section 5053(e).
1976 -- Subsec. (a)(2). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsecs. (c), (d). Pub. L. 94-455, 1905(a)(5), redesignated subsec.
(d) as (c) and struck out former subsec. (c) respecting stamps or
other devices as evidence of payment of tax.
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of 1986,
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
Amendment by Pub. L. 99-509 applicable to articles imported, entered
for warehousing, or brought into the United States or a foreign trade
zone after Dec. 15, 1986, see section 8011(c) of Pub. L. 99-509, set
out as a note under section 5061 of this title.
Amendment by Pub. L. 95-458 effective on first day of first calendar
month beginning more than 90 days after Oct. 14, 1978, see section 2(c)
of Pub. L. 95-458, set out as a note under section 5042 of this title.
Amendment by section 1905(a)(5) of Pub. L. 94-455 effective on first
day of first month which begins more than 90 days after Oct. 4, 1976,
see section 1905(d) of Pub. L. 94-455, set out as a note under section
5005 of this title.
/1/ So in original. Probably should be ''section''.
26 USC 5055. Drawback of tax
TITLE 26 -- INTERNAL REVENUE CODE
On the exportation of beer, brewed or produced in the United States,
the brewer thereof shall be allowed a drawback equal in amount to the
tax found to have been paid on such beer, to be paid on submission of
such evidence, records and certificates indicating exportation, as the
Secretary may by regulations prescribe. For the purpose of this
section, exportation shall include delivery for use as supplies on the
vessels and aircraft described in section 309 of the Tariff Act of 1930,
as amended (19 U.S.C. 1309).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1335;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5055, act Aug. 16, 1954, ch. 736, 68A Stat. 613,
related to ''determination and collection of tax on beer'', prior to the
general revision of this chapter by Pub. L. 85-859. See section
5054(a)(1), (2), (c), (d) of this title.
Provisions similar to those comprising this section were contained in
prior section 5056, act Aug. 16, 1954, ch. 736, 68A Stat. 613, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC 5056. Refund and credit of tax, or relief from liability
TITLE 26 -- INTERNAL REVENUE CODE
(a) Beer returned or voluntarily destroyed
Any tax paid by any brewer on beer produced in the United States may
be refunded or credited to the brewer, without interest, or if the tax
has not been paid, the brewer may be relieved of liability therefor,
under such regulations as the Secretary may prescribe, if such beer is
returned to any brewery of the brewer or is destroyed under the
supervision required by such regulations. In determining the amount of
tax due on beer removed on any day, the quantity of beer returned to the
same brewery from which removed shall be allowed, under such regulations
as the Secretary may prescribe, as an offset against or deduction from
the total quantity of beer removed from that brewery on the day of such
return.
(b) Beer lost by fire, theft, casualty, or act of God
Subject to regulations prescribed by the Secretary, the tax paid by
any brewer on beer produced in the United States may be refunded or
credited to the brewer, without interest, or if the tax has not been
paid, the brewer may be relieved of liability therefor, if such beer is
lost, whether by theft or otherwise, or is destroyed or otherwise
rendered unmerchantable by fire, casualty, or act of God before the
transfer of title thereto to any other person. In any case in which
beer is lost or destroyed, whether by theft or otherwise, the Secretary
may require the brewer to file a claim for relief from the tax and
submit proof as to the cause of such loss. In every case where it
appears that the loss was by theft, the first sentence shall not apply
unless the brewer establishes to the satisfaction of the Secretary that
such theft occurred before removal from the brewery and occurred without
connivance, collusion, fraud, or negligence on the part of the brewer,
consignor, consignee, bailee, or carrier, or the employees or agents of
any of them.
(c) Limitations
No claim under this section shall be allowed (1) unless filed within
6 months after the date of the return, loss, destruction, or rendering
unmerchantable or (2) if the claimant was indemnified by insurance or
otherwise in respect of the tax.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1335;
amended Pub. L. 91-673, 1(a), Jan. 12, 1971, 84 Stat. 2056; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
A prior section 5056, act Aug. 16, 1954, ch. 736, 68A Stat. 613,
related to ''drawback of tax'' prior to the general revision of this
chapter by Pub. L. 85-859. See section 5055 of this title.
A prior section 5057, act Aug. 16, 1954, ch. 736, 68A Stat. 613,
related to refund and credit of tax or relief from liability, prior to
the general revision of this chapter by Pub. L. 85-859.
1976 -- Subsecs. (a), (b). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
1971 -- Subsec. (a). Pub. L. 91-673 inserted provision permitting
credit or refund of tax if the beer is returned to any brewery of the
brewer who paid the tax, and provided for offset or deduction against
amount of beer removed from the brewery on the day of return if the beer
is returned to the same brewery from which it was withdrawn.
Subsec. (b). Pub. L. 91-673 inserted provisions for credit or refund
or relief from liability of tax when the beer is lost by theft or
otherwise or rendered unmerchantable by fire, casualty or act of God,
before the transfer of title to any other party, and required the brewer
to file claim for relief from the tax and submit proof of the cause of
the loss, and in the case of theft, to further prove that such theft
occurred before removal from the brewery and without connivance,
collusion, fraud, or negligence on the part of the brewer, consignor,
consignee, bailee, or carrier, or the employees or agents of any of
them.
Subsec. (c). Pub. L. 91-673 substantially reenacted subsec. (c) to
reflect changes in subsec. (b).
Section 5 of Pub. L. 91-673 provided that: ''The amendments made by
the first four sections of this Act (enacting section 5417 of this title
and amending this section and sections 5052, 5053, 5401, 5402, 5411,
5412, and 5416 of this title) shall take effect on the first day of the
first calendar month which begins more than 90 days after the date of
the enactment of this Act (Jan. 12, 1971).''
26 USC Subpart E -- General Provisions
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5061. Method of collecting tax.
5062. Refund and drawback in case of exportation.
(5063. Repealed.)
5064. Losses resulting from disaster, vandalism, or malicious
mischief.
5065. Territorial extent of law.
5066. Distilled spirits for use of foreign embassies, legations,
etc.
5067. Cross reference.
A prior subpart E, comprising sections 5061 to 5065, related to
general provisions, prior to the general revision of this chapter by
Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1313.
1978 -- Pub. L. 95-423, 1(b), Oct. 6, 1978, 92 Stat. 936,
substituted ''Losses resulting from disaster, vandalism, or malicious
mischief'' for ''Losses caused by disaster'' in item 5064.
1971 -- Pub. L. 91-659, 3(b), Jan. 8, 1971, 84 Stat. 1966, added
item 5066 and redesignated former item 5066 as 5067.
1965 -- Pub. L. 89-44, title V, 501(e), June 21, 1965, 79 Stat.
150, struck out item 5063 ''Floor stocks tax refunds on distilled
spirits, wines, cordials, and beer''.
26 USC 5061. Method of collecting tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Collection by return
The taxes on distilled spirits, wines, and beer shall be collected on
the basis of a return. The Secretary shall, by regulation, prescribe
the period or event for which such return shall be filed, the time for
filing such return, the information to be shown in such return, and the
time for payment of such tax.
(b) Exceptions
Notwithstanding the provisions of subsection (a), any taxes imposed
on, or amounts to be paid or collected in respect of, distilled spirits,
wines, and beer under --
(1) section 5001(a)(5), (6), or (7),
(2) section 5006(c) or (d),
(3) section 5041(e), /1/
(4) section 5043(a)(3),
(5) section 5054(a)(3) or (4), or
(6) section 5505(a),
shall be immediately due and payable at the time provided by such
provisions (or if no specific time for payment is provided, at the time
the event referred to in such provision occurs). Such taxes and amounts
shall be assessed and collected by the Secretary on the basis of the
information available to him in the same manner as taxes payable by
return but with respect to which no return has been filed.
(c) Import duties
The internal revenue taxes imposed by this part shall be in addition
to any import duties unless such duties are specifically designated as
being in lieu of internal revenue tax.
(d) Time for collecting tax on distilled spirits, wines, and beer
(1) In general
Except as otherwise provided in this subsection, in the case of
distilled spirits, wines, and beer to which this part applies (other
than subsection (b) of this section) which are withdrawn under bond for
deferred payment of tax, the last day for payment of such tax shall be
the 14th day after the last day of the semimonthly period during which
the withdrawal occurs.
(2) Imported articles
In the case of distilled spirits, wines, and beer which are imported
into the United States (other than in bulk containers) --
(A) In general
The last day for payment of tax shall be the 14th day after the last
day of the semimonthly period during which the article is entered into
the customs territory of the United States.
(B) Special rule for entry for warehousing
Except as provided in subparagraph (D), in the case of an entry for
warehousing, the last day for payment of tax shall not be later than the
14th day after the last day of the semimonthly period during which the
article is removed from the 1st such warehouse.
(C) Foreign trade zones
Except as provided in subparagraph (D) and in regulations prescribed
by the Secretary, articles brought into a foreign trade zone shall,
notwithstanding any other provision of law, be treated for purposes of
this subsection as if such zone were a single customs warehouse.
(D) Exception for articles destined for export
Subparagraphs (B) and (C) shall not apply to any article which is
shown to the satisfaction of the Secretary to be destined for export.
(3) Distilled spirits, wines, and beer brought into the United States
from Puerto Rico
In the case of distilled spirits, wines, and beer which are brought
into the United States (other than in bulk containers) from Puerto Rico,
the last day for payment of tax shall be the 14th day after the last day
of the semimonthly period during which the article is brought into the
United States.
(4) Special rule where 14th day falls on Saturday, Sunday, or holiday
Notwithstanding section 7503, if, but for this paragraph, the due
date under this subsection for payment of tax would fall on a Saturday,
Sunday, or a legal holiday (within the meaning of section 7503), such
due date shall be the immediately preceding day which is not a Saturday,
Sunday, or such a holiday.
(e) Payment by electronic fund transfer
(1) In general
Any person who in any 12-month period ending December 31, was liable
for a gross amount equal to or exceeding $5,000,000 in taxes imposed on
distilled spirits, wines, or beer by sections 5001, 5041, and 5051 (or
7652), respectively, shall pay such taxes during the succeeding calendar
year by electronic fund transfer to a Federal Reserve Bank.
(2) Electronic fund transfer
The term ''electronic fund transfer'' means any transfer of funds,
other than a transaction originated by check, draft, or similar paper
instrument, which is initiated through an electronic terminal,
telephonic instrument, or computer or magnetic tape so as to order,
instruct, or authorize a financial institution to debit or credit an
account.
(3) Controlled groups
(A) In general
In the case of a controlled group of corporations, all corporations
which are component members of such group shall be treated as 1
taxpayer. For purposes of the preceding sentence, the term ''controlled
group of corporations'' has the meaning given to such term by subsection
(a) of section 1563, except that ''more than 50 percent'' shall be
substituted for ''at least 80 percent'' each place it appears in such
subsection.
(B) Controlled groups which include nonincorporated persons
Under regulations prescribed by the Secretary, principles similar to
the principles of subparagraph (A) shall apply to a group of persons
under common control where 1 or more of such persons is not a
corporation.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1335;
amended Pub. L. 94-455, title XIX, 1905(a)(6), (b)(2)(E)(iii),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1819, 1822, 1834; Pub. L. 96-39,
title VIII, 804(b), 807(a)(9), July 26, 1979, 93 Stat. 274, 281; Pub.
L. 98-369, div. A, title I, 27(c)(1), July 18, 1984, 98 Stat. 509;
Pub. L. 99-509, title VIII, 8011(b)(1), Oct. 21, 1986, 100 Stat. 1952;
Pub. L. 99-514, title XVIII, 1801(c)(1), Oct. 22, 1986, 100 Stat.
2786; Pub. L. 100-647, title II, 2003(b)(1)(A), (B), Nov. 10, 1988,
102 Stat. 3598; Pub. L. 101-508, title XI, 11201(b)(3), 11704(a)(21),
Nov. 5, 1990, 104 Stat. 1388-416, 1388-519.)
A prior section 5061, act Aug. 16, 1954, ch. 736, 68A Stat. 614,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising subsec. (d) of this section
were contained in former section 5001(c), act Aug. 16, 1954, ch. 736,
68A Stat. 597, prior to the general revision of this chapter by Pub.
L. 85-859.
1990 -- Subsec. (b)(3). Pub. L. 101-508, 11201(b)(3),
11704(a)(21), amended par. (3) identically, substituting ''section
5041(e)'' for ''section 5041(d)''.
1988 -- Subsec. (d)(2)(A), (B), (3). Pub. L. 100-647 substituted
''last day of the semimonthly period during'' for ''date on''.
1986 -- Subsec. (d). Pub. L. 99-509 amended subsec. (d) generally,
substituting provisions relating to time for collecting tax on distilled
spirits, wines, and beer, for provisions relating to extension of time
for collecting tax on distilled spirits.
Subsec. (e)(3). Pub. L. 99-514 added par. (3).
1984 -- Subsec. (e). Pub. L. 98-369 added subsec. (e).
1979 -- Subsec. (a). Pub. L. 96-39, 807(a)(9)(A), struck out
''rectified distilled spirits and wines,'' after ''distilled spirits,
wines,''.
Subsec. (b). Pub. L. 96-39, 807(a)(9)(B), in provisions preceding
par. (1) struck out ''rectified distilled spirits and wines'' after
''spirits, wines,'' and redesignated pars. (4) to (7) as (3) to (6),
respectively. Former par. (3), which made reference to section
5026(a)(2), was struck out.
Subsec. (d). Pub. L. 96-39, 804(b), added subsec. (d).
1976 -- Subsec. (a). Pub. L. 94-455, 1905(a)(6)(A),
1906(b)(13)(A), struck out last sentence providing for continued payment
of taxes by stamp until the Secretary shall by regulation provide for
collection of the taxes on the basis of a return and struck out ''or his
delegate'' after ''Secretary''.
Subsec. (b). Pub. L. 94-455, 1905(a)(6)(B), substituted the
exceptions provisions for discretion method of collection providing that
''Whether or not the method of collecting any tax imposed by this part
is specifically provided in this part, any such tax may, under
regulations prescribed by the Secretary or his delegate, be collected by
stamp, coupon, serially-numbered ticket, or the use of tax-stamp
machines, or by such other reasonable device or method as may be
necessary or helpful in securing collection of the tax.''
Subsec. (c). Pub. L. 94-455, 1905(a)(6)(C), substituted the import
duties provision for provision respecting applicability of other
provisions of law and reading ''All administrative and penalty
provisions of this title, insofar as applicable, shall apply to the
collection of any tax which the Secretary or his delegate determines or
prescribes shall be collected in any manner provided in this section.''
Subsec. (d). Pub. L. 94-455, 1905(b)(2)(E)(iii), struck out subsec.
(d) which provided cross reference to section 5689 for penalty and
forfeiture for tampering with a stamp machine.
Amendment by section 11201(b)(3) of Pub. L. 101-508 effective Jan.
1, 1991, see section 11201(d) of Pub. L. 101-508, set out as a note
under section 5001 of this title.
Section 2003(b)(2) of Pub. L. 100-647 provided that: ''The
amendments made by paragraph (1) (amending this section and section 5703
of this title) shall take effect as if included in the amendments made
by section 8011 of the Omnibus Budget Reconciliation Act of 1986 (Pub.
L. 99-509).''
Amendment by Pub. L. 99-514 effective, except as otherwise provided,
as if included in the provisions of the Tax Reform Act of 1984, Pub. L.
98-369, div. A, to which such amendment relates, see section 1881 of
Pub. L. 99-514, set out as a note under section 48 of this title.
Section 8011(c) of Pub. L. 99-509, as amended by Pub. L. 99-514,
2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) In general. -- Except as provided in paragraph (2), the
amendments made by this section (amending this section and sections
5054, 5703, and 5704 of this title) shall apply to removals during
semimonthly periods ending on or after December 31, 1986.
''(2) Imported articles, etc. -- Subparagraphs (B) and (C) of section
5703(b)(2) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)
(as added by this section), paragraphs (2) and (3) of section 5061(d) of
such Code (as amended by this section), and the amendments made by
subsections (a)(2) and (b)(2) (amending sections 5054 and 5704 of this
title) shall apply to articles imported, entered for warehousing, or
brought into the United States or a foreign trade zone after December
15, 1986.
''(3) Special rule for distilled spirits and tobacco for semimonthly
period ending december 15, 1986. -- With respect to remittances of --
''(A) taxes imposed on distilled spirits by section 5001 or 7652 of
such Code, and
''(B) taxes imposed on tobacco products and cigarette papers and
tubes by section 5701 or 7652 of such Code,
for the semimonthly period ending December 15, 1986, the last day for
payment of such remittances shall be January 14, 1987.
''(4) Treatment of smokeless tobacco in inventory on June 30, 1986.
-- The tax imposed by section 5701(e) of the Internal Revenue Code of
1986 shall not apply to any smokeless tobacco which --
''(A) on June 30, 1986, was in the inventory of the manufacturer or
importer, and
''(B) on such date was in a form ready for sale.''
Amendment by Pub. L. 98-369 applicable to taxes required to be paid
on or after Sept. 30, 1984, see section 27(d)(2) of Pub. L. 98-369,
set out as a note under section 5001 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by section 1905(a)(6), (b)(2)(E)(iii) of Pub. L. 94-455
effective on first day of first month which begins more than 90 days
after Oct. 4, 1976, see section 1905(d) of Pub. L. 94-455, set out as
a note under section 5005 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
For provisions directing that if any amendments made by subtitle A or
subtitle C of title XI ( 1101-1147 and 1171-1177) or title XVIII (
1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such
plan amendment shall not be required to be made before the first plan
year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L.
99-514, as amended, set out as a note under section 401 of this title.
Section 808 of Pub. L. 96-39, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that:
''(a) Liability for Payment of Tax. -- Except as otherwise provided
in this section, the tax on all distilled spirits which have been
withdrawn from bond on determination of tax and on which tax has not
been paid by the close of December 31, 1979, shall become due on January
1, 1980, and shall be payable in accordance with section 5061 of the
Internal Revenue Code of 1986 (formerly I.R.C. 1954).
''(b) Treatment of Controlled Stock and Bulk Wine. --
''(1) Election with respect to controlled stock. -- The proprietor of
a distilled spirits plant may elect to convert any distilled spirits or
wine which on January 1, 1980, is controlled stock.
''(2) Election with respect to wine. -- The proprietor of a distilled
spirits plant may elect to convert any bulk wine which on January 1,
1980, is on the premises of a distilled spirits plant.
''(3) Effect of election. -- If an election under paragraph (1) or
(2) is in effect with respect to any controlled stock or wine --
''(A) any distilled spirits, wine, or rectification tax previously
paid or determined on such controlled stock or wine shall be abated or
(without interest) credited or refunded under such regulations as the
Secretary shall prescribe, and
''(B) such controlled stock or wine shall be treated as distilled
spirits or wine on which tax has not been paid or determined.
''(4) Making of elections. -- The elections under this subsection
shall be made at such time and in such manner as the Secretary shall by
regulations prescribe.
''(c) Taxpaid Stock. --
''(1) Taxpaid stock may remain on bonded premises during 1980. --
Section 5612(a) of the Internal Revenue Code of 1986 (relating to
forfeiture of taxpaid distilled spirits remaining on bonded premises)
shall not apply during 1980.
''(2) Separation of taxpaid stock. -- All distilled spirits and wine
on which tax has been paid and which are on the bonded premises of a
distilled spirits plant shall be physically separated from other
distilled spirits and wine. Such separation shall be by the use of
separate tanks, rooms, or buildings, or by partitioning, or by such
other methods as the Secretary finds will distinguish such distilled
spirits and wine from other distilled spirits and wine on the bonded
premises of the distilled spirits plant.
''(d) Return of Distilled Spirits Products Containing Taxpaid Wine.
-- With respect to distilled spirits returned to the bonded premises of
distilled spirits plants during 1980, section 5008(c)(1) of the Internal
Revenue Code of 1986 (relating to refunds for distilled spirits returned
to bonded premises) shall be treated as including a reference to section
5041 of such Code.
''(e) Return of Distilled Spirits Products Containing Other Alcoholic
Ingredients. -- With respect to distilled spirits to which alcoholic
ingredients other than distilled spirits have been added and which have
been withdrawn from a distilled spirits plant before January 1, 1980,
section 5215(a) of the Internal Revenue Code of 1986 shall apply only if
such spirits are returned to the distilled spirits plant from which
withdrawn.
''(f) Secretary Defined. -- For purposes of this section, the term
'Secretary' means the Secretary of the Treasury or his delegate.''
/1/ So in original. Probably should be section ''5041(f),''.
26 USC 5062. Refund and drawback in case of exportation
TITLE 26 -- INTERNAL REVENUE CODE
(a) Refund
Under such regulations as the Secretary may prescribe, the amount of
any internal revenue tax erroneously or illegally collected in respect
to exported articles may be refunded to the exporter of the article,
instead of to the manufacturer, if the manufacturer waives any claim for
the amount so to be refunded.
(b) Drawback
On the exportation of distilled spirits or wines manufactured,
produced, bottled, or packaged in casks or other bulk containers in the
United States on which an internal revenue tax has been paid or
determined, and which are contained in any cask or other bulk container,
or in bottles packed in cases or other containers, there shall be
allowed, under regulations prescribed by the Secretary, a drawback equal
in amount to the tax found to have been paid or determined on such
distilled spirits or wines. In the case of distilled spirits, the
preceding sentence shall not apply unless the claim for drawback is
filed by the bottler or packager of the spirits and unless such spirits
have been marked, especially for export, under regulations prescribed by
the Secretary. The Secretary is authorized to prescribe regulations
governing the determination and payment or crediting of drawback of
internal revenue tax on spirits and wines eligible for drawback under
this subsection, including the requirements of such notices, bonds,
bills of lading, and other evidence indicating payment or determination
of tax and exportation as shall be deemed necessary.
(c) Exportation of imported liquors
(1) Allowance of tax
Upon the exportation of imported distilled spirits, wines, and beer
upon which the duties and internal revenue taxes have been paid or
determined incident to their importation into the United States, and
which have been found after entry to be unmerchantable or not to conform
to sample or specifications, and which have been returned to customs
custody, the Secretary shall, under such regulations as he shall
prescribe, refund, remit, abate, or credit, without interest, to the
importer thereof, the full amount of the internal revenue taxes paid or
determined with respect to such distilled spirits, wines, or beer.
(2) Destruction in lieu of exportation
At the option of the importer, such imported distilled spirits,
wines, and beer, after return to customs custody, may be destroyed under
customs supervision and the importer thereof granted relief in the same
manner and to the same extent as provided in this subsection upon
exportation.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1336;
amended Pub. L. 88-539, 1, Aug. 31, 1964, 78 Stat. 746; Pub. L.
89-44, title VIII, 805(f)(6), June 21, 1965, 79 Stat. 161; Pub. L.
90-630, 2(a), Oct. 22, 1968, 82 Stat. 1328; Pub. L. 94-455, title XIX,
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95-176, 1, Nov.
14, 1977, 91 Stat. 1363; Pub. L. 98-369, div. A, title IV, 454(c)(1),
July 18, 1984, 98 Stat. 820.)
A prior section 5062, act Aug. 16, 1954, ch. 736, 68A Stat. 614,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1984 -- Subsec. (b). Pub. L. 98-369 substituted ''have been marked''
for ''have been stamped or restamped, and marked''.
1977 -- Subsec. (b). Pub. L. 95-176 substituted in first sentence
''manufactured, produced, bottled, or packaged in casks or other bulk
containers'' and ''other bulk container'' for ''manufactured or
produced'' and ''package'' and in last sentence ''spirits and wines
eligible for drawback under this subsection, including the
requirements'' for ''domestic distilled spirits and wines, including the
requirement''.
1976 -- Subsecs. (a), (b), (c)(1). Pub. L. 94-455 struck out ''or
his delegate'' after ''Secretary'' wherever appearing.
1968 -- Subsec. (b). Pub. L. 90-630 permitted, under Treasury
regulations, drawback of the tax where the stamping, restamping, or
marking is done after the spirits have been removed from the original
bottling plant.
1965 -- Subsec. (c)(1). Pub. L. 89-44 struck out ''within six months
of their release therefrom'' after ''customs custody''.
1964 -- Subsec. (c). Pub. L. 88-539 added subsec. (c).
Amendment by Pub. L. 98-369 effective July 1, 1985, see section
456(b) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by Pub. L. 95-176 effective on first day of first calendar
month beginning more than 90 days after Nov. 14, 1977, see section 7 of
Pub. L. 95-176, set out as a note under section 5003 of this title.
Amendment by Pub. L. 90-630 applicable only to articles exported on
or after first day of first calendar month which begins more than 90
days after Oct. 22, 1968, see section 4 of Pub. L. 90-630, set out as
a note under section 5008 of this title.
Amendment by Pub. L. 89-44 effective July 1, 1965, see section
805(g)(1) of Pub. L. 89-44, set out as a note under section 5008 of
this title.
Section 2 of Pub. L. 88-539 provided that: ''The amendment made by
the first section of this Act (amending this section) shall apply with
respect to articles exported or destroyed after the date of the
enactment of this Act (Aug. 31, 1964).''
26 USC ( 5063. Repealed. Pub. L. 89-44, title V, 501(e), June 21,
1965, 79 Stat. 150)
TITLE 26 -- INTERNAL REVENUE CODE
Section, Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1336; Pub. L. 86-75, 3(b)(1), June 30, 1959, 73 Stat. 157; Pub. L.
86-564, title II, 202(b)(1), June 30, 1960, 74 Stat. 290; Pub. L.
87-72, 3(b)(1), June 30, 1961, 75 Stat. 193; Pub. L. 87-508,
3(b)(1), June 28, 1962, 76 Stat. 114; Pub. L. 88-52, 3(b)(1)(A), June
29, 1963, 77 Stat. 72; Pub. L. 88-348, 2(b)(1)(A), June 30, 1964, 78
Stat. 237, made provision for floor stocks refunds on distilled
spirits, wines, cordials, and beer and set out limitations on the
eligibility for such refunds or credits.
A prior section 5063, act Aug. 16, 1954, ch. 736, 68A Stat. 615,
consisted of provisions similar to those comprising section 5063, prior
to the general revision of this chapter by Pub. L. 85-859.
Repeal applicable on and after July 1, 1965, see section 701(d) of
Pub. L. 89-44, set out as an Effective Date of 1965 Amendment note
under section 5701 of this title.
26 USC 5064. Losses resulting from disaster, vandalism, or malicious
mischief
TITLE 26 -- INTERNAL REVENUE CODE
(a) Payments
The Secretary, under such regulations as he may prescribe, shall pay
(without interest) an amount equal to the amount of the internal revenue
taxes paid or determined and customs duties paid on distilled spirits,
wines, and beer previously withdrawn, which were lost, rendered
unmarketable, or condemned by a duly authorized official by reason of --
(1) fire, flood, casualty, or other disaster, or
(2) breakage, destruction, or other damage (but not including theft)
resulting from vandalism or malicious mischief,
if such disaster or damage occurred in the United States and if such
distilled spirits, wines, or beer were held and intended for sale at the
time of such disaster or other damage. The payments provided for in
this section shall be made to the person holding such distilled spirits,
wines, or beer for sale at the time of such disaster or other damage.
(b) Claims
(1) Period for making claim; proof
No claim shall be allowed under this section unless --
(A) filed within 6 months after the date on which such distilled
spirits, wines, or beer were lost, rendered unmarketable, or condemned
by a duly authorized official, and
(B) the claimant furnishes proof satisfactory to the Secretary that
the claimant --
(i) was not indemnified by any valid claim of insurance or otherwise
in respect of the tax, or tax and duty, on the distilled spirits, wines,
or beer covered by the claim; and
(ii) is entitled to payment under this section.
(2) Minimum claim
Except as provided in paragraph (3)(A), no claim of less than $250
shall be allowed under this section with respect to any disaster or
other damage (as the case may be).
(3) Special rules for major disasters
If the President has determined under the Disaster Relief and
Emergency Assistance Act that a ''major disaster'' (as defined in such
Act) has occurred in any part of the United States, and if the disaster
referred to in subsection (a)(1) occurs in such part of the United
States by reason of such major disaster, then --
(A) paragraph (2) shall not apply, and
(B) the filing period set forth in paragraph (1)(A) shall not expire
before the day which is 6 months after the date on which the President
makes the determination that such major disaster has occurred.
(4) Regulations
Claims under this section shall be filed under such regulations as
the Secretary shall prescribe.
(c) Destruction of distilled spirits, wines, or beer
When the Secretary has made payment under this section in respect of
the tax, or tax and duty, on the distilled spirits, wines, or beer
condemned by a duly authorized official or rendered unmarketable, such
distilled spirits, wines, or beer shall be destroyed under such
supervision as the Secretary may prescribe, unless such distilled
spirits, wines, or beer were previously destroyed under supervision
satisfactory to the Secretary.
(d) Products of Puerto Rico
The provisions of this section shall not be applicable in respect of
distilled spirits, wines, and beer of Puerto Rican manufacture brought
into the United States and so lost or rendered unmarketable or
condemned.
(e) Other laws applicable
All provisions of law, including penalties, applicable in respect of
internal revenue taxes on distilled spirits, wines, and beer shall,
insofar as applicable and not inconsistent with this section, be applied
in respect of the payments provided for in this section to the same
extent as if such payments constituted refunds of such taxes.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1337;
amended Pub. L. 91-606, title III, 301(i), Dec. 31, 1970, 84 Stat.
1759; Pub. L. 93-288, title VI, 602(i), May 22, 1974, 88 Stat. 164;
Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834;
Pub. L. 95-423, 1(a), Oct. 6, 1978, 92 Stat. 935; Pub. L. 96-39,
title VIII, 807(a)(10), July 26, 1979, 93 Stat. 282; Pub. L. 100-707,
title I, 109(l), Nov. 23, 1988, 102 Stat. 4709.)
The Disaster Relief and Emergency Assistance Act, referred to in
subsec. (b)(3), is Pub. L. 93-288, May 22, 1974, 88 Stat. 143, as
amended, known as the Robert T. Stafford Disaster Relief and Emergency
Assistance Act, which is classified principally to chapter 68 ( 5121 et
seq.) of Title 42, The Public Health and Welfare. For complete
classification of this Act to the Code, see Short Title note set out
under section 5121 of Title 42 and Tables.
A prior section 5064, act Aug. 16, 1954, ch. 736, 68A Stat. 615,
related to ''territorial extent of law'', prior to the general revision
of this chapter by Pub. L. 85-859. See section 5065 of this title.
1988 -- Subsec. (b)(3). Pub. L. 100-707 substituted ''and Emergency
Assistance Act'' for ''Act of 1974''.
1979 -- Pub. L. 96-39 struck out ''rectified products,'' after
''distilled spirits, wines,'' wherever appearing.
1978 -- Pub. L. 95-423 substituted ''Losses resulting from disaster,
vandalism, or malicious mischief'' for ''Losses caused by disaster'' in
section catchline.
Subsec. (a). Pub. L. 95-423 substituted provisions authorizing the
Secretary, under such regulations as he may prescribe, to pay the
prescribed amount on distilled spirits, etc., lost, rendered
unmarketable, or condemned by a duly authorized official by reason of
fire, flood, casualty or other disaster, breakage, destruction, or other
damage (but not including theft) resulting from vandalism or malicious
mischief, for provisions authorizing such payment where the President
has determined under the Disaster Relief Act of 1974 that a ''major
disaster'' has occurred, and that distilled spirits, etc., were lost,
rendered unmarketable, or condemned by a duly authorized official by
reason of such disaster occurring after June 30, 1959.
Subsec. (b). Pub. L. 95-423 redesignated par. (1) as (1)(A),
substituted provisions disallowing a claim unless filed within 6 months
after such distilled spirits, etc., were lost, rendered unmarketable or
condemned, for provisions disallowing a claim unless filed within 6
months after the President determined that such disaster occurred, and
added par. (1)(B); in par. (2) substituted provisions limiting claims
to no less than $250, except as provided in par. (3)(A), for provisions
demanding proof that claimant was not indemnified by any valid claim of
insurance and that he is entitled to payment under this section; and
added pars. (3) and (4).
1976 -- Subsecs. (a) to (c). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
1974 -- Subsec. (a). Pub. L. 93-288 substituted ''Disaster Relief
Act of 1974'' for ''Disaster Relief Act of 1970''.
1970 -- Subsec. (a). Pub. L. 91-606 substituted ''Disaster Relief
Act of 1970'' for ''Act of September 30, 1950 (42 U.S.C. 1855)''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section 1(c) of Pub. L. 95-423 provided that: ''The amendments made
by this section (amending this section) shall apply to disasters (or
other damage) occurring on or after the first day of the first calendar
month which begins more than 90 days after the date of the enactment of
this Act (Oct. 6, 1978).''
Amendment by Pub. L. 93-288 effective Apr. 1, 1974, see section 605
of Pub. L. 93-288, set out as an Effective Date note under section 5121
of Title 42, The Public Health and Welfare.
Amendment by Pub. L. 91-606 effective Dec. 31, 1970, see section
304 of Pub. L. 91-606, set out as a note under section 165 of this
title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Section 210(a)(3) of Pub. L. 85-859, as amended by Pub. L. 99-514,
2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''Provisions having
the effect of section 5064 of the Internal Revenue Code of 1986
(formerly I.R.C. 1954) (as such section is included in chapter 51 of
such Code as amended by section 201 of this Act) shall be deemed to be
included in the Internal Revenue Code of 1986, effective on the day
following the date of the enactment of this Act (Sept. 2, 1958), and
shall apply with respect to disasters occurring after such date of
enactment, and not later than June 30, 1959.''
Section 207 of Pub. L. 85-859 provided for payment of an amount
equal to the amount of taxes paid under section 3150(a) of the Internal
Revenue Code of 1939 on fermented malt liquor which was lost, rendered
unmarketable, or condemned by reason of the floods of 1951 or the
hurricanes of 1954, under certain conditions and under regulations to be
prescribed.
Section 208 of Pub. L. 85-859 provided for payment of an amount
equal to the amount of taxes and customs duties paid on distilled
spirits, wines, rectified products, and beer previously withdrawn, which
were lost, rendered unmarketable, or condemned by reason of a major
disaster occurring after Dec. 31, 1954, and not later than Sept. 2,
1958, under certain conditions and under regulations to be prescribed.
26 USC 5065. Territorial extent of law
TITLE 26 -- INTERNAL REVENUE CODE
The provisions of this part imposing taxes on distilled spirits,
wines, and beer shall be held to extend to such articles produced
anywhere within the exterior boundaries of the United States, whether
the same be within an internal revenue district or not.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1337.)
A prior section 5065, act Aug. 16, 1954, ch. 736, 68A Stat. 615,
made a cross reference to general administrative provisions applicable
to assessment, collection, refund, etc., of taxes, prior to the general
revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising this section were contained in
former section 5064, act Aug. 16, 1954, ch. 736, 68A Stat. 615, prior
to the general revision of this chapter by Pub. L. 85-859.
26 USC 5066. Distilled spirits for use of foreign embassies,
legations, etc.
TITLE 26 -- INTERNAL REVENUE CODE
(a) Entry into customs bonded warehouses
(1) Bottled distilled spirits withdrawn from bonded premises
Under such regulations as the Secretary may prescribe, bottled
distilled spirits may be withdrawn from bonded premises as provided in
section 5214(a)(4) for transfer to customs bonded warehouses in which
imported distilled spirits are permitted to be stored in bond for entry
therein pending withdrawal therefrom as provided in subsection (b). For
the purposes of this chapter, the withdrawal of distilled spirits from
bonded premises under the provisions of this paragraph shall be treated
as a withdrawal for exportation and all provisions of law applicable to
distilled spirits withdrawn for exportation under the provisions of
section 5214(a)(4) shall apply with respect to spirits withdrawn under
this paragraph.
(2) Bottled distilled spirits eligible for export with benefit of
drawback
Under such regulations as the Secretary may prescribe, distilled
spirits marked especially for export under the provisions of section
5062(b) may be shipped to a customs bonded warehouse in which imported
distilled spirits are permitted to be stored, and entered in such
warehouses pending withdrawal therefrom as provided in subsection (b),
and the provisions of this chapter shall apply in respect of such
distilled spirits as if such spirits were for exportation.
(3) Time deemed exported
For the purposes of this chapter, distilled spirits entered into a
customs bonded warehouse as provided in this subsection shall be deemed
exported at the time so entered.
(b) Withdrawal from customs bonded warehouses
Notwithstanding any other provisions of law, distilled spirits
entered into customs bonded warehouses under the provisions of
subsection (a) may, under such regulations as the Secretary may
prescribe, be withdrawn from such warehouses for consumption in the
United States by and for the official or family use of such foreign
governments, organizations, and individuals who are entitled to withdraw
imported distilled spirits from such warehouses free of tax. Distilled
spirits transferred to customs bonded warehouses under the provisions of
this section shall be entered, stored, and accounted for in such
warehouses under such regulations and bonds as the Secretary may
prescribe, and may be withdrawn therefrom by such governments,
organizations, and individuals free of tax under the same conditions and
procedures as imported distilled spirits.
(c) Withdrawal for domestic use
Distilled spirits entered into customs bonded warehouses as
authorized by this section may be withdrawn therefrom for domestic use,
in which event they shall be treated as American goods exported and
returned.
(d) Sale or unauthorized use prohibited
No distilled spirits withdrawn from customs bonded warehouses or
otherwise brought into the United States free of tax for the official or
family use of such foreign governments, organizations, or individuals as
are authorized to obtain distilled spirits free of tax shall be sold, or
shall be disposed of or possessed for any use other than an authorized
use. The provisions of section 5001(a)(5) are hereby extended and made
applicable to any person selling, disposing of, or possessing any
distilled spirits in violation of the preceding sentence, and to the
distilled spirits involved in any such violation.
(Added Pub. L. 91-659, 3(a), Jan. 8, 1971, 84 Stat. 1965; amended
Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834;
Pub. L. 95-176, 2(d), Nov. 14, 1977, 91 Stat. 1364; Pub. L. 96-39,
title VIII, 807(a)(11), July 26, 1979, 93 Stat. 282; Pub. L. 98-369,
div. A, title IV, 454(c)(2), July 18, 1984, 98 Stat. 820.)
A prior section 5066 was renumbered 5067.
1984 -- Subsec. (a)(2). Pub. L. 98-369 substituted ''marked'' for
''stamped or restamped, and marked,''.
1979 -- Subsec. (a)(1). Pub. L. 96-39, 807(a)(11)(A), substituted
''bottled distilled spirits'' for ''distilled spirits bottled in bond
for export under the provisions of section 5233, or bottled distilled
spirits returned to bonded premises under section 5215(b),''.
Subsec. (b). Pub. L. 96-39, 807(a)(11)(B), struck out ''or domestic
distilled spirits transferred to customs bonded warehouses under section
5521(d)(2)'' after ''the provisions of subsection (a)''.
1977 -- Subsec. (a)(1). Pub. L. 95-176 substituted par. (1) heading
''Bottled distilled spirits withdrawn from bonded premises'' for
''Distilled spirits bottled in bond for export'' and authorized
withdrawal of bottled distilled spirits returned to bonded premises
under section 5215(b) as provided in section 5214(a)(4).
1976 -- Subsecs. (a), (b). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Amendment by Pub. L. 98-369 effective July 1, 1985, see section
456(b) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 95-176 effective on first day of first calendar
month beginning more than 90 days after Nov. 14, 1977, see section 7 of
Pub. L. 95-176, set out as a note under section 5003 of this title.
Section 6 of Pub. L. 91-659 provided that: ''This Act (enacting
this section and amending sections 5008, 5173, 5178, 5215, and 5232 of
this title) shall take effect on the first day of the first calendar
month which begins more than 90 days after the date of the enactment of
this Act (Jan. 8, 1971).''
26 USC 5067. Cross reference
TITLE 26 -- INTERNAL REVENUE CODE
For general administrative provisions applicable to the assessment,
collection, refund, etc., of taxes, see subtitle F.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1338,
5066; renumbered 5067, Pub. L. 91-659, 3(a), Jan. 8, 1971, 84 Stat.
1965.)
Provisions similar to those comprising this section were contained in
former section 5065, act Aug. 16, 1954, ch. 736, 68A Stat. 615, prior
to the general revision of this chapter by Pub. L. 85-859.
26 USC PART II -- OCCUPATIONAL TAX
TITLE 26 -- INTERNAL REVENUE CODE
Subpart
A. Proprietors of distilled spirits plants, bonded wine cellars,
etc.
B. Brewer.
C. Manufacturers of stills.
D. Wholesale dealers.
E. Retail dealers.
F. Nonbeverage domestic drawback claimants.
G. General provisions.
A prior part II, consisting of subparts A to G, related to
occupational tax, prior to the general revision of this chapter by Pub.
L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1313.
1987 -- Pub. L. 100-203, title X, 10512(a)(1)(C), Dec. 22, 1987,
101 Stat. 1330-448, added item relating to subpart A.
1979 -- Pub. L. 96-39, title VIII, 807(b)(3), July 26, 1979, 93
Stat. 290, struck out item relating to subpart A ''Rectifier'' in table
of subparts comprising part II.
26 USC Subpart A -- Proprietors of Distilled Spirits Plants, Bonded Wine
Cellars, Etc.
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5081. Imposition and rate of tax.
A prior subpart A, which consisted of sections 5081 to 5084 of this
title, was repealed by Pub. L. 96-39, title VIII, 803(b), July 26,
1979, 93 Stat. 274, effective Jan. 1, 1980.
Section 5081, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1338, imposed a tax on rectifiers of distilled spirits or
wines.
Another prior section 5081, act Aug. 16, 1954, ch. 736, 68A Stat.
615, imposed a tax on rectifiers of distilled spirits or wines, prior to
the general revision of this chapter by Pub. L. 85-859.
Section 5082, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1338, defined ''rectifier''.
Another prior section 5082, act Aug. 16, 1954, ch. 736, 68A Stat.
616, defined ''rectifier'', prior to the general revision of this
chapter by Pub. L. 85-859.
Section 5083, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1338; amended Pub. L. 89-44, title VIII, 805(f)(7), June
21, 1965, 79 Stat. 161, enumerated source authority for 15 exemptions
from tax under sections 5021 and 5081 of this title.
Another prior section 5083, act Aug. 16, 1954, ch. 736, 68A Stat.
616, enumerated source authority for certain exemptions from tax under
sections 5021 and 5081 of this title, prior to the general revision of
this chapter by Pub. L. 85-859.
Section 5084, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1339, made cross references to other provisions relating to
rectification.
Another prior section 5084, act Aug. 16, 1954, ch. 736, 68A Stat.
616, made cross references to other provisions relating to
rectification, prior to the general revision of this chapter by Pub. L.
85-859.
26 USC 5081. Imposition and rate of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
Every proprietor of --
(1) a distilled spirits plant,
(2) a bonded wine cellar,
(3) a bonded wine warehouse, or
(4) a taxpaid wine bottling house,
shall pay a tax of $1,000 per year in respect of each such premises.
(b) Reduced rates for small proprietors
(1) In general
Subsection (a) shall be applied by substituting ''$500'' for
''$1,000'' with respect to any taxpayer not described in subsection (c)
the gross receipts of which (for the most recent taxable year ending
before the 1st day of the taxable period to which the tax imposed by
subsection (a) relates) are less than $500,000.
(2) Controlled group rules
All persons treated as 1 taxpayer under section 5061(e)(3) shall be
treated as 1 taxpayer for purposes of paragraph (1).
(3) Certain rules to apply
For purposes of paragraph (1), rules similar to the rules of
subparagraphs (B) and (C) of section 448(c)(3) shall apply.
(c) Exemption for small producers
Subsection (a) shall not apply with respect to any taxpayer who is a
proprietor of an eligible distilled spirits plant (as defined in section
5181(c)(4)).
(Added Pub. L. 100-203, title X, 10512(a)(1)(A), Dec. 22, 1987, 101
Stat. 1330-447; amended Pub. L. 100-647, title VI, 6106(a), (b), Nov.
10, 1988, 102 Stat. 3712.)
Prior sections 5081 to 5084 of this title constituted a former
subpart A of this part, see Prior Provisions note set out preceding this
section.
1988 -- Subsec. (b)(1). Pub. L. 100-647, 6106(b), inserted ''not
described in subsection (c)'' after ''taxpayer''.
Subsec. (c). Pub. L. 100-647, 6106(a), added subsec. (c).
Section 6106(c) of Pub. L. 100-647 provided that: ''The amendments
made by this section (amending this section) shall take effect on July
1, 1989.''
Section 10512(h) of Pub. L. 100-203 provided that:
''(1) In general. -- The amendments made by this section (enacting
this section and sections 5276 and 5731 of this title and amending
sections 5091, 5111, 5121, 5131, 5691, and 5801 of this title) shall
take effect on January 1, 1988.
''(2) All taxpayers treated as commencing in business on january 1,
1988. --
''(A) In general. -- Any person engaged on January 1, 1988, in any
trade or business which is subject to an occupational tax shall be
treated for purposes of such tax as having 1st engaged in such trade or
business on such date.
''(B) Limitation on amount of tax. -- In the case of a taxpayer who
paid an occupational tax in respect of any premises for any taxable
period which began before January 1, 1988, and includes such date, the
amount of the occupational tax imposed by reason of subparagraph (A) in
respect of such premises shall not exceed an amount equal to 1/2 the
excess (if any) of --
''(i) the rate of such tax as in effect on January 1, 1988, over
''(ii) the rate of such tax as in effect on December 31, 1987.
''(C) Occupational tax. -- For purposes of this paragraph, the term
'occupational tax' means any tax imposed under part II of subchapter A
of chapter 51, section 5276, section 5731, or section 5801 of the
Internal Revenue Code of 1986 (as amended by this section).
''(D) Due date of tax. -- The amount of any tax required to be paid
by reason of this paragraph shall be due on April 1, 1988.''
26 USC Subpart B -- Brewer
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5091. Imposition and rate of tax.
5092. Definition of brewer.
5093. Cross references.
A prior subpart B, consisting of sections 5091 to 5093, related to
brewer, prior to the general revision of this chapter by Pub. L.
85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1313.
26 USC 5091. Imposition and rate of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
Every brewer shall pay a tax of $1,000 per year in respect of each
brewery.
(b) Reduced rates for small brewers
Rules similar to the rules of section 5081(b) shall apply for
purposes of subsection (a).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1339;
amended Pub. L. 100-203, title X, 10512(a)(2), Dec. 22, 1987, 101
Stat. 1330-448.)
A prior section 5091, act Aug. 16, 1954, ch. 736, 68A Stat. 616,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1987 -- Pub. L. 100-203 amended section generally. Prior to
amendment, section read as follows: ''Every brewer shall pay $110 a
year in respect of each brewery; except that any brewer of less than
500 barrels a year shall pay the sum of $55 a year. Any beer procured
by a brewer in his own hogsheads, barrels, or kegs under the provisions
of section 5413 shall be included in calculating the liability to
brewers' special tax of both the brewer who produces the same and the
brewer who procures the same.''
Amendment by Pub. L. 100-203 effective Jan. 1, 1988, see section
10512(h) of Pub. L. 100-203, set out as an Effective Date note under
section 5081 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Due date of tax, see section 5142 of this title.
Method of payment of tax, see section 5142 of this title.
26 USC 5092. Definition of brewer
TITLE 26 -- INTERNAL REVENUE CODE
Every person who brews beer (except a person who produces only beer
exempt from tax under section 5053(e)) and every person who produces
beer for sale shall be deemed to be a brewer.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1339;
amended Pub. L. 95-458, 2(b)(3), Oct. 14, 1978, 92 Stat. 1256.)
A prior section 5092, act Aug. 16, 1954, ch. 736, 68A Stat. 617,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1978 -- Pub. L. 95-458 inserted provision which excludes from
definition of brewer a person who produces beer exempt from tax under
section 5053(e).
Amendment by Pub. L. 95-458 effective on the first day of the first
calendar month beginning more than 90 days after Oct. 14, 1978, see
section 2(c) of Pub. L. 95-458, set out as a note under section 5042 of
this title.
26 USC 5093. Cross references
TITLE 26 -- INTERNAL REVENUE CODE
(1) For exemption of brewer from special tax as wholesale and retail
dealer, see section 5113(a).
(2) For provisions relating to liability for special tax for carrying
on business in more than one location, see section 5143(c).
(3) For exemption from special tax in case of sales made on purchaser
dealers' premises, see section 5113(d).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1339.)
A prior section 5093, act Aug. 16, 1954, ch. 736, 68A Stat. 617,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
26 USC Subpart C -- Manufacturers of Stills
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5101. Notice of manufacture of still; notice of set up of still.
5102. Definition of manufacturer of stills.
A prior subpart C, consisting of sections 5101 to 5106, related to
manufacturers of stills, prior to the general revision of this subpart
by Pub. L. 98-369, div. A, title IV, 451(a), July 18, 1984, 98 Stat.
818.
Another prior subpart C, consisting of sections 5101 to 5106, related
to manufacturers of stills, prior to the general revision of this
chapter by Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1313.
26 USC 5101. Notice of manufacture of still; notice of set up of
still
TITLE 26 -- INTERNAL REVENUE CODE
(a) Notice requirements
(1) Notice of manufacture of still
The Secretary may, pursuant to regulations, require any person who
manufactures any still, boiler, or other vessel to be used for the
purpose of distilling, to give written notice, before the still, boiler,
or other vessel is removed from the place of manufacture, setting forth
by whom it is to be used, its capacity, and the time of removal from the
place of manufacture.
(2) Notice of set up of still
The Secretary may, pursuant to regulations, require that no still,
boiler, or other vessel be set up without the manufacturer of the still,
boiler, or other vessel first giving written notice to the Secretary of
that purpose.
(b) Penalties, etc.
(1) For penalty and forfeiture for failure to give notice of
manufacture, or for setting up a still without first giving notice, when
required by the Secretary, see sections 5615(2) and 5687.
(2) For penalty and forfeiture for failure to register still or
distilling apparatus when set up, see section 5601(a)(1) and 5615(1).
(Added Pub. L. 98-369, div. A, title IV, 451(a), July 18, 1984, 98
Stat. 818.)
A prior section 5101, added Pub. L. 85-859, title II, 201, Sept.
2, 1958, 72 Stat. 1339, contained provisions relating to imposition and
rate of tax, prior to the general revision of this subpart by Pub. L.
98-369.
Another prior section 5101, act Aug. 16, 1954, ch. 736, 68A Stat.
617, consisted of provisions similar to those comprising this section,
prior to the general revision of this chapter by Pub. L. 85-859.
Section 456 of part II ( 451-456) of subtitle D of title IV of
division A of Pub. L. 98-369, as amended by Pub. L. 99-514, title
XVIII, 1845, Oct. 22, 1986, 100 Stat. 2856, provided that:
''(a) In General. -- Except as otherwise provided in this section the
amendments made by this part (enacting this section and section 5102 of
this title, amending sections 5005, 5062, 5066, 5116, 5134, 5179, 5204,
5206, 5207, 5214, 5215, 5235, 5301, 5354, 5555, 5604, 5613, 5615, 5691,
6103, 6801, and 7213 of this title, repealing section 5205 of this
title, and omitting sections 5103, 5105, and 5106 of this title) shall
take effect on the first day of the first calendar month which begins
more than 90 days after the date of the enactment of this Act (July 18,
1984).
''(b) Repeal of Stamp Requirement. -- The amendments made by section
454 (amending sections 5062, 5066, 5116, 5204, 5206, 5207, 5215, 5235,
5301, 5555, 5604, 5613, and 6801 of this title and repealing section
5205 of this title) shall take effect on July 1, 1985.
''(c) Fortification of Cooking Wine. -- The amendments made by
section 455 (amending sections 5005, 5214, and 5354 of this title) shall
take effect on the date of the enactment of this Act (July 18, 1984).
''(d) Section 452. -- The amendment made by section 452 (amending
section 5134 of this title) shall apply to products manufactured or
produced after October 31, 1984.''
26 USC 5102. Definition of manufacturer of stills
TITLE 26 -- INTERNAL REVENUE CODE
Any person who manufactures any still or condenser to be used in
distilling shall be deemed a manufacturer of stills.
(Added Pub. L. 98-369, div. A, title IV, 451(a), July 18, 1984, 98
Stat. 819.)
A prior section 5102, added Pub. L. 85-859, title II, 201, Sept.
2, 1958, 72 Stat. 1339, consisted of provisions similar to those
comprising this section, prior to the general revision of this subpart
by Pub. L. 98-369.
Another prior section 5102, act Aug. 16, 1954, ch. 736, 68A Stat.
617, defined manufacturer of stills, prior to the general revision of
this chapter by Pub. L. 85-859.
A prior section 5103, added Pub. L. 85-859, title II, 201, Sept.
2, 1958, 72 Stat. 1339, related to exemptions from the taxes imposed by
section 5101 of this title, prior to the general revision of this
subpart by Pub. L. 98-369.
Another prior section 5103, act Aug. 16, 1954, ch. 736, 68A Stat.
617, related to exemptions, prior to the general revision of this
chapter by Pub. L. 85-859.
A prior section 5104, added Pub. L. 85-859, title II, 201, Sept.
2, 1958, 72 Stat. 1339, which provided that the tax imposed on stills
or condensers by section 5101 be paid by stamp, denoting the tax, under
regulations prescribed by Secretary or his delegate, was repealed by
Pub. L. 94-455, title XIX, 1905(b)(3)(A)(i), Oct. 4, 1976, 90 Stat.
1822, effective on first day of first month which began more than 90
days after Oct. 4, 1976.
Another prior section 5104, act Aug. 16, 1954, ch. 736, 68A Stat.
617, required taxes to be paid by stamps, prior to the general revision
of this chapter by Pub. L. 85-859.
A prior section 5105, added Pub. L. 85-859, title II, 201, Sept.
2, 1958, 72 Stat. 1339; amended Pub. L. 94-455, title XIX,
1905(b)(6)(A), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1823, 1834,
related to notice of manufacturer of and permit to set up still, prior
to the general revision of this subpart by Pub. L. 98-369. See section
5101 of this title.
Another prior section 5105, act Aug. 16, 1954, ch. 736, 68A Stat.
617, related to notice of manufacture of and permit to set up still,
prior to the general revision of this chapter by Pub. L. 85-859.
A prior section 5106, added Pub. L. 85-859, title II, 201, Sept.
2, 1958, 72 Stat. 1340; amended Pub. L. 94-455, title XIX,
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834, related to export without
payment of tax and export with the privilege of drawback, prior to the
general revision of this subpart by Pub. L. 98-369.
Another prior section 5106, act Aug. 16, 1954, ch. 736, 68A Stat.
618, related to payment of tax and drawback on exports, prior to the
general revision of this chapter by Pub. L. 85-859.
Section effective on first day of first calendar month which begins
more than 90 days after July 18, 1984, see section 456(a) of Pub. L.
98-369, set out as a note under section 5101 of this title.
26 USC Subpart D -- Wholesale Dealers
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5111. Imposition and rate of tax.
5112. Definitions.
5113. Exemptions.
5114. Records.
5115. Sign required on premises.
5116. Packaging distilled spirits for industrial uses.
5117. Prohibited purchases by dealers.
A prior subpart D, consisting of sections 5111 to 5116, related to
wholesale dealers, prior to the general revision of this chapter by Pub.
L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1313.
26 USC 5111. Imposition and rate of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Wholesale dealers in liquors
Every wholesale dealer in liquors shall pay a special tax of $500 a
year.
(b) Wholesale dealers in beer
Every wholesale dealer in beer shall pay a special tax of $500 a
year.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1340;
amended Pub. L. 94-455, title XIX, 1905(b)(3)(B), Oct. 4, 1976, 90
Stat. 1822; Pub. L. 100-203, title X, 10512(b), Dec. 22, 1987, 101
Stat. 1330-448.)
A prior section 5111, act Aug. 16, 1954, ch. 736, 68A Stat. 618,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising subsec. (a) of this section
were contained in former section 5112(a), act Aug. 16, 1954, ch. 736,
68A Stat. 618, prior to the general revision of this chapter by Pub.
L. 85-859.
1987 -- Subsec. (a). Pub. L. 100-203, 10512(b)(1), substituted
''$500'' for ''$255''.
Subsec. (b). Pub. L. 100-203, 10512(b)(2), substituted ''$500'' for
''$123''.
1976 -- Subsec. (a). Pub. L. 94-455 struck out provisions
authorizing the issuance of stamps denoting payment of the special tax.
Amendment by Pub. L. 100-203 effective Jan. 1, 1988, see section
10512(h) of Pub. L. 100-203, set out as an Effective Date note under
section 5081 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Due date of tax, see section 5142 of this title.
Method of payment of tax, see section 5142 of this title.
26 USC 5112. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Dealer
When used in this subpart, subpart E, or subpart G, the term
''dealer'' means any person who sells, or offers for sale, any distilled
spirits, wines, or beer.
(b) Wholesale dealer in liquors
When used in this chapter, the term ''wholesale dealer in liquors''
means any dealer, other than a wholesale dealer in beer, who sells, or
offers for sale, distilled spirits, wines, or beer, to another dealer.
(c) Wholesale dealer in beer
When used in this chapter, the term ''wholesale dealer in beer''
means a dealer who sells, or offers for sale, beer, but not distilled
spirits or wines, to another dealer.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1340.)
A prior section 5112, act Aug. 16, 1954, ch. 736, 68A Stat. 618,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Prior section 5112(a) also provided for issuance of stamp denoting
payment of special tax as ''wholesale dealer in wines'' or ''wholesale
dealer in wines and beer''. See section 5111(a) of this title.
Businesses in more than one location, see section 5143 of this title.
26 USC 5113. Exemptions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Sales by proprietors of controlled premises
No proprietor of a distilled spirits plant, bonded wine cellar,
taxpaid wine bottling house, or brewery, shall be required to pay
special tax under section 5111 or section 5121 on account of the sale at
his principal business office as designated in writing to the Secretary,
or at his distilled spirits plant, bonded wine cellar, taxpaid wine
bottling house, or brewery, as the case may be, of distilled spirits,
wines, or beer, which, at the time of sale, are stored at his distilled
spirits plant, bonded wine cellar, taxpaid wine bottling house, or
brewery, as the case may be, or had been removed from such premises to a
taxpaid storeroom operated in connection therewith and are stored
therein. However, on such proprietor shall have more than one place of
sale, as to each distilled spirits plant, bonded wine cellar, taxpaid
wine bottling house, or brewery, that shall be exempt from special taxes
by reason of the sale of distilled spirits, wines, or beer stored at
such premises (or removed therefrom and stored as provided in this
section), by reason of this subsection.
(b) Sales by liquor stores operated by States, political
subdivisions, etc.
No liquor store engaged in the business of selling to persons other
than dealers, which is operated by a State, by a political subdivision
of a State or by the District of Columbia, shall be required to pay any
special tax imposed under section 5111, by reason of selling distilled
spirits, wines, or beer to dealers qualified to do business as such in
such State, subdivision, or District, if such State, political
subdivision, or District has paid the applicable special tax imposed
under section 5121, and if such State, political subdivision, or
District has paid special tax under section 5111 at its principal place
of business.
(c) Casual sales
(1) Sales by creditors, fiduciaries, and officers of court
No person shall be deemed to be a dealer by reason of the sale of
distilled spirits, wines, or beer which have been received by him as
security for or in payment of a debt, or as an executor, administrator,
or other fiduciary, or which have been levied on by any officer under
order or process of any court or magistrate, if such distilled spirits,
wines, or beer are sold by such person in one parcel only or at public
auction in parcels of not less than 20 wine gallons.
(2) Sales by retiring partners or representatives of deceased
partners to incoming or remaining partners
No person shall be deemed to be a dealer by reason of a sale of
distilled spirits, wines, or beer made by such person as a retiring
partner or the representative of a deceased partner to the incoming,
remaining, or surviving partner or partners of a firm.
(3) Return of liquors for credit, refund, or exchange
No person shall be deemed to be a dealer by reason of the bona fide
return of distilled spirits, wines, or beer to the dealer from whom
purchased (or to the successor of the vendor's business or line of
merchandise) for credit, refund, or exchange, and the giving of such
credit, refund, or exchange shall not be deemed to be a purchase within
the meaning of section 5117.
(d) Dealers making sales on purchaser dealer's premises
(1) Wholesale dealers in liquors
No wholesale dealer in liquors who has paid the special tax as such
dealer shall again be required to pay special tax as such dealer on
account of sales of wines or beer to wholesale or retail dealers in
liquors, or to limited retail dealers, or of beer to wholesale or retail
dealers in beer, consummated at the purchaser's place of business.
(2) Wholesale dealers in beer
No wholesale dealer in beer who has paid the special tax as such a
dealer shall again be required to pay special tax as such dealer on
account of sales of beer to wholesale or retail dealers in liquors or
beer, or to limited retail dealers, consummated at the purchaser's place
of business.
(e) Sales by retail dealers in liquidation
No retail dealer in liquors or retail dealer in beer, selling in
liquidation his entire stock of liquors in one parcel or in parcels
embracing not less than his entire stock of distilled spirits, of wines,
or of beer to any other dealer, shall be deemed to be a wholesale dealer
in liquors or a wholesale dealer in beer, as the case may be, by reason
of such sale or sales.
(f) Sales to limited retail dealers
(1) Retail dealers in liquors
No retail dealer in liquors who has paid special tax as such dealer
under section 5121(a) shall be required to pay special tax under section
5111 on account of the sale at his place of business of distilled
spirits, wines, or beer to limited retail dealers as defined in section
5122(c).
(2) Retail dealers in beer
No retail dealer in beer who has paid special tax as such dealer
under section 5121(b) shall be required to pay special tax under section
5111 on account of the sale at his place of business of beer to limited
retail dealers as defined in section 5122(c).
(g) Coordination of taxes under section 5111
No tax shall be imposed by section 5111(a) with respect to a person's
activities at any place during a year if such person has paid the tax
imposed by section 5111(b) with respect to such place for such year.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1340;
amended Pub. L. 87-863, 4(b), Oct. 23, 1962, 76 Stat. 1142; Pub. L.
94-455, title XIX, 1905(a)(7), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat.
1819, 1834; Pub. L. 100-647, title II, 2004(t)(2), (4), Nov. 10, 1988,
102 Stat. 3609, 3610.)
A prior section 5113, act Aug. 16, 1954, ch. 736, 68A Stat. 619,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising subsecs. (a), (d), and (e) of
this section were contained in prior sections 5123(a), (b)(3), (c),
5144(c), and 5306, act Aug. 16, 1954, ch. 736, 68A Stat. 621, 624,
657, prior to the general revision of this chapter by Pub. L. 85-859.
1988 -- Subsec. (a). Pub. L. 100-647, 2004(t)(2), substituted
''controlled premises'' for ''distilled spirits plants, bonded wine
cellars, or breweries'' in heading and inserted ''taxpaid wine bottling
house,'' after ''bonded wine cellar,'' wherever appearing in text.
Subsec. (g). Pub. L. 100-647, 2004(t)(4), added subsec. (g).
1976 -- Subsec. (a). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (f)(1). Pub. L. 94-455, 1905(a)(7), inserted reference to
distilled spirits.
1962 -- Subsec. (b). Pub. L. 87-863 substituted ''if such State,
political subdivision, or district'' for ''if such liquor store'' before
''has paid the'', and struck out reference to Territories wherever
appearing.
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provisions of the Revenue Act of 1987,
Pub. L. 100-203, title X, to which such amendment relates, see section
2004(u) of Pub. L. 100-647, set out as a note under section 56 of this
title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
Section 4(c) of Pub. L. 87-863 provided that: ''The amendments made
by subsections (a) and (b) of this section (amending this section and
section 5123 of this title) shall take effect on July 1, 1962.''
26 USC 5114. Records
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirements
(1) Distilled spirits
Every wholesale dealer in liquors who sells distilled spirits to
other dealers shall keep daily a record of distilled spirits received
and disposed of by him, in such form and at such place and containing
such information, and shall submit correct summaries of such records to
the Secretary at such time and in such form and manner, as the Secretary
shall by regulations prescribe. Such dealer shall also submit correct
extracts from or copies of such records, at such time and in such form
and manner as the Secretary may by regulations prescribe; however, the
Secretary may on application by such dealer, in accordance with such
regulations, relieve him from this requirement until further notice,
whenever the Secretary deems that the submission of such extracts or
copies serves no useful purpose in law enforcement or in protection of
the revenue.
(2) Wines and beer
Every wholesale dealer in liquors and every wholesale dealer in beer
shall provide and keep, at such place as the Secretary shall by
regulations prescribe, a record in book form of all wines and beer
received, showing the quantities thereof and from whom and the dates
received, or shall keep all invoices of, and bills for, all wines and
beer received.
(b) Exemption of States, political subdivisions, etc.
The provision of subsection (a) shall not apply to a State, to a
political subdivision of a State, to the District of Columbia, or to
liquor stores operated by any of them, if they maintain and make
available for inspection by internal revenue officers such records as
will enable such officers to trace all distilled spirits, wines, and
beer received, and all distilled spirits disposed of by them. Such
States, subdivisions, District, or liquor stores shall, upon the request
of the Secretary, furnish him such transcripts, summaries and copies of
their records with respect to distilled spirits as he shall require.
(c) Cross references
(1) For provisions requiring proprietors of distilled spirits plants
to keep records and submit reports of receipts and dispositions of
distilled spirits, see section 5207.
(2) For penalty for violation of subsection (a), see section 5603.
(3) For provisions relating to the preservation and inspection of
records, and entry of premises for inspection, see section 5146.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1342;
amended Pub. L. 94-455, title XIX, 1905(c)(1), 1906(b)(13)(A), Oct.
4, 1976, 90 Stat. 1823, 1834.)
A prior section 5114, act Aug. 16, 1954, ch. 736, 68A Stat. 619,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Subsec. (a). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary'' wherever appearing.
Subsec. (b). Pub. L. 94-455, 1905(c)(1), 1906(b)(13)(A), struck out
''or Territory'' after ''a State'', ''Territories'' after ''States,'',
and ''or his delegate'' after ''Secretary''.
Amendment by section 1905(c)(1) of Pub. L. 94-455 effective on first
day of first month which begins more than 90 days after Oct. 4, 1976,
see section 1905(d) of Pub. L. 94-455, set out as a note under section
5005 of this title.
26 USC 5115. Sign required on premises
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirements
Every wholesale dealer in liquors who is required to pay special tax
as such dealer shall, in the manner and form prescribed by regulations
issued by the Secretary, place and keep conspicuously on the outside of
the place of such business a sign, exhibiting, in plain and legible
letters, the name or firm of the wholesale dealer, with the words:
''wholesale liquor dealer.'' The requirements of this subsection will be
met by the posting of a sign of the character prescribed herein, but
with words conforming to the designation on the dealer's special tax
stamp.
(b) Penalty
For penalty for failure to post sign, or for posting sign without
paying the special tax, see section 5681.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1342;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5115, act Aug. 16, 1954, ch. 736, 68A Stat. 620,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859. See section
5205(d) of this title.
Provisions similar to those comprising this section were contained in
prior section 5116, act Aug. 16, 1954, ch. 736, 68A Stat. 620, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
26 USC 5116. Packaging distilled spirits for industrial uses
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
The Secretary may, at his discretion and under such regulations as he
may prescribe, authorize a dealer engaging in the business of supplying
distilled spirits for industrial uses to package distilled spirits, on
which the tax has been paid or determined, for such uses in containers
of a capacity in excess of 1 wine gallon and not more than 5 wine
gallons.
(b) Cross reference
For provisions relating to containers of distilled spirits, see
section 5206.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1343;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(12), July 26, 1979, 93
Stat. 282; Pub. L. 98-369, div. A, title IV, 454(c)(3), July 18, 1984,
98 Stat. 821.)
A prior section 5116, act Aug. 16, 1954, ch. 736, 68A Stat. 620,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1984 -- Subsec. (b). Pub. L. 98-369 substituted ''reference'' for
''references'' in heading, struck out former par. (1) which provided a
cross reference to section 5205(a)(1) of this title regarding stamps for
immediate containers, and struck out designation ''(2)'' preceding
provisions relating to containers of distilled spirits.
1979 -- Subsec. (b)(1). Pub. L. 96-39 substituted ''section
5205(a)(1)'' for ''section 5205(a)(2)''.
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
Amendment by Pub. L. 98-369 effective July 1, 1985, see section
456(b) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC 5117. Prohibited purchases by dealers
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
It shall be unlawful for any dealer to purchase distilled spirits for
resale from any person other than --
(1) a wholesale dealer in liquors who has paid the special tax as
such dealer to cover the place where such purchase is made; or
(2) a wholesale dealer in liquors who is exempt, at the place where
such purchase is made, from payment of such tax under any provision of
this chapter; or
(3) a person who is not required to pay special tax as a wholesale
dealer in liquors.
(b) Limited retail dealers
A limited retail dealer may lawfully purchase distilled spirits for
resale from a retail dealer in liquors.
(c) Penalty and forfeiture
For penalty and forfeiture provisions applicable to violation of
subsection (a), see sections 5687 and 7302
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1343;
amended Pub. L. 94-455, title XIX, 1905(a)(8), Oct. 4, 1976, 90 Stat.
1819.)
1976 -- Subsecs. (b), (c). Pub. L. 94-455 added subsec. (b) and
redesignated former subsec. (b) as (c).
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
26 USC Subpart E -- Retail Dealers
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5121. Imposition and rate of tax.
5122. Definitions.
5123. Exemptions.
5124. Records.
5125. Cross references.
A prior subpart E, consisting of sections 5121 to 5124, related to
retail dealers, prior to the general revision of this chapter by Pub.
L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1313.
26 USC 5121. Imposition and rate of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Retail dealers in liquors
Every retail dealer in liquors shall pay a special tax of $250 a
year.
(b) Retail dealers in beer
Every retail dealer in beer shall pay a special tax of $250 a year.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1343;
amended Pub. L. 94-455, title XIX, 1905(a)(9), (b)(3)(C), Oct. 4,
1976, 90 Stat. 1819, 1822; Pub. L. 100-203, title X, 10512(c), Dec.
22, 1987, 101 Stat. 1330-448.)
A prior section 5121, act Aug. 16, 1954, ch. 736, 68A Stat. 621,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Prior section 5121(a)(2) regarded wholesale dealers in liquors
selling in quantities of less than 5 wine gallons as retail dealers
liable to special tax. See section 5122(a) of this title.
Prior section 5121(b)(2) regarded wholesale dealers in beer selling
in quantities of less than 5 gallons as retail dealers liable to special
tax. See section 5122(b) of this title.
Prior section 5121(c) also described limited retail dealers. See
section 5122(c) of this title.
Provisions similar to those comprising subsecs. (a)(1), (2) of this
section were contained in prior section 5122(a), (c), act Aug. 16,
1954, ch. 736, 68A Stat. 621, prior to the general revision of this
chapter by Pub. L. 85-859.
1987 -- Subsec. (a). Pub. L. 100-203, 10512(c)(1), substituted
''$250'' for ''$54''.
Subsec. (b). Pub. L. 100-203, 10512(c)(2), substituted ''$250'' for
''$24''.
Subsec. (c). Pub. L. 100-203, 10512(c)(3), struck out subsec. (c)
which read as follows: ''Every limited retail dealer shall pay a
special tax of $4.50 for each calendar month in which sales are made as
such dealer; except that the special tax shall be $2.20 for each
calendar month in which only sales of beer or wine are made.''
1976 -- Subsec. (a). Pub. L. 94-455, 1905(b)(3)(C), struck out
provision for the issuance of a stamp denoting payment of the special
tax.
Subsec. (c). Pub. L. 94-455, 1905(a)(9), substituted ''$4.50'' for
''$2.20'' as amount of special tax for each calendar month in which
sales are made as such dealer, and inserted provision setting special
tax at $2.20 for each calendar month in which only sales of beer or wine
are made.
Amendment by Pub. L. 100-203 effective Jan. 1, 1988, see section
10512(h) of Pub. L. 100-203, set out as an Effective Date note under
section 5081 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Due date of tax, see section 5142 of this title.
Method of payment of tax, see section 5142 of this title.
26 USC 5122. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Retail dealers in liquors
When used in this chapter, the term ''retail dealer in liquors''
means any dealer, other than a retail dealer in beer or a limited retail
dealer, who sells, or offers for sale, any distilled spirits, wines, or
beer, to any person other than a dealer.
(b) Retail dealer in beer
When used in this chapter, the term ''retail dealer in beer'' means
any dealer, other than a limited retail dealer, who sells, or offers for
sale, beer, but not distilled spirits or wines, to any person other than
a dealer.
(c) Limited retail dealer
When used in this chapter, the term ''limited retail dealer'' means
any fraternal, civic, church, labor, charitable, benevolent, or
ex-servicemen's organization making sales of distilled spirits, wine or
beer on the occasion of any kind of entertainment, dance, picnic,
bazaar, or festival held by it, or any person making sales of distilled
spirits, wine or beer to the members, guests, or patrons of bona fide
fairs, reunions, picnics, carnivals, or other similar outings, if such
organization or person is not otherwise engaged in business as a dealer.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1344;
amended Pub. L. 94-455, title XIX, 1905(a)(10), Oct. 4, 1976, 90 Stat.
1819.)
A prior section 5122, act Aug. 16, 1954, ch. 736, 68A Stat. 621,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Prior section 5122(a) also provided for issuance of stamp denoting
payment of special tax as ''retail dealer in wines'' or ''retail dealer
in wines and beer''. See section 5121(a)(1) of this title.
Prior section 5122(c) related to ''retail drug stores or
pharmacies''. See section 5121(a)(2) of this title.
Provisions similar to those comprising subsec. (c) of this section
were contained in prior section 5121(c), act Aug. 16, 1954, ch. 736,
68A Stat. 620.
1976 -- Subsec. (c). Pub. L. 94-455 inserted reference to distilled
spirits.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
Businesses in more than one location, see section 5143 of this title.
26 USC 5123. Exemptions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Wholesale dealers
(1) Wholesale dealers in liquors
No special tax shall be imposed under section 5121(a) or (b) on any
dealer by reason of the selling, or selling, or offering for sale, of
distilled spirits, wines, or beer at any location where such dealer is
required to pay special tax under section 5111(a).
(2) Wholesale dealers in beer
No special tax shall be imposed under section 5121(b) on any dealer
by reason of the selling, or offering for sale, of beer at any location
where such dealer is required to pay special tax under section 5111(b).
(b) Business conducted in more than one location
(1) Retail dealers at large
Any retail dealer in liquors or retailer dealer in beer whose
business is such as to require him to travel from place to place in
different States of the United States may, under regulations prescribed
by the Secretary, procure a special tax stamp ''At Large'' covering his
activities throughout the United States with the payment of but one
special tax as a retail dealer in liquors or as a retail dealer in beer,
as the case may be.
(2) Dealers on trains, aircraft, and boats
Nothing contained in this chapter shall prevent the issue, under such
regulations as the Secretary may prescribe, of special tax stamps to --
(A) persons carrying on the business of retail dealers in liquors, or
retail dealers in beer, on trains, aircraft, boats or other vessels,
engaged in the business of carrying passengers; or
(B) persons carrying on the business of retail dealers in liquors or
retail dealers in beer on boats or other vessels operated by them, when
such persons operate from a fixed address in a port or harbor and supply
exclusively boats or other vessels, or persons thereon, at such port or
harbor.
(3) Liquor stores operated by States, political subdivisions, etc.
A State, a political subdivision of a State, or the District of
Columbia shall not be required to pay more than one special tax as a
retail dealer in liquors under section 5121(a) regardless of the number
of locations at which such State, political subdivision, or District
carries on business as a retail dealer in liquors.
(c) Coordination of taxes under section 5121
No tax shall be imposed by section 5121(a) with respect to a person's
activities at any place during a year if such person has paid the tax
imposed by section 5121(b) with respect to such place for such year.
(d) Cross references
(1) For exemption of proprietors of distilled spirits plants, bonded
wine cellars, and breweries from special tax as dealers, see section
5113(a).
(2) For provisions relating to sales by creditors, fiduciaries, and
officers of courts, see section 5113(c)(1).
(3) For provisions relating to sales by retiring partners or
representatives of deceased partners to incoming or remaining partners,
see section 5113(c)(2).
(4) For provisions relating to return of liquors for credit, refund,
or exchange, see section 5113(c)(3).
(5) For provisions relating to sales by retail dealers in
liquidation, see section 5113(e).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1344;
amended Pub. L. 87-863, 4(a), Oct. 23, 1962, 76 Stat. 1142; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub.
L. 100-647, title II, 2004(t)(3), Nov. 10, 1988, 102 Stat. 3610.)
A prior section 5123, act Aug. 16, 1954, ch. 736, 68A Stat. 621,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Former section 5123(a), (b)(3), and (c) related to ''exemptions of
brewers selling in eighth-barrel packages'', ''dealers making sales on
purchaser dealers' premises'' and ''sales by retail dealers in
liquidation''. See section 5113(a), (d)(1), (2) and (e), respectively,
of this title.
1988 -- Subsecs. (c), (d). Pub. L. 100-647 added subsec. (c) and
redesignated former subsec. (c) as (d).
1976 -- Subsec. (b)(1), (2). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary''.
1962 -- Subsec. (b)(3). Pub. L. 87-863 added par. (3).
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provisions of the Revenue Act of 1987,
Pub. L. 100-203, title X, to which such amendment relates, see section
2004(u) of Pub. L. 100-647, set out as a note under section 56 of this
title.
Amendment by Pub. L. 87-863 effective July 1, 1962, see section 4(c)
of Pub. L. 87-863, set out as a note under section 5113 of this title.
26 USC 5124. Records
TITLE 26 -- INTERNAL REVENUE CODE
(a) Receipts
Every retail dealer in liquors and every retail dealer in beer shall
provide and keep in his place of business a record in book form of all
distilled spirits, wines, and beer received, showing the quantity
thereof and from whom and the dates received, or shall keep all invoices
of, and bills for, all distilled spirits, wines, and beer received.
(b) Dispositions
When he deems it necessary for law enforcement purposes or the
protection of the revenue, the Secretary may by regulations require
retail dealers in liquors and retail dealers in beer to keep records of
the disposition of distilled spirits, wines, or beer, in such form or
manner and of such quantities as the Secretary may prescribe.
(c) Cross references
For provisions relating to the preservation and inspection of
records, and entry of premises for inspection, see section 5146.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1345;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5124, act Aug. 16, 1954, ch. 736, 68A Stat. 622,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Prior section 5124(b), (c) related to ''inspection and preservation
of records''. See section 5146(a) of this title.
Prior section 5124(d) was a cross reference to a penalty provision
relating to retail dealers' records.
1976 -- Subsec. (b). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary'' in two places.
26 USC 5125. Cross references
TITLE 26 -- INTERNAL REVENUE CODE
(1) For provisions relating to prohibited purchases by dealers, see
section 5117.
(2) For provisions relating to presumptions of liability as wholesale
dealer in case of sale of 20 wine gallons or more, see section 5691(b).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1345.)
26 USC Subpart F -- Nonbeverage Domestic Drawback Claimants
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5131. Eligibility and rate of tax.
5132. Registration and regulation.
5133. Investigation of claims.
5134. Drawback.
A prior subpart F, consisting of sections 5131 to 5134, related to
nonbeverage domestic drawback claimants, prior to the general revision
of this chapter by Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72
Stat. 1313.
26 USC 5131. Eligibility and rate of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Eligibility for drawback
Any person using distilled spirits on which the tax has been
determined, in the manufacture or production of medicines, medicinal
preparations, food products, flavors, or flavoring extracts, which are
unfit for beverage purposes, on payment of a special tax per annum,
shall be eligible for drawback at the time when such distilled spirits
are used in the manufacture of such products as provided for in this
subpart.
(b) Rate of tax
The special tax imposed by subsection (a) shall be $500 per year.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1345;
amended Pub. L. 94-455, title XIX, 1905(a)(11), Oct. 4, 1976, 90 Stat.
1819; Pub. L. 100-203, title X, 10512(d), Dec. 22, 1987, 101 Stat.
1330-448.)
A prior section 5131, act Aug. 16, 1954, ch. 736, 68A Stat. 622,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1987 -- Subsec. (b). Pub. L. 100-203 amended subsec. (b) generally.
Prior to amendment, subsec. (b) read as follows: ''The special tax
imposed by subsection (a) shall be graduated in amount as follows: (1)
for total annual use not exceeding 25 proof gallons, $25 a year; (2)
for total annual use not exceeding 50 proof gallons, $50 a year; (3)
for total annual use of more than 50 proof gallons, $100 a year.''
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''produced in a
domestic registered distillery or industrial alcohol plant and withdrawn
from bond, or using distilled spirits withdrawn from the bonded premises
of a distilled spirits plant,'' after ''Any person using distilled
spirits''.
Amendment by Pub. L. 100-203 effective Jan. 1, 1988, see section
10512(h) of Pub. L. 100-203, set out as an Effective Date note under
section 5081 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Due date of tax, see section 5142 of this title.
Method of payment of tax, see section 5142 of this title.
26 USC 5132. Registration and regulation
TITLE 26 -- INTERNAL REVENUE CODE
Every person claiming drawback under this subpart shall register
annually with the Secretary; keep such books and records as may be
necessary to establish the fact that distilled spirits received by him
and on which the tax has been determined were used in the manufacture or
production of medicines, medicinal preparations, food products, flavors,
or flavoring extracts, which were unfit for use for beverage purposes;
and be subject to such rules and regulations in relation thereto as the
Secretary shall prescribe to secure the Treasury against frauds.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1345;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5132, act Aug. 16, 1954, ch. 736, 68A Stat. 623,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
26 USC 5133. Investigation of claims
TITLE 26 -- INTERNAL REVENUE CODE
For the purpose of ascertaining the correctness of any claim filed
under this subpart, the Secretary is authorized to examine any books,
papers, records, or memoranda bearing upon the matters required to be
alleged in the claim, to require the attendance of the person filing the
claim or of any officer or employee of such person or the attendance of
any other person having knowledge in the premises, to take testimony
with reference to any matter covered by the claim, and to administer
oaths to any person giving such testimony.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1346;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5133, act Aug. 16, 1954, ch. 736, 68A Stat. 623,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Authority to administer oaths, see section 7622 of this title.
26 USC 5134. Drawback
TITLE 26 -- INTERNAL REVENUE CODE
(a) Rate of drawback
In the case of distilled spirits on which the tax has been paid or
determined, and which have been used as provided in this subpart, a
drawback shall be allowed on each proof gallon at a rate of $1 less than
the rate at which the distilled spirits tax has been paid or determined.
(b) Claims
Such drawback shall be due and payable quarterly upon filing of a
proper claim with the Secretary; except that, where any person entitled
to such drawback shall elect in writing to file monthly claims therefor,
such drawback shall be due and payable monthly upon filing of a proper
claim with the Secretary. The Secretary may require persons electing to
file monthly drawback claims to file with him a bond or other security
in such amount and with such conditions as he shall by regulations
prescribe. Any such election may be revoked on filing of notice thereof
with the Secretary. No claim under this subpart shall be allowed unless
filed with the Secretary within the 6 months next succeeding the quarter
in which the distilled spirits covered by the claim were used as
provided in this subpart.
(c) Allowance of drawback even where certain requirements not met
(1) In general
No claim for drawback under this section shall be denied in the case
of a failure to comply with any requirement imposed under this subpart
or any rule or regulation issued thereunder upon the claimant's
establishing to the satisfaction of the Secretary that distilled spirits
on which the tax has been paid or determined were in fact used in the
manufacture or production of medicines, medicinal preparations, food
products, flavors, or flavoring extracts, which were unfit for beverage
purposes.
(2) Penalty
(A) In general
In the case of a failure to comply with any requirement imposed under
this subpart or any rule or regulation issued thereunder, the claimant
shall be liable for a penalty of $1,000 for each failure to comply
unless it is shown that the failure to comply was due to reasonable
cause.
(B) Penalty may not exceed amount of claim
The aggregate amount of the penalties imposed under subparagraph (A)
for failures described in paragraph (1) in respect of any claim shall
not exceed the amount of such claim (determined without regard to
subparagraph (A)).
(3) Penalty treated as tax
The penalty imposed by paragraph (2) shall be assessed, collected,
and paid in the same manner as taxes, as provided in section 6662(a).
/1/
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1346;
amended Pub. L. 90-615, 2(a), Oct. 21, 1968, 82 Stat. 1210; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub.
L. 98-369, div. A, title IV, 452, July 18, 1984, 98 Stat. 819.)
Section 6662 of this title, referred to in subsec. (c)(3), was
repealed by Pub. L. 101-239, title VII, 7721(a), Dec. 19, 1989, 103
Stat. 2395, which added a new section 6662. For similar provisions,
see section 6665 of this title.
A prior section 5134, acts Aug. 16, 1954, ch. 736, 68A Stat. 623;
Mar. 30, 1955, ch. 18, 3(b)(2), 69 Stat. 15; Mar. 29, 1956, ch.
115, 3(b)(2), 70 Stat. 67; Mar. 29, 1957, Pub. L. 85-12, 3(b)(2),
71 Stat. 10; June 30, 1958, Pub. L. 85-475, 3(b)(2), 72 Stat. 259,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1984 -- Subsec. (c). Pub. L. 98-369 added subsec. (c).
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1968 -- Subsec. (b). Pub. L. 90-615 substituted ''6 months'' for ''3
months'' in last sentence.
Amendment by Pub. L. 98-369 applicable to products manufactured or
produced after Oct. 31, 1984, see section 456(d) of Pub. L. 98-369,
set out as an Effective Date note under section 5101 of this title.
Section 2(b) of Pub. L. 90-615 provided that: ''The amendment made
by subsection (a) (amending this section) shall apply to claims filed on
or after the date of the enactment of this Act (Oct. 21, 1968).''
/1/ See References in Text note below.
26 USC Subpart G -- General Provisions
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5141. Registration.
5142. Payment of tax.
5143. Provisions relating to liability for occupational taxes.
(5144. Repealed.)
5145. Application of State laws.
5146. Preservation and inspection of records, and entry of premises
for inspection.
5147. Application of subpart.
5148. Cross references.
A prior subpart G, consisting of sections 5141 to 5149, related to
general provisions, prior to the general revision of this chapter by
Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1313.
1976 -- Pub. L. 94-455, title XIX, 1905(b)(3)(D)(ii), Oct. 4,
1976, 90 Stat. 1822, struck out item 5144 ''Supply of stamps''.
26 USC 5141. Registration
TITLE 26 -- INTERNAL REVENUE CODE
For provisions relating to registration in the case of persons
engaged in any trade or business on which a special tax is imposed, see
section 7011(a).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1346.)
A prior section 5141, act Aug. 16, 1954, ch. 736, 68A Stat. 624,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC 5142. Payment of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Condition precedent to carrying on business
No person shall be engaged in or carry on any trade or business
subject to tax under this part (except the tax imposed by section 5131)
until he has paid the special tax therefor.
(b) Computation
All special taxes under this part (except the tax imposed by section
5131) shall be imposed as of on the first day of July in each year, or
on commencing any trade or business on which such tax is imposed. In
the former case the tax shall be reckoned for 1 year, and in the latter
case it shall be reckoned proportionately, from the first day of the
month in which the liability to a special tax commenced, to and
including the 30th day of June following.
(c) How paid
(1) Payment by return
The special taxes imposed by this part shall be paid on the basis of
a return under such regulations as the Secretary shall prescribe.
(2) Stamp denoting payment of tax
After receiving a properly executed return and remittance of any
special tax imposed by this subpart, the Secretary shall issue to the
taxpayer an appropriate stamp as a receipt denoting payment of the tax.
This paragraph shall not apply in the case of a return covering
liability for a past period.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1346;
amended Pub. L. 94-455, title XIX, 1905(a)(12), Oct. 4, 1976, 90 Stat.
1820.)
A prior section 5142, act Aug. 16, 1954, ch. 736, 68A Stat. 624,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Prior section 5142(d) also contained a cross reference to a penalty
and forfeiture provision for nonpayment of special taxes. See section
5148(1) of this title.
1976 -- Subsec. (c). Pub. L. 94-455 substituted provisions under
which the special taxes would be paid on the basis of a return for
provisions under which the special taxes were paid by stamps denoting
the tax.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
26 USC 5143. Provisions relating to liability for occupational taxes
TITLE 26 -- INTERNAL REVENUE CODE
(a) Partners
Any number of persons doing business in partnership at any one place
shall be required to pay but one special tax.
(b) Different businesses of same ownership and location
Whenever more than one of the pursuits or occupations described in
this part are carried on in the same place by the same person at the
same time, except as otherwise provided in this part, the tax shall be
paid for each according to the rates severally prescribed.
(c) Businesses in more than one location
(1) Liability for tax
The payment of a special tax imposed by this part shall not exempt
from an additional special tax the person carrying on a trade or
business in any other place than that stated in the register kept in the
office of the official in charge of the internal revenue district.
(2) Storage
Nothing contained in paragraph (1) shall require a special tax for
the storage of liquors at a location other than the place where liquors
are sold or offered for sale.
(3) Definition of place
The term ''place'' as used in this section means the entire office,
plant or area of the business in any one location under the same
proprietorship; and passageways, streets, highways, rail crossings,
waterways, or partitions dividing the premises, shall not be deemed
sufficient separation to require additional special tax, if the various
divisions are otherwise contiguous.
(d) Death or change of location
Certain persons, other than the person who has paid the special tax
under this part for the carrying on of any business at any place, may
secure the right to carry on, without incurring additional special tax,
the same business at the same place for the remainder of the taxable
period for which the special tax was paid. The persons who may secure
such right are:
(1) the surviving spouse or child, or executor or administrator or
other legal representative, of a deceased taxpayer;
(2) a husband or wife succeeding to the business of his or her living
spouse;
(3) a receiver or trustee in bankruptcy, or an assignee for benefit
of creditors; and
(4) the partner or partners remaining after death or withdrawal of a
member of a partnership.
When any person moves to any place other than the place for which
special tax was paid for the carrying on of any business, he may secure
the right to carry on, without incurring additional special tax, the
same business at his new location for the remainder of the taxable
period for which the special tax was paid. To secure the right to carry
on the business without incurring additional special tax, the successor,
or the person relocating his business, must register the succession or
relocation with the Secretary in accordance with regulations prescribed
by the Secretary.
(e) Federal agencies or instrumentalities
Any tax imposed by this part shall apply to any agency or
instrumentality of the United States unless such agency or
instrumentality is granted by statute a specific exemption from such
tax.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1347;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5143, act Aug. 16, 1954, ch. 736, 68A Stat. 624,
related to time for filing returns and cross-referred to penalty
provisions for failure to file returns or for making false or fraudulent
returns, prior to the general revision of this chapter by Pub. L.
85-859. See subtitle F of this title.
Provisions similar to those comprising this section were contained in
a prior section 5144, act Aug. 16, 1954, ch. 736, 68A Stat. 624,
prior to the general revision of this chapter by Pub. L. 85-859.
1976 -- Subsec. (d)(4). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary''.
26 USC ( 5144. Repealed. Pub. L. 94-455, title XIX, 1905(b)(3)(D)(i),
Oct. 4, 1976, 90 Stat. 1822)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72
Stat. 1348, authorized and directed Secretary or his delegate to
procure the necessary stamps for payment of special taxes and to make
needful regulations relative thereto.
A prior section 5144, act Aug. 16, 1954, ch. 736, 68A Stat. 624,
related to liability for occupational taxes, prior to the general
revision of this chapter by Pub. L. 85-859. See sections 5113(a) and
5143 of this title.
Repeal effective on first day of first month which begins more than
90 days after Oct. 4, 1976, see section 1905(d) of Pub. L. 94-455,
set out as an Effective Date of 1976 Amendment note under section 5005
of this title.
26 USC 5145. Application of State laws
TITLE 26 -- INTERNAL REVENUE CODE
The payment of any tax imposed by this part for carrying on any trade
or business shall not be held to exempt any person from any penalty or
punishment provided by the laws of any State for carrying on such trade
or business within such State, or in any manner to authorize the
commencement or continuance of such trade or business contrary to the
laws of such State or in places prohibited by municipal law; nor shall
the payment of any such tax be held to prohibit any State from placing a
duty or tax on the same trade or business, for State or other purposes.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1348.)
A prior section 5145, act Aug. 16, 1954, ch. 736, 68A Stat. 625,
related to ''supply of stamps'', prior to the general revision of this
chapter by Pub. L. 85-859. See section 5144 of this title.
Provisions similar to those comprising this section were contained in
a prior section 5148, act Aug. 16, 1954, ch. 736, 68A Stat. 626,
prior to the general revision of this chapter by Pub. L. 85-859.
26 USC 5146. Preservation and inspection of records, and entry of
premises for inspection
TITLE 26 -- INTERNAL REVENUE CODE
(a) Preservation and inspection of records
Any records or other documents required to be kept under this part or
regulations issued pursuant thereto shall be preserved by the person
required to keep such records or documents, as the Secretary may by
regulations prescribe, and shall be kept available for inspection by any
internal revenue officer during business hours.
(b) Entry of premises for inspection
The Secretary may enter during business hours the premises (including
places of storage) of any dealer for the purpose of inspecting or
examining any records or other documents required to be kept by such
dealer under this chapter or regulations issued pursuant thereto and any
distilled spirits, wines, or beer kept or stored by such dealer on such
premises.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1348;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5146, act Aug. 16, 1954, ch. 736, 68A Stat. 625,
contained cross references to provisions respecting posting stamp in
place of business, prior to the general revision of this chapter by Pub.
L. 85-859. See sections 6806 and 7273 of this title.
Provisions similar to those comprising subsec. (a) of this section
were contained in prior sections 5114(a) and 5124 (b), (c), act Aug.
16, 1954, ch. 736, 68A Stat. 619, 622, prior to the general revision
of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
26 USC 5147. Application of subpart
TITLE 26 -- INTERNAL REVENUE CODE
The provisions of this subpart shall extend to and apply to the
special taxes imposed by the other subparts of this part and to the
persons on whom such taxes are imposed.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1348.)
A prior section 5147, act Aug. 16, 1954, ch. 736, 68A Stat. 626,
made a cross reference to provision respecting keeping of list of
special taxpayers for public inspection, prior to the general revision
of this chapter by Pub. L. 85-859.
Provisions similar to those comprising this section were contained in
a prior section 5149, act Aug. 16, 1954, ch. 736, 68A Stat. 626,
prior to the general revision of this chapter by Pub. L. 85-859.
26 USC 5148. Cross references
TITLE 26 -- INTERNAL REVENUE CODE
(1) For penalties for willful nonpayment of special taxes, see
section 5691.
(2) For penalties applicable to this part generally, see subchapter
J.
(3) For penalties, authority for assessments, and other general and
administrative provisions applicable to this part, see subtitle F.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1348;
amended Pub. L. 94-455, title XIX, 1905(b)(3)(E), Oct. 4, 1976, 90
Stat. 1822.)
A prior section 5148, act Aug. 16, 1954, ch. 736, 68A Stat. 626,
related to ''Application of State laws'', prior to the general revision
of this chapter by Pub. L. 85-859. See section 5145 of this title.
Provisions similar to those comprising subd. (1) of this section
were contained in a prior section 5142(d), act Aug. 16, 1954, ch. 736,
68A Stat. 624, prior to the general revision of this chapter by Pub.
L. 85-859.
A prior section 5149, act Aug. 16, 1954, ch. 736, 68A Stat. 626,
related to ''Application of subpart'', prior to the general revision of
this chapter by Pub. L. 85-859. See section 5147 of this title.
1976 -- Par. (3). Pub. L. 94-455 inserted reference to authority for
assessments.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
26 USC Subchapter B -- Qualification Requirements for Distilled Spirits
Plants
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5171. Establishment.
5172. Application.
5173. Bonds.
(5174. Repealed.)
5175. Export bonds.
5176. New or renewed bonds.
5177. Other provisions relating to bonds.
5178. Distilled spirits plants. /1/
5179. Registration of stills.
5180. Signs.
5181. Distilled spirits for fuel use.
5182. Cross references.
A prior subchapter B, Distilleries, consisted of part I,
Establishment, part II, Operation, and part III, General Provisions
Relating to Distilleries and Distilled Spirits, and consisted of
sections 5171 to 5180, 5191 to 5197, and 5211 to 5217, respectively,
prior to the general revision of this chapter by Pub. L. 85-859, title
II, 201, Sept. 2, 1958, 72 Stat. 1313.
1980 -- Pub. L. 96-223, title II, 232(e)(2)(F), Apr. 2, 1980, 94
Stat. 280, added item 5181 and redesignated former item 5181 as 5182.
1979 -- Pub. L. 96-39, title VIII, 807(b)(4), July 26, 1979, 93
Stat. 290, substituted ''Bonds'' for ''Qualification bonds'' in item
5173, struck out item 5174 ''Withdrawal bonds'', and substituted
''Distilled spirits plants'' for ''Premises of distilled spirits
plants'' in item 5178.
/1/ So in original. Does not conform to section catchline.
26 USC 5171. Establishment
TITLE 26 -- INTERNAL REVENUE CODE
(a) Certain operations may be conducted only on bonded premises
Except as otherwise provided by law, operations as a distiller,
warehouseman, or processor may be conducted only on the bonded premises
of a distilled spirits plant by a person who is qualified under this
subchapter.
(b) Establishment of distilled spirits plant
A distilled spirits plant may be established only by a person who
intends to conduct at such plant operations as a distiller, as a
warehouseman, or as both.
(c) Registration
(1) In general
Each person shall, before commencing operations at a distilled
spirits plant (and at such other times as the Secretary may by
regulations prescribe), make application to the Secretary for, and
receive notice of, the registration of such plant.
(2) Application required where new operations are added
No operation in addition to those set forth in the application made
pursuant to paragraph (1) may be conducted at a distilled spirits plant
until the person has made application to the Secretary for, and received
notice of, the registration of such additional operation.
(3) Secretary may establish minimum capacity and level of activity
requirements
The Secretary may by regulations prescribe for each type of operation
minimum capacity and level of activity requirements for qualifying
premises as a distilled spirits plant.
(4) Applicant must comply with law and regulations
No plant (or additional operation) shall be registered under this
section until the applicant has complied with the requirements of law
and regulations in relation to the qualification of such plant (or
additional operation).
(d) Permits
(1) Requirements
Each person required to file an application for registration under
subsection (c) whose distilled spirits operations (or any part thereof)
are not required to be covered by a basic permit under the Federal
Alcohol Administration Act (27 U.S.C. secs. 203 and 204) shall, before
commencing the operations (or part thereof) not so covered, apply for
and obtain a permit under this subsection from the Secretary to engage
in such operations (or part thereof). Subsections (b), (c), (d), (e),
(f), (g), and (h) of section 5271 are hereby made applicable to persons
filing applications and permits required by or issued under this
subsection.
(2) Exceptions for agencies of a State or political subdivisions
Paragraph (1) shall not apply to any agency of a State or political
subdivision thereof or to any officer or employee of any such agency,
and no such agency, officer, or employee shall be required to obtain a
permit thereunder.
(e) Cross references
(1) For penalty for failure of a distiller or processor to file
application for registration as required by this section, see section
5601(a)(2).
(2) For penalty for the filing of a false application by a distiller,
warehouseman, or processor of distilled spirits, see section 5601(a)(3).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1349;
amended Pub. L. 94-455, title XIX, 1905(a)(13), 1906(b)(13)(A), Oct.
4, 1976, 90 Stat. 1820, 1834; Pub. L. 96-39, title VIII, 805(a), July
26, 1979, 93 Stat. 274.)
The Federal Alcohol Administration Act, referred to in subsec.
(d)(1), is act Aug. 29, 1935, ch. 814, 49 Stat. 977, as amended,
which is classified generally to subchapter I ( 201 et seq.) of chapter
8 of Title 27, Intoxicating Liquors. The basic permit is covered by
sections 203 and 204 of Title 27. For complete classification of this
Act to the Code, see section 201 of Title 27 and Tables.
A prior section 5171, act Aug. 16, 1954, ch. 736, 68A Stat. 627,
related to ''premises prohibited for distilling'', prior to the general
revision of this chapter by Pub. L. 85-859. See sections 5178(a)(1)(B),
(b), (c)(2), and 5505(b) of this title.
Provisions similar to those comprising subsecs. (a), (b)(1) and (c)
of this section were contained in prior sections of act Aug. 16, 1954,
prior to the general revision of this chapter by Pub. L. 85-859, as
follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 627 to 631, 643, 645, 650, 654, 655.
1979 -- Subsecs. (a), (b). Pub. L. 96-39 added subsecs. (a) and
(b) and redesignated former subsecs. (a) and (b) as (c) and (d),
respectively.
Subsec. (c). Pub. L. 96-39 redesignated former subsec. (a) as (c)
and inserted provisions relating to an application requirement where new
operations are added and permitting the Secretary to establish minimum
capacity and level of activity requirements. Former subsec. (c)
redesignated (e).
Subsec. (d). Pub. L. 96-39 redesignated former subsec. (b) as (d)
and substituted reference to subsection (c) for reference to subsection
(a) and struck out reference to section 5274.
Subsec. (e). Pub. L. 96-39 redesignated former subsec. (c) as (e)
and substituted reference to processor for reference to rectifier and
reference to warehouseman for reference to bonded warehouseman and
struck out reference to bottler.
1976 -- Subsec. (b)(1). Pub. L. 94-455, 1905(a)(13)(A),
1906(b)(13)(A), struck out ''49 Stat. 978;'' before ''27 U.S.C. 203,
204'' in parenthetical provisions after ''Federal Alcohol Administration
Act'' and struck out ''or his delegate'' after ''Secretary''.
Subsec. (b)(3). Pub. L. 94-455, 1905(a)(13)(B), struck out par. (3)
under which persons who were qualified on June 30, 1959, to perform
operations for which a permit was required covering operations not
required to be covered by a basic permit under the Federal Alcohol
Administration Act had been allowed to continue operations pending a
reasonable opportunity to make application for a permit.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by section 1905(a)(13) of Pub. L. 94-455 effective on
first day of first month which begins more than 90 days after Oct. 4,
1976, see section 1905(d) of Pub. L. 94-455, set out as a note under
section 5005 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Section 809(a), (b) of Pub. L. 96-39, as amended by Pub. L.
99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(a) New Application Required. --
''(1) In general. -- For purposes of section 5171 of the Internal
Revenue Code of 1986 (formerly I.R.C. 1954) (relating to establishment
of distilled spirits plants), each person who intends to continue any
distilled spirits operation at a premises after December 31, 1979, shall
be treated as intending to establish a distilled spirits plant on such
premises on January 1, 1980.
''(2) Current registration to remain in effect. -- Notwithstanding
paragraph (1), the registration of any person under section 5171 of the
Internal Revenue Code of 1986 which is in effect on December 31, 1979,
shall remain in effect until final action on the application required by
paragraph (1).
''(b) Continuing Operations at Existing Premises. -- With respect to
any operation which was permitted to be conducted on May 1, 1979, at
premises which were registered on such date under section 5171 of the
Internal Revenue Code of 1986, the determination of whether such
premises qualify for registration under such section as a distilled
spirits plant shall be made without regard to whether or not --
''(1) the person engaged in operations at such premises is registered
under such section with respect to such premises as a distiller or
warehouseman, and
''(2) such premises meet the minimum capacity and level of activity
requirements for that type of operation.''
26 USC 5172. Application
TITLE 26 -- INTERNAL REVENUE CODE
The application for registration required by section 5171(c) shall,
in such manner and form as the Secretary may by regulations prescribe,
identify the applicant and persons interested in the business (or
businesses) covered by the application, show the nature, location and
extent of the premises, show the specific type or types of operations to
be conducted on such premises, and show any other information which the
Secretary may by regulations require for the purpose of carrying out the
provisions of this chapter.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1349;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(13), July 26, 1979, 93
Stat. 282.)
A prior section 5172, act Aug. 16, 1954, ch. 736, 68A Stat. 627,
related to ''conditions precedent to carrying on business of
distilling'', prior to the general revision of this chapter by Pub. L.
85-859 and is covered in part by this section. See also sections
5171(a), 5173(a), 5178(a)(1)(A), and 5601(a)(2), (4) of this title.
Provisions similar to those comprising this section were contained in
prior sections 5175(a), 5178, 5231, 5243(a), 5271, 5301 to 5303, 5305,
and 5331(a)(1), act Aug. 16, 1954, ch. 736, 68A Stat. 628, 631, 643,
645, 650, 654, 655, 657, 661, prior to the general revision of this
chapter by Pub. L. 85-859.
1979 -- Pub. L. 96-39 substituted ''section 5171(c)'' for ''section
5171(a)''.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC 5173. Bonds
TITLE 26 -- INTERNAL REVENUE CODE
(a) Operations at, and withdrawals from, distilled spirits plant must
be covered by bond
(1) Operations
No person intending to establish a distilled spirits plant may
commence operations at such plant unless such person has furnished bond
covering operations at such plant.
(2) Withdrawals
No distilled spirits (other than distilled spirits withdrawn under
section 5214 or 7510) may be withdrawn from bonded premises except on
payment of tax unless the proprietor of the bonded premises has
furnished bond covering such withdrawal.
(b) Operations bonds
The bond required by paragraph (1) of subsection (a) shall meet the
requirements of paragraph (1), (2), or (3) of this subsection:
(1) One plant bond
The bond covers operations at a single distilled spirits plant.
(2) Adjacent wine cellar bond
The bond covers operations at a distilled spirits plant and at an
adjacent bonded wine cellar.
(3) Area bond
The bond covers operations at 2 or more distilled spirits plants (and
adjacent bonded wine cellars) which --
(A) are located in the same geographical area (as designated in
regulations prescribed by the Secretary), and
(B) are operated by the same person (or, in the case of a
corporation, by such corporation and its controlled subsidiaries).
(c) Withdrawal bonds
The bond required by paragraph (2) of subsection (a) shall cover
withdrawals from 1 or more bonded premises the operations at which could
be covered by the same operations bond under subsection (b).
(d) Unit bonds
Under regulations prescribed by the Secretary, the requirements of
paragraphs (1) and (2) of subsection (a) shall be treated as met by a
unit bond which covers both operations at, and withdrawals from, 1 or
more bonded premises which could be covered by the same operations bond
under subsection (b).
(e) Terms and conditions
(1) In general
Any bond furnished under this section shall be conditioned that the
person furnishing the bond --
(A) will faithfully comply with all provisions of law and regulations
relating to the activities covered by such bond, and
(B) will pay --
(i) all taxes imposed by this chapter, and
(ii) all penalties incurred by, or fines imposed on, such person for
violation of any such provision.
(2) Other terms and conditions
Any bond furnished under this section shall contain such other terms
and conditions as may be required by regulations prescribed by the
Secretary.
(f) Amount
(1) In general
The penal sum of any bond shall be the amount determined under
regulations prescribed by the Secretary.
(2) Maximum and minimum amount
The Secretary shall by regulations prescribe a minimum amount and a
maximum amount for each type of bond which may be furnished under this
section.
(g) Total amount available
The total amount of any bond furnished under this section shall be
available for the satisfaction of any liability incurred under the terms
and conditions of such bond.
(h) Special rules
For purposes of this section --
(1) Withdrawal bonds
In the case of any bond furnished under this section which covers
withdrawals but not operations --
(A) such bond shall be in addition to the operations bond, and
(B) if distilled spirits are withdrawn under such bond, the
operations bond shall no longer cover liability for payment of the tax
on the spirits withdrawn.
(2) Adjacent wine cellars
(A) Requirements
No wine cellar shall be treated as being adjacent to a distilled
spirits plant unless --
(i) such distilled spirits plant is qualified under this subchapter
for the production of distilled spirits, and
(ii) such wine cellar and the distilled spirits plant are operated by
the same person (or, in the case of a corporation, by such corporation
and its controlled subsidiaries).
(B) Bond in lieu of wine cellar bond
In the case of any adjacent wine cellar, a bond furnished under this
section which covers operations at such wine cellar shall be in lieu of
any bond which would otherwise be required under section 5354 with
respect to such wine cellar (other than supplemental bonds required
under the second sentence of section 5354).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1349;
amended Pub. L. 91-659, 4, Jan. 8, 1971, 84 Stat. 1966; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub.
L. 96-39, title VIII, 805(c), July 26, 1979, 93 Stat. 276.)
A prior section 5173, act Aug. 16, 1954, ch. 736, 68A Stat. 628,
related to ''distillery fixtures and equipment'', prior to the general
revision of this chapter by Pub. L. 85-859. See sections 5178(a)(1)(A),
(2)(B)(C), (c)(1) and 5202(b) of this title.
Provisions similar to those comprising subsecs. (a), (b), (b)(1),
(b)(1)(A) to (C), (b)(3), (c), (c)(1), (d) and (e)(1) of this section
were contained in prior sections of act Aug. 16, 1954, prior to the
general revision of this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 627, 629 to 631, 643, 650, 654, 655, 657, 662.
1979 -- Pub. L. 96-39, among other changes, struck out provisions
relating to liens on distillery property and the furnishing of indemnity
bonds as methods of securing tax payments and inserted provisions
relating to the one plant operations bond, which will cover the
operations at a bonded wine cellar which is adjacent to the distilled
spirits plant and operated by the same person.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1971 -- Subsec. (b)(1). Pub. L. 91-659, 4(b), extended exception
clause in parenthetical by making reference to cl. (4) of this
subsection.
Subsec. (b)(2). Pub. L. 91-659, 4(c), inserted reference to par.
(4).
Subsec. (b)(4). Pub. L. 91-659, 4(a), added par. (4).
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 91-659 effective on first day of first calendar
month which begins more than 90 days after Jan. 8, 1971, see section 6
of Pub. L. 91-659, set out as an Effective Date note under section 5066
of this title.
Section 809(c) of Pub. L. 96-39, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that: ''For purposes of
section 5173 of the Internal Revenue Code of 1986 (formerly I.R.C.
1954) (relating to bonds), each person who intends to continue operation
at a premises after December 31, 1979, shall be treated as intending to
establish a distilled spirits plant on such premises on January 1,
1980.''
26 USC ( 5174. Repealed. Pub. L. 96-39, title VIII, 807(a)(14), July
26, 1979, 93 Stat. 282)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72
Stat. 1352; amended Pub. L. 94-455, title XIX, 1905(a)(14),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1820, 1834, related to
withdrawal bonds.
A prior section 5174, act Aug. 16, 1954, ch. 736, 68A Stat. 630,
related to ''registry of stills'', prior to the general revision of this
chapter by Pub. L. 85-859. See sections 5179 and 5505(d) of this title.
Provisions similar to those comprising subsec. (a)(1) of section
5174, added by Pub. L. 85-859, title I, 201, Sept. 2, 1958, 725 Stat.
1352, relating to the withdrawal from bonded premises of distilled
spirits on the furnishing of a bond by the proprietor of the bonded
premises to secure payment of the tax on such spirits, were contained in
prior sections 5176(b) and 5232(b), act Aug. 16, 1954, ch. 736, 68A
Stat. 629, 643, prior to the general revision of this chapter by Pub.
L. 85-859.
Repeal effective Jan. 1, 1980, see section 810 of Pub. L. 96-39,
set out as an Effective Date of 1979 Amendment note under section 5001
of this title.
26 USC 5175. Export bonds
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirements
No distilled spirits shall be withdrawn from bonded premises for
exportation, or for transfer to a customs bonded warehouse, without
payment of tax unless the exporter has furnished bond to cover such
withdrawal under such regulations and conditions, and in such form and
penal sum, as the Secretary may prescribe.
(b) Exception where proprietor withdraws spirits for exportation
In the case of distilled spirits withdrawn from bonded premises by
the proprietor for exportation without payment of tax, the bond of such
proprietor required to be furnished under paragraph (1) of section
5173(a) covering such premises shall cover such exportation, and
subsection (a) shall not apply.
(c) Cancellation or credit of export bonds
The bonds given under subsection (a) shall be cancelled or credited
and the bonds liable under subsection (b) credited on the submission of
such evidence, records, and certification indicating exportation as the
Secretary may by regulations prescribe.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1352;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 95-176, 3(b), Nov. 14, 1977, 91 Stat. 1365; Pub.
L. 96-39, title VIII, 807(a)(15), July 26, 1979, 93 Stat. 282.)
A prior section 5175, act Aug. 16, 1954, ch. 736, 68A Stat. 628,
related to ''notice of business of distiller'', prior to the general
revision of this chapter by Pub. L. 85-859. See sections 5171(a), (c)
and 5172 of this title.
Provisions similar to those comprising this section were contained in
a prior section 5247(a), act Aug. 16, 1954, ch. 736, 68A Stat. 647,
prior to the general revision of this chapter by Pub. L. 85-859.
1979 -- Subsec. (a). Pub. L. 96-39, 807(a)(15)(A), struck out ''for
storage therein pending exportation'' after ''customs bonded
warehouse''.
Subsec. (b). Pub. L. 96-39, 807(a)(15)(B), substituted ''from bonded
premises by the proprietor for exportation without payment of tax, the
bond of such proprietor required to be furnished under paragraph (1) of
section 5173(a) covering such premises shall cover such exportation, and
subsection (a) shall not apply'' for ''for exportation without payment
of tax on application of the proprietor of bonded premises, the bond of
such proprietor covering such bonded premises shall cover such
exportation and subsection (a) shall not be applicable''.
1977 -- Subsec. (a). Pub. L. 95-176 required export bonds for
withdrawals from bonded premises, without payment of tax, for transfer
to a customs bonded warehouse for storage therein pending exportation.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 95-176 effective on first day of first calendar
month beginning more than 90 days after Nov. 14, 1977, see section 7 of
Pub. L. 95-176, set out as a note under section 5003 of this title.
Section 210(f) of Pub. L. 85-859, as amended by Pub. L. 99-514, 2,
Oct. 22, 1986, 100 Stat. 2095, provided that: ''Notwithstanding any
provision of section 5175 or 5176(a) of the Internal Revenue Code of
1986 (formerly I.R.C. 1954), the Secretary of the Treasury or his
delegate may waive, as to registered distillers or registered fruit
distillers qualified to operate under bond on April 30, 1959,
requirements for filing notice and executing new bond on May 1, 1959, if
the distiller and the surety have executed consent to continuation of
the terms of the existing bond to cover operations from May 1, 1959, to
June 30, 1959, both dates inclusive. Nothing in this subsection shall
be construed as limiting the authority of the Secretary of the Treasury
or his delegate under section 5176(b) or (c) of the Internal Revenue
Code of 1986.''
26 USC 5176. New or renewed bonds
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
New bonds shall be required under sections 5173 and 5175 in case of
insolvency or removal of any surety, and may, at the discretion of the
Secretary, be required in any other contingency affecting the validity
or impairing the efficiency of such bond.
(b) Bonds
If the proprietor of a distilled spirits plant fails or refuses to
furnish a bond required under paragraph (1) of section 5173(a) or to
renew the same, and neglects to immediately withdraw the spirits and pay
the tax thereon, the Secretary shall proceed to collect the tax.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1353;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(16), July 26, 1979, 93
Stat. 282.)
A prior section 5176(c), act Aug. 16, 1954, ch. 736, 68A Stat.
629, consisted of provisions similar to those comprising subsec. (a) of
this section, prior to the general revision of this chapter by Pub. L.
85-859.
Prior section 5176(a), (b), (d), (e), related to distiller's bond:
form and approval; additional bond; exemption from survey
requirements; and cross references, prior to the general revision of
this chapter by Pub. L. 85-859. See sections 5173(a), (b), 5174(a)(1)
and 5177 of this title.
Provisions similar to those comprising this section were contained in
prior section 5232(c), act Aug. 16, 1954, ch. 736, 68A Stat. 643,
prior to the general revision of this chapter by Pub. L. 85-859.
1979 -- Subsec. (a). Pub. L. 96-39, 807(a)(16)(A), struck out '',
5174,'' after ''sections 5173''.
Subsec. (b). Pub. L. 96-39, 807(a)(16)(A), substituted reference to
paragraph (1) of section 5173(a) for reference to section 5173(c) and
struck out provisions relating to failure or refusal of the proprietor
of a distilled spirits plant to withdraw any spirits from storage on
bonded premises before the expiration of the time limited on the bond
and pay the tax thereon.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Authority to waive requirements for filing notice and executing new
bond on May 1, 1959, if distiller and surety have executed consent to
continuation of the terms of existing bond to cover operations from May
1, 1959 to June 30, 1959, see section 210(f) of Pub. L. 85-859, set out
as a note under section 5175 of this title.
26 USC 5177. Other provisions relating to bonds
TITLE 26 -- INTERNAL REVENUE CODE
(a) General provisions relating to bonds
The provisions of section 5551 shall be applicable to the bonds
required by or given under sections 5173 and 5175.
(b) Cross references
(1) For deposit of United States bonds or notes in lieu of sureties,
see section 9303 of title 31, United States Code.
(2) For penalty and forfeiture for failure or refusal to give bond,
or for giving false, forged, or fraudulent bond, or carrying on the
business of a distiller without giving bond, see sections 5601(a)(4),
5601(a)(5), 5601(b), and 5615(3).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1353;
amended Pub. L. 94-455, title XIX, 1905(b)(6)(B), Oct. 4, 1976, 90
Stat. 1823; Pub. L. 96-39, title VIII, 807(a)(17), July 26, 1979, 93
Stat. 282; Pub. L. 97-258, 3(f)(3), Sept. 13, 1982, 96 Stat. 1064.)
A prior section 5177, act Aug. 16, 1954, ch. 736, 68A Stat. 628,
related to ''conditions of approval of distiller's bond'', prior to the
general revision of this chapter by Pub. L. 85-859. See section
5173(b)(1) of this title.
Prior section 5177(a) was a general provision. See section 5171(a)
of this title.
Prior section 5177(b)(1) to (3) related to ownership, consent of
owner, or indemnity bond. See section 5173(b)(1)(A) to (C) of this
title.
Prior section 5177(b)(4) related to judicial sale. See section
5173(b)(3) of this title.
Prior section 5177(c) related to situation of distillery. See
sections 5173(b)(1) and 5551(c) of this title.
Prior section 5177(d) was a cross reference to penalty for improper
approval of distiller's bond, and to general provisions relating to
approval, disapproval and appeal on bonds. See subsec. (a) of this
section and section 5551 of this title.
Provisions similar to those comprising subsec. (b) of this section
were contained in prior sections 5176(e) and 5232(d), act Aug. 16,
1954, ch. 736, 68A Stat. 630, 644, prior to the general revision of
this chapter by Pub. L. 85-859.
1982 -- Subsec. (b)(1). Pub. L. 97-258 substituted ''section 9303 of
title 31, United States Code'' for ''6 U.S.C. 15''.
1979 -- Subsec. (a). Pub. L. 96-39 struck out '', 5174,'' after
''sections 5173''.
1976 -- Subsec. (b)(2). Pub. L. 94-455 substituted ''5601(b)'' for
''5601(b)(2)''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
26 USC 5178. Premises of distilled spirits plants
TITLE 26 -- INTERNAL REVENUE CODE
(a) Location, construction, and arrangement
(1) General
(A) The premises of a distilled spirits plant shall be as described
in the application required by section 5171(c). The Secretary shall
prescribe such regulations relating to the location, construction,
arrangement, and protection of distilled spirits plants as he deems
necessary to facilitate inspection and afford adequate security to the
revenue.
(B) No distilled spirits plant for the production of distilled
spirits shall be located in any dwelling house, in any shed, yard, or
inclosure connected with any dwelling house, or on board any vessel or
boat, or on premises where beer or wine is made or produced, or liquors
of any description are retailed, or on premises where any other business
is carried on (except when authorized under subsection (b)).
(C) Notwithstanding any other provision of this chapter relating to
distilled spirits plants the Secretary may approve the location,
construction, arrangement, and method of operation of any establishment
which was qualified to operate on the date preceding the effective date
of this section if he deems that such location, construction,
arrangement, and method of operation will afford adequate security to
the revenue.
(2) Production operations
(A) Any person establishing a distilled spirits plant may, as
described in his application for registration, produce distilled spirits
from any source or substance.
(B) The distilling system shall be continuous and shall be so
designed and constructed and so connected as to prevent the unauthorized
removal of distilled spirits before their production gauge.
(C) The Secretary is authorized to order and require --
(i) such identification of, changes of, and additions to, distilling
apparatus, connecting pipes, pumps, tanks, and any machinery connected
with or used in or on the premises, and
(ii) such fastenings, locks, and seals to be part of any of the
stills, tubs, pipes, tanks, and other equipment, as he may deem
necessary to facilitate inspection and afford adequate security to the
revenue.
(3) Warehousing operations
(A) Any person establishing a distilled spirits plant for the
production of distilled spirits may, as described in the application for
registration, warehouse bulk distilled spirits on the bonded premises of
such plant.
(B) Distilled spirits plants for the bonded warehousing of bulk
distilled spirits elsewhere than as described in subparagraph (A) may be
established at the discretion of the Secretary by proprietors referred
to in subparagraph (A) or by other persons under such regulations as the
Secretary shall prescribe.
(4) Processing operations
Any person establishing a distilled spirits plant may, as described
in the application for registration, process distilled spirits on the
bonded premises of such plant.
(b) Use of premises for other businesses
The Secretary may authorize the carrying on of such other businesses
(not specifically prohibited by section 5601(a)(6)) on premises of
distilled spirits plants, as he finds will not jeopardize the revenue.
Such other businesses shall not be carried on until an application to
carry on such business has been made to and approved by the Secretary.
(c) Cross references
(1) For provisions authorizing the Secretary to require installation
of meters, tanks, and other apparatus, see section 5552.
(2) For penalty for distilling on prohibited premises, see section
5601(a)(6).
(3) For provisions relating to the bottling of distilled spirits
labeled as alcohol, see section 5235.
(4) For provisions relating to the unauthorized use of distilled
spirits in any manufacturing process, see section 5601(a)(9).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1353;
amended Pub. L. 91-659, 5, Jan. 8, 1971, 84 Stat. 1966; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub.
L. 95-176, 2(b), Nov. 14, 1977, 91 Stat. 1364; Pub. L. 96-39, title
VIII, 805(b)(1), 807(a)(18), July 26, 1979, 93 Stat. 275, 283.)
A prior section 5178, act Aug. 16, 1954, ch. 736, 68A Stat. 631,
related to plan of distillery, prior to the general revision of this
chapter by Pub. L. 85-859. See sections 5171(a) and 5172 of this title.
Provisions similar to those comprising subsecs. (a)(1)(A), (B),
(2)(A) to (C), (3), (4)(A), (B), (D), (5), (b), (c)(1), (2), (4) of this
section were contained in prior sections of act Aug. 16, 1954, prior to
the general revision of this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 627, 628, 641, 643, 645, 650, 654, 655, 657, 661.
1979 -- Subsec. (a)(1)(A). Pub. L. 96-39, 807(a)(18), substituted
''section 5171(c)'' for ''section 5171(a)''.
Subsec. (a)(2). Pub. L. 96-39, 805(b)(1), substituted in heading
''operations'' for ''facilities'' and in subpar. (A) ''produce'' for
''provided facilities which may be used for the production of'' and
struck out in subpar. (B) ''closed at all points where potable or
readily recoverable spirits are present and the distilling apparatus''
after ''shall be continuous and''.
Subsec. (a)(3). Pub. L. 96-39, 805(b)(1), substituted in heading
''Warehousing operations'' for ''Bonded warehousing facilities'' and in
subpar. (A) ''the application'' for ''his application'' and ''warehouse
bulk distilled spirits'' for ''establish warehousing facilities'' and
struck out subpar. (C) which related to facilities for the storage on
bonded premises of distilled spirits in casks, packages, cases, or
similar portable approved containers and subpar. (D), which related to
the establishment of a portion of the premises established under subpar.
(C) as an export storage facility for the storage of distilled spirits
returned to bonded premises under section 5215(b).
Subsec. (a)(4). Pub. L. 96-39, 805(b)(1), substituted provisions
relating to processing operations for provisions relating to bottling
facilities.
Subsec. (a)(5). Pub. L. 96-39, 805(b)(1), struck out par. (5) which
related to arrangement and segregation of denaturing facilities by
regulation of the Secretary.
1977 -- Subsec. (a)(3)(D). Pub. L. 95-176 added subpar. (D).
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1971 -- Subsec. (a)(4)(A). Pub. L. 91-659 substantially reenacted
existing provisions and added cl. (ii) and the following sentence.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 95-176 effective on first day of first calendar
month beginning more than 90 days after Nov. 14, 1977, see section 7 of
Pub. L. 95-176, set out as a note under section 5003 of this title.
Amendment by Pub. L. 91-659 effective on first day of first calendar
month which begins more than 90 days after Jan. 8, 1971, see section 6
of Pub. L. 91-659, set out as an Effective Date note under section 5066
of this title.
26 USC 5179. Registration of stills
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirements
Every person having in his possession or custody, or under his
control, any still or distilling apparatus set up, shall register such
still or apparatus with the Secretary immediately on its being set up,
by subscribing and filing with the Secretary a statement, in writing,
setting forth the particular place where such still or distilling
apparatus is set up, the kind of still and its capacity, the owner
thereof, his place of residence, and the purpose for which said still or
distilling apparatus has been or is intended to be used (except that
stills or distilling apparatus not used or intended to be used for the
distillation, redistillation, or recovery of distilled spirits are not
required to be registered under this section).
(b) Cross references
(1) For penalty and forfeiture provisions relating to unregistered
stills, see sections 5601(a)(1) and 5615(1).
(2) For provisions requiring notification to set up a still, boiler,
or other vessel for distilling, see section 5101(a)(2).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1355;
amended Pub. L. 94-455, title XIX, 1905(b)(6)(C), 1906(b)(13)(A),
Oct. 4, 1976, 90 Stat. 1823, 1834; Pub. L. 98-369, div. A, title IV,
451(b)(1), July 18, 1984, 98 Stat. 819.)
A prior section 5179, act Aug. 16, 1954, ch. 736, 68A Stat. 631,
related to ''survey of distillery'', prior to the general revision of
this chapter by Pub. L. 85-859.
Provisions similar to those comprising this section were contained in
prior sections 5174 and 5275(2), act Aug. 16, 1954, ch. 736, 68A Stat.
630, 651, prior to the general revision of this chapter by Pub. L.
85-859.
1984 -- Subsec. (b)(2). Pub. L. 98-369 substituted ''notification to
set up a still, boiler, or other vessel for distilling, see section
5101(a)(2)'' for ''permit to set up a still, boiler or other vessel for
distilling, see section 5105''.
1976 -- Subsec. (a). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (b)(1). Pub. L. 94-455, 1905(b)(6)(C), struck out '',
5601(b)(1),'' after ''5601(a)(1)''.
Amendment by Pub. L. 98-369 effective on first day of first calendar
month which begins more than 90 days after July 18, 1984, see section
456(a) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by section 1905(b)(6)(C) of Pub. L. 94-455 effective on
first day of first month which begins more than 90 days after Oct. 4,
1976, see section 1905(d) of Pub. L. 94-455, set out as a note under
section 5005 of this title.
26 USC 5180. Signs
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirements
Every person engaged in distilled spirits operations shall place and
keep conspicuously on the outside of his place of business a sign
showing the name of such person and denoting the business, or
businesses, in which engaged. The sign required by this subsection
shall be in such form and contain such information as the Secretary
shall by regulations prescribe.
(b) Penalty
For penalty and forfeiture relating to failure to post sign or
improperly posting such sign, see section 5681.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1355;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(19), July 26, 1979, 93
Stat. 283.)
A prior section 5180, act Aug. 16, 1954, ch. 736, 68A Stat. 632,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising this section were contained in
prior section 5274, act Aug. 16, 1954, ch. 736, 68A Stat. 651, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Subsec. (a). Pub. L. 96-39 substituted ''distilled spirits
operation'' for ''distilling, bonded warehousing, rectifying, or
bottling of distilled spirits''.
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC 5181. Distilled spirits for fuel use
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
(1) Purposes for which plant may be established
On such application and bond and in such manner as the Secretary may
prescribe by regulation, a person may establish a distilled spirits
plant solely for the purpose of --
(A) producing, processing, and storing, and
(B) using or distributing,
distilled spirits to be used exclusively for fuel use.
(2) Regulations
In prescribing regulations under paragraph (1) and in carrying out
the provisions of this section, the Secretary shall, to the greatest
extent possible, take steps to --
(A) expedite all applications;
(B) establish a minimum bond; and
(C) generally encourage and promote (through regulation or otherwise)
the production of alcohol for fuel purposes.
(b) Authority to exempt
The Secretary may by regulation provide for the waiver of any
provision of this chapter (other than this section or any provision
requiring the payment of tax) for any distilled spirits plant described
in subsection (a) if the Secretary finds it necessary to carry out the
provisions of this section.
(c) Special rules for small plant production
(1) Applications
(A) In general
An application for an operating permit for an eligible distilled
spirits plant shall be in such a form and manner, and contain such
information, as the Secretary may by regulations prescribe; except that
the Secretary shall, to the greatest extent possible, take steps to
simplify the application so as to expedite the issuance of such permits.
(B) Receipt of application
Within 15 days of receipt of an application under subparagraph (A),
the Secretary shall send a written notice of receipt to the applicant,
together with a statement as to whether the application meets the
requirements of subparagraph (A). If such a notice is not sent and the
applicant has a receipt indicating that the Secretary has received an
application, paragraph (2) shall apply as if a written notice required
by the preceding sentence, together with a statement that the
application meets the requirements of subparagraph (A), had been sent on
the 15th day after the date the Secretary received the application.
(C) Multiple applications
If more than one application is submitted with respect to any
eligible distilled spirits plant in any calendar quarter, the provisions
of this section shall apply only to the first application submitted with
respect to such plant during such quarter. For purposes of the
preceding sentence, if a corrected or amended first application is
filed, such application shall not be considered as a separate
application, and the 15-day period referred to in subparagraph (A) shall
commence with receipt of the corrected or amended application.
(2) Determination
(A) In general
In any case in which the Secretary under paragraph (1)(B) has
notified an applicant of receipt of an application which meets the
requirements of paragraph (1)(A), the Secretary shall make a
determination as to whether such operating permit is to be issued, and
shall notify the applicant of such determination, within 45 days of the
date on which notice was sent under paragraph (1)(B).
(B) Failure to make determination
If the Secretary has not notified an applicant within the time
prescribed under subparagraph (A), the application shall be treated as
approved.
(C) Rejection of application
If the Secretary determines under subparagraph (A) that a permit
should not be issued --
(i) the Secretary shall include in the notice to the applicant of
such determination under subparagraph (A) detailed reasons for such
determination, and
(ii) such determination shall not prejudice any further application
for such operating permit.
(3) Bond
No bond shall be required for an eligible distilled spirits plant.
For purposes of section 5212 and subsection (e)(2) of this section, the
premises of an eligible distilled spirits plant shall be treated as
bonded premises.
(4) Eligible distilled spirits plant
The term ''eligible distilled spirits plant'' means a plant which is
used to produce distilled spirits exclusively for fuel use and the
production from which does not exceed 10,000 proof gallons per year.
(d) Withdrawal free of tax
Distilled spirits produced under this section may be withdrawn free
of tax from the bonded premises (and any premises which are not bonded
by reason of subsection (c)(3)) of a distilled spirits plant exclusively
for fuel use as provided in section 5214(a)(12).
(e) Prohibited withdrawal, use, sale, or disposition
(1) In general
Distilled spirits produced under this section shall not be withdrawn,
used, sold, or disposed of for other than fuel use.
(2) Rendering unfit for use
For protection of the revenue and under such regulations as the
Secretary may prescribe, distilled spirits produced under this section
shall, before withdrawal from the bonded premises of a distilled spirits
plant, be rendered unfit for beverage use by the addition of substances
which will not impair the quality of the spirits for fuel use.
(f) Definition of distilled spirits
For purposes of this section, the term ''distilled spirits'' does not
include distilled spirits produced from petroleum, natural gas, or coal.
(Added Pub. L. 96-223, title II, 232(e)(1), Apr. 2, 1980, 94 Stat.
278.)
A prior section 5181 was renumbered 5182.
Section 232(h)(3) of Pub. L. 96-223 provided that: ''The amendments
made by subsection (e) (enacting this section, amending sections 5004,
5005, 5214, and 5601, and repealing provisions set out as a note under
section 4081 of this title) shall take effect on the first day of the
first calendar month beginning more than 60 days after the date of the
enactment of this Act (Apr. 2, 1980).''
26 USC 5182. Cross references
TITLE 26 -- INTERNAL REVENUE CODE
For provisions requiring payment of special (occupational) tax as
wholesale liquor dealer, see section 5111, or as retail liquor dealer,
see section 5121.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1356,
5181; amended Pub. L. 96-39, title VIII, 807(a)(20), July 26, 1979,
93 Stat. 283; renumbered 5182, Pub. L. 96-223, title II, 232(e)(1),
Apr. 2, 1980, 94 Stat. 278.)
Provisions similar to those comprising this section were contained in
a prior section 5275(3), act Aug. 16, 1954, ch. 736, 68A Stat. 651,
prior to the general revision of this chapter by Pub. L. 85-859.
1979 -- Pub. L. 96-39 struck out ''as rectifier, see section 5081,
or'' after ''(occupational) tax''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC Subchapter C -- Operation of Distilled Spirits Plants
TITLE 26 -- INTERNAL REVENUE CODE
Part
I. General provisions.
II. Operations on bonded premises.
(III. Repealed.)
A prior subchapter C, Internal Revenue Bonded Warehouses, consisted
of part I, Establishment, and part II, Operation, and consisted of
sections 5231 to 5233 and 5241 to 5252, respectively, prior to the
general revision of this chapter by Pub. L. 85-859, title II, 201,
Sept. 2, 1958, 72 Stat. 1313.
1979 -- Pub. L. 96-39, title VIII, 807(b)(5), July 26, 1979, 93
Stat. 290, struck out item relating to Part III ''Operations on
bottling premises'' in table of parts comprising subchapter C.
26 USC PART I -- GENERAL PROVISIONS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5201. Regulation of operations.
5202. Supervision of operations.
5203. Entry and examination of premises.
5204. Gauging.
(5205. Repealed.)
5206. Containers.
5207. Records and reports.
A prior part I, Establishment, consisted of sections 5231 to 5233,
prior to the general revision of this chapter by Pub. L. 85-859, title
II, 201, Sept. 2, 1958, 72 Stat. 1313.
1984 -- Pub. L. 98-369, div. A, title IV, 454(c)(14), July 18,
1984, 98 Stat. 823, struck out item 5205 ''Stamps''.
26 USC 5201. Regulation of operations
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
Proprietors of distilled spirits plants shall conduct all operations
authorized to be conducted on the premises of such plants under such
regulations as the Secretary shall prescribe.
(b) Distilled spirits for industrial uses
The regulations of the Secretary under this chapter respecting the
production, warehousing, denaturing, distribution, sale, export, and use
of distilled spirits for industrial purposes shall be such as he deems
necessary, advisable, or proper to secure the revenue, to prevent
diversion to illegal uses, and to place the distilled spirits industry
and other industries using such distilled spirits as a chemical raw
material or for other lawful industrial purposes on the highest possible
plane of scientific and commercial efficiency and development consistent
with the provisions of this chapter. Where nonpotable chemical mixtures
containing distilled spirits are produced for transfer to the bonded
premises of a distilled spirits plant for completion of processing, the
Secretary may waive any provision of this chapter with respect to the
production of such mixtures, and the processing of such mixtures on the
bonded premises shall be deemed to be production of distilled spirits
for purposes of this chapter.
(c) Hours of operations
The Secretary may prescribe regulations relating to hours for
distillery operations and to hours for removal of distilled spirits from
distilled spirits plants; however, such regulations shall not be more
restrictive, as to any operation or function, that the provisions of
internal revenue law and regulations relating to such operation or
function in effect on the day preceding the effective date of this
section.
(d) Identification of distilled spirits
The Secretary may provide by regulations for the addition of tracer
elements to distilled spirits to facilitate the enforcement of this
chapter. Tracer elements to be added to distilled spirits at any
distilled spirits plant under provisions of this subsection shall be of
such character and in such quantity as the Secretary may authorize or
require, and such as will not impair the quality of the distilled
spirits for their intended use.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1357;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(21), July 26, 1979, 93
Stat. 283.)
Provisions similar to those comprising subsecs. (a) to (c) of this
section were contained in prior sections of act Aug. 16, 1954, prior to
the general revision of this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 633, 636, 640, 644, 651, 654, 657, 661.
1979 -- Subsec. (a). Pub. L. 96-39 substituted ''all operations
authorized to be conducted'' for ''their operations relating to the
production, storage, denaturing, rectification and bottling of distilled
spirits, and all other operations authorized to be conducted''.
1976 -- Subsecs. (a) to (d). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC 5202. Supervision of operations
TITLE 26 -- INTERNAL REVENUE CODE
All operations on the premises of a distilled spirits plant shall be
conducted under such supervision and controls (including the use of
Government locks and seals) as the Secretary shall by regulations
prescribe.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1357;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 806(a), July 26, 1979, 93 Stat.
279.)
Provisions similar to those comprising this section were contained in
prior sections of act Aug. 16, 1954, prior to the general revision of
this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 628, 633, 644, 646, 649, 652, 661.
1979 -- Pub. L. 96-39 substituted provisions making on-site
supervision and the use of government locks and seals optional at the
discretion of the Secretary of the Treasury for provisions whereby
bonded warehouses are required to be kept under government locks and
certain activities are required to be conducted under government
supervision.
1976 -- Subsecs. (a) to (g). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC 5203. Entry and examination of premises
TITLE 26 -- INTERNAL REVENUE CODE
(a) Keeping premises accessible
Every proprietor of a distilled spirits plant shall furnish the
Secretary such keys as may be required for internal revenue officers to
gain access to the premises and any structures thereon, and such
premises shall always be kept accessible to any officer having such
keys.
(b) Right of entry and examination
It shall be lawful for any internal revenue officer at all times, as
well by night as by day, to enter any distilled spirits plant, or any
other premises where distilled spirits operations are carried on, or
structure or place used in connection therewith for storage or other
purposes; to make examination of the materials, equipment, and
facilities thereon; and make such gauges and inventories as he deems
necessary. Whenever any officer, having demanded admittance, and having
declared his name and office, is not admitted into such premises by the
proprietor or other person having charge thereof, it shall be lawful for
such officer, at all times, as well by night as by day, to use such
force as is necessary for him to gain entry to such premises.
(c) Furnishing facilities and assistance
On the demand of any internal revenue officer or agent, every
proprietor of a distilled spirits plant shall furnish the necessary
facilities and assistance to enable the officer or agent to gauge the
spirits in any container or to examine any apparatus, equipment,
containers, or materials on such premises. Such proprietor shall also,
on demand of such officer or agent, open all doors, and open for
examination all boxes, packages, and all casks, barrels, and other
vessels on such premises.
(d) Authority to break up grounds or walls
It shall be lawful for any internal revenue officer, and any person
acting in his aid, to break up the ground on any part of a distilled
spirits plant or any other premises where distilled spirits operations
are carried on, or any ground adjoining or near to such plant or
premises, or any wall or partition thereof, or belonging thereto, or
other place, to search for any pipe, cock, private conveyance, or
utensil; and, upon finding any such pipe or conveyance leading
therefrom or thereto, to break up any ground, house, wall, or other
place through or into which such pipe or other conveyance leads, and to
break or cut away such pipe or other conveyance, and turn any cock, or
to examine whether such pipe or other conveyance conveys or conceals any
distilled spirits, mash, wort, or beer, or other liquor, from the sight
or view of the officer, so as to prevent or hinder him from taking a
true account thereof.
(e) Penalty
For penalty for violation of this section, see section 5687.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1357;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(22), July 26, 1979, 93
Stat. 283.)
Provisions similar to those comprising this section were contained in
prior sections of act Aug. 16, 1954, prior to the general revision of
this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 636, 652, 686, 700.
1979 -- Subsec. (b). Pub. L. 96-39, 807(a)(22)(A), substituted
''where distilled spirits operations are carried on'' for ''where
distilled spirits are produced or rectified''.
Subsec. (c). Pub. L. 96-39, 807(a)(22)(B), substituted ''on such
premises'' for ''not under the control of the internal revenue officer
in charge''.
Subsec. (d). Pub. L. 96-39, 807(a)(22)(C), substituted ''where
distilled spirits operations are carried on'' for ''where distilled
spirits are produced or rectified''.
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC 5204. Gauging
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
The Secretary may by regulations require the gauging of distilled
spirits for such purposes, as he may deem necessary, and all required
gauges shall be made at such times and under such conditions as he may
by regulations prescribe.
(b) Gauging instruments
For the determination of tax and the prevention and detection of
frauds, the Secretary may prescribe for use such hydrometers,
saccharometers, weighing and gauging instruments, or other means or
methods for ascertaining the quantity, gravity, and producing capacity
of any mash, wort, or beer used, or to be used, in the production of
distilled spirits, and the strength and quantity of spirits subject to
tax, as he may deem necessary; and he may prescribe regulations to
secure a uniform and correct system of inspection, weighing, marking,
and gauging of spirits.
(c) Gauging, marking, and branding by proprietors
The Secretary may by regulations require the proprietor of a
distilled spirits plant, at the proprietor's expense and under such
supervision as the Secretary may require, to do such gauging, marking,
and branding and such mechanical labor pertaining thereto as the
Secretary deems proper and determines may be done without danger to the
revenue.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1358;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(23), July 26, 1979, 93
Stat. 283; Pub. L. 98-369, div. A, title IV, 454(c)(4), July 18, 1984,
98 Stat. 821.)
Provisions similar to those comprising this section were contained in
prior sections of act Aug. 16, 1954, prior to the general revision of
this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 633, 634, 636, 639, 647, 649, 652, 657.
1984 -- Subsec. (c). Pub. L. 98-369 struck out ''stamping,'' before
''marking'' in heading and text.
1979 -- Subsec. (a). Pub. L. 96-39 struck out '', in addition to
those specified in section 5202(f),'' after ''spirits for such
purposes''.
1976 -- Subsecs. (a) to (c). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Amendment by Pub. L. 98-369 effective July 1, 1985, see section
456(b) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC ( 5205. Repealed. Pub. L. 98-369, div. A, title IV, 454(a),
July 18, 1984, 98 Stat. 820)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72
Stat. 1358; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct.
4, 1976, 90 Stat. 1834; Pub. L. 94-569, 1, Oct. 20, 1976, 90 Stat.
2699; Pub. L. 95-176, 2(c), Nov. 14, 1977, 91 Stat. 1364; Pub. L.
96-39, title VIII, 807(a)(24), July 26, 1979, 93 Stat. 283, related to
stamps for containers of distilled spirits.
Repeal effective July 1, 1985, see section 456(b) of Pub. L.
98-369, set out as an Effective Date note under section 5101 of this
title.
26 USC 5206. Containers
TITLE 26 -- INTERNAL REVENUE CODE
(a) Authority to prescribe
The Secretary shall by regulations prescribe the types or kinds of
containers which may be used to contain, store, transfer, convey,
remove, or withdraw distilled spirits.
(b) Standards of fill
The Secretary may by regulations prescribe the standards of fill for
approved containers.
(c) Marking, branding, or identification
Containers of distilled spirits (and cases containing bottles or
other containers of such spirits) shall be marked, branded, or
identified in such manner as the Secretary shall by regulations
prescribe.
(d) Effacement of marks and brands on emptied containers
Every person who empties, or causes to be emptied, any container of
distilled spirits bearing any mark or brand required by law (or
regulations pursuant thereto) shall at the time of emptying such
container efface and obliterate such mark or brand; except that the
Secretary may, by regulations, waive any requirement of this subsection
where he determines that no jeopardy to the revenue will be involved.
(e) Applicability
This section shall be applicable exclusively with respect to
containers of distilled spirits for industrial use, with respect to
containers of distilled spirits of a capacity of more than one gallon
for other than industrial use, and with respect to cases containing
bottles or other containers of distilled spirits.
(f) Cross references
(1) For other provisions relating to regulation of containers of
distilled spirits, see section 5301.
(2) For provisions relating to labeling containers of distilled
spirits of one gallon or less for nonindustrial uses, see section 5(e)
of the Federal Alcohol Administration Act (27 U.S.C. 205(e)). /1/
(3) For provisions relating to the marking and branding of containers
of distilled spirits by proprietors, see section 5204(c).
(4) For penalties and forfeitures relating to marks and brands, see
sections 5604 and 5613.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1360;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 98-369, div. A, title IV, 454(c)(5), July 18,
1984, 98 Stat. 821.)
Section 5(e) of the Federal Alcohol Administration Act (27 U.S.C.
205(e)), referred to in subsec. (f)(2), was renumbered section 105(e)
of the Federal Alcohol Administration Act by Pub. L. 100-690, title
VIII, 8001(a)(2), Nov. 18, 1988, 102 Stat. 4517, and is classified to
section 205(e) of Title 27, Intoxicating Liquors.
Provisions similar to those comprising subsecs. (a) to (c) of this
section were contained in prior sections of act Aug. 16, 1954, prior to
the general revision of this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 603, 633 to 635, 646 to 649, 652, 654.
1984 -- Subsecs. (d) to (f). Pub. L. 98-369 added subsec. (d),
redesignated existing subsecs. (d) and (e) as (e) and (f),
respectively, and in subsec. (f) added pars. (3) and (4).
1976 -- Subsecs. (a) to (c). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary''.
Amendment by Pub. L. 98-369 effective July 1, 1985, see section
456(b) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
/1/ See References in Text note below.
26 USC 5207. Records and reports
TITLE 26 -- INTERNAL REVENUE CODE
(a) Records of distilled spirits plant proprietors
Every distilled spirits plant proprietor shall keep records in such
form and manner as the Secretary shall by regulations prescribe of:
(1) The following production activities --
(A) the receipt of materials intended for use in the production of
distilled spirits, and the use thereof,
(B) the receipt and use of distilled spirits received for
redistillation, and
(C) the kind and quantity of distilled spirits produced.
(2) The following storage activities --
(A) the kind and quantity of distilled spirits, wines, and alcoholic
ingredients entered into storage,
(B) the kind and quantity of distilled spirits, wines, and alcoholic
ingredients removed, and the purpose for which removed, and
(C) the kind and quantity of distilled spirits returned to storage.
(3) The following denaturation activities --
(A) the kind and quantity of denaturants received and used or
otherwise disposed of,
(B) the kind and quantity of distilled spirits denatured, and
(C) the kind and quantity of denatured distilled spirits removed.
(4) The following processing activities --
(A) all distilled spirits, wines, and alcoholic ingredients received
or transferred,
(B) the kind and quantity of distilled spirits packaged or bottled,
and
(C) the kind and quantity of distilled spirits removed from his
premises.
(5) Such additional information with respect to activities described
in paragraphs (1), (2), (3), and (4), and with respect to other
activities, as may by regulations be required.
(b) Reports
Every person required to keep records under subsection (a) shall
render such reports covering his operations, at such times and in such
form and manner and containing such information, as the Secretary shall
by regulations prescribe.
(c) Preservation and inspection
The records required by subsection (a) and a copy of each report
required by subsection (b) shall be kept on the premises where the
operations covered by the record are carried on and shall be available
for inspection by any internal revenue officer during business hours,
and shall be preserved by the person required to keep such records and
reports for such period as the Secretary shall by regulations prescribe.
(d) Penalty
For penalty and forfeiture for refusal or neglect to keep records
required under this section, or for false entries therein, see sections
5603 and 5615(5).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1361;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 95-176, 2(e), Nov. 14, 1977, 91 Stat. 1364; Pub.
L. 96-39, title VIII, 807(a)(25), July 26, 1979, 93 Stat. 283; Pub.
L. 98-369, div. A, title IV, 454(c)(6), July 18, 1984, 98 Stat. 821.)
Provisions similar to those comprising this section were contained in
prior sections of act Aug. 16, 1954, prior to the general revision of
this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 637, 638, 652, 657, 662, 681.
1984 -- Subsec. (a)(4)(D). Pub. L. 98-369, 454(c)(6), struck out
subpar. (D) which required every distilled spirits plant proprietor to
keep records in such form and manner as prescribed by the Secretary of
the receipt, use, and balance on hand of all stamps required by law or
regulations to be used by the proprietor.
1979 -- Subsec. (a). Pub. L. 96-39 struck out provisions relating to
the bottling of distilled spirits in bond and relating to the kind and
quantity of distilled spirits returned to bonded premises and inserted
provisions relating to the kind and quantity of distilled spirits
returned to storage and relating to receipt, use, and balance on hand of
all stamps required by law or regulations to be used by the Secretary.
Subsec. (b). Pub. L. 96-39 redesignated subsec. (c) as (b) and
struck out ''or (b)'' after ''subsection (a)''. Former subsec. (b),
relating to records of rectifiers and bottlers, was struck out.
Subsec. (c). Pub. L. 96-39 redesignated subsec. (d) as (c), struck
out ''and (b),'' after ''subsection (a)'', and substituted ''subsection
(b)'' for ''subsection (c)''. Former subsec. (c) redesignated (b).
Subsecs. (d), (e). Pub. L. 96-39 redesignated subsec. (e) as (d).
Former subsec. (d) redesignated (c).
1977 -- Subsec. (a)(10), (11). Pub. L. 95-176, 2(e)(2), (3), added
par. (10) and redesignated former par. (10) as (11).
1976 -- Subsecs. (a) to (d). Pub. L. 94 -- 455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Amendment by Pub. L. 98-369 effective July 1, 1985, see section
456(b) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 95-176 effective on first day of first calendar
month beginning more than 90 days after Nov. 14, 1977, see section 7 of
Pub. L. 95-176, set out as a note under section 5003 of this title.
26 USC PART II -- OPERATIONS ON BONDED PREMISES
TITLE 26 -- INTERNAL REVENUE CODE
Subpart
A. General
B. Production.
C. Storage.
D. Denaturation.
A prior part II, Operation, consisted of sections 5241 to 5252, prior
to the general revision of this chapter by Pub. L. 85-859, title II,
201, Sept. 2, 1958, 72 Stat. 1313.
26 USC Subpart A -- General
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5211. Production and entry of distilled spirits.
5212. Transfer of distilled spirits between bonded premises.
5213. Withdrawal of distilled spirits from bonded premises on
determination of tax.
5214. Withdrawal of distilled spirits from bonded premises free of
tax or without payment of tax.
5215. Return of tax determined distilled spirits to bonded premises.
5216. Regulation of operations.
26 USC 5211. Production and entry of distilled spirits
TITLE 26 -- INTERNAL REVENUE CODE
Distilled spirits in the process of production in a distilled spirits
plant may be held prior to the production gauge only for so long as is
reasonably necessary to complete the process of production. Under such
regulations as the Secretary shall prescribe, all distilled spirits
produced in a distilled spirits plant shall be gauged and a record made
of such gauge within a reasonable time after the production thereof has
been completed. The proprietor shall, pursuant to such production gauge
and in accordance with such regulations as the Secretary shall
prescribe, make appropriate entry for --
(1) deposit of such spirits on bonded premises for storage or
processing;
(2) withdrawal upon determination of tax as authorized by law;
(3) withdrawal under the provisions of section 5214; and
(4) transfer for redistillation under the provisions of section 5223.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1362;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(26), July 26, 1979, 93
Stat. 284.)
A prior section 5211, act Aug. 16, 1954, ch. 736, 68A Stat. 638,
related to detention of casks, packages, or containers on suspicion,
prior to the general revision of this chapter by Pub. L. 85-859. See
section 5311 of this title.
Provisions similar to those comprising this section were contained in
prior sections 5193(a), 5194(a), (e) to (g), 5242(a), 5305, act Aug.
16, 1954, ch. 736, 68A Stat. 633 to 636, 645, 657, prior to the
general revision of this chapter by Pub. L. 85-859.
1979 -- Pars. (1), (5). Pub. L. 96-39 substituted in par. (1) ''on
bonded premises for storage or processing'' for ''in storage on bonded
premises'' and struck out par. (5) which related to an appropriate
entry by the proprietor for immediate denaturation.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC 5212. Transfer of distilled spirits between bonded premises
TITLE 26 -- INTERNAL REVENUE CODE
Bulk distilled spirits on which the internal revenue tax has not been
paid or determined as authorized by law may, under such regulations as
the Secretary shall prescribe, be transferred in bond between bonded
premises in any approved container. For the purposes of this chapter,
the removal of bulk distilled spirits for transfer in bond between
bonded premises shall not be construed to be a withdrawal from bonded
premises. The provisions of this section restricting transfers to bulk
distilled spirits shall not apply to alcohol bottled under the
provisions of section 5235 which is to be withdrawn for industrial
purposes.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1362;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 805(b)(2), July 26, 1979, 93
Stat. 276; Pub. L. 96-598, 6(d), Dec. 24, 1980, 94 Stat. 3490.)
A prior section 5212, act Aug. 16, 1954, ch. 736, 68A Stat. 639,
related to the prevention and detection of fraud and contained a cross
reference to provisions for gauging and marking of spirits, prior to the
general revision of this chapter by Pub. L. 85-859. See section 5204(b)
of this title.
Provisions similar to those comprising this section were contained in
prior sections 5194(a), (e) to (g), 5217(a), 5246, 5308, act Aug. 16,
1954, ch. 736, 68A Stat. 634 to 636, 641, 647, 657, prior to the
general revision of this chapter by Pub. L. 85-859.
1980 -- Pub. L. 96-598 inserted provision that restriction on
transfers to bulk distilled spirits not apply to alcohol bottled under
section 5235 of this title which is to be withdrawn for industrial
purposes.
1979 -- Pub. L. 96-39 substituted ''Bulk distilled spirits'' for
''Distilled spirits'' and ''bulk distilled spirits'' for ''distilled
spirits''.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC 5213. Withdrawal of distilled spirits from bonded premises on
determination of tax
TITLE 26 -- INTERNAL REVENUE CODE
Subject to the provisions of section 5173, distilled spirits may be
withdrawn from the bonded premises of a distilled spirits plant on
payment or determination of tax thereon, in approved containers, under
such regulations as the Secretary shall prescribe.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1362;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(27), July 26, 1979, 93
Stat. 285.)
A prior section 5213, act Aug. 16, 1954, ch. 736, 68A Stat. 639,
related to return of materials used in the manufacture of distilled
spirits, prior to the general revision of this chapter by Pub. L.
85-859. See sections 5002(a)(6) and 5291 of this title.
Provisions similar to those comprising this section were contained in
prior sections 5194(a), (e) and 5244, act Aug. 16, 1954, ch. 736, 68A
Stat. 634, 647, prior to the general revision of this chapter by Pub.
L. 85-859.
1979 -- Pub. L. 96-39 substituted ''Subject to the provisions of
section 5173'' for ''On application to the Secretary and subject to the
provisions of section 5174(a)''.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC 5214. Withdrawal of distilled spirits from bonded premises free
of tax or without payment of tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) Purposes
Distilled spirits on which the internal revenue tax has not been paid
or determined may, subject to such regulations as the Secretary shall
prescribe, be withdrawn from the bonded premises of any distilled
spirits plant in approved containers --
(1) free of tax after denaturation of such spirits in the manner
prescribed by law for --
(A) exportation;
(B) use in the manufacture of ether, chloroform, or other definite
chemical substance where such distilled spirits are changed into some
other chemical substance and do not appear in the finished product; or
(C) any other use in the arts and industries (except for uses
prohibited by section 5273(b) or (d)) and for fuel, light, and power;
or
(2) free of tax by, and for the use of, the United States or any
governmental agency thereof, any State, any political subdivision of a
State, or the District of Columbia, for nonbeverage purposes; or
(3) free of tax for nonbeverage purposes and not for resale or use in
the manufacture of any product for sale --
(A) for the use of any educational organization described in section
170(b)(1)(A)(ii) which is exempt from income tax under section 501(a),
or for the use of any scientific university or college of learning;
(B) for any laboratory for use exclusively in scientific research;
(C) for use at any hospital, blood bank, or sanitarium), (including
use in making any analysis or test at such hospital, blood bank, or
sanitarium), or at any pathological laboratory exclusively engaged in
making analyses, or tests, for hospitals or sanitariums; or
(D) for the use of any clinic operated for charity and not for profit
(including use in the compounding of bona fide medicines for treatment
outside of such clinics of patients thereof); or
(4) without payment of tax for exportation, after making such
application and entries, filing such bonds as are required by section
5175, and complying with such other requirements as may by regulations
be prescribed; or
(5) without payment of tax for use in wine production, as authorized
by section 5373; or
(6) without payment of tax for transfer to manufacturing bonded
warehouses for manufacturing in such warehouses for export, as
authorized by law; or
(7) without payment of tax for use of certain vessels and aircraft,
as authorized by law; or
(8) without payment of tax for transfer to foreign-trade zones, as
authorized by law; or
(9) without payment of tax, for transfer (for the purpose of storage
pending exportation) to any customs bonded warehouse from which
distilled spirits may be exported, and distilled spirits transferred to
a customs bonded warehouse under this paragraph shall be entered,
stored, and accounted for under such regulations and bonds as the
Secretary may prescribe; or
(10) without payment of tax by a proprietor of bonded premises for
use in research, development, or testing (other than consumer testing or
other market analysis) of processes, systems, materials, or equipment,
relating to distilled spirits or distilled spirits operations, under
such limitations and conditions as to quantities, use, and
accountability as the Secretary may by regulations require for the
protection of the revenue; or
(11) free of tax when contained in an article (within the meaning of
section 5002(a)(14)); or
(12) free of tax in the case of distilled spirits produced under
section 5181; or
(13) without payment of tax for use on bonded wine cellar premises in
the production of wine or wine products which will be rendered unfit for
beverage use and removed pursuant to section 5362(d).
(b) Cross references
(1) For provisions relating to denaturation, see sections 5241 and
5242.
(2) For provisions requiring permit for users of distilled spirits
withdrawn free of tax and for users of specially denatured distilled
spirits, see section 5271.
(3) For provisions relating to withdrawal of distilled spirits
without payment of tax for use of certain vessels and aircraft, as
authorized by law, see 19 U.S.C. 1309.
(4) For provisions relating to withdrawal of distilled spirits
without payment of tax for manufacture in manufacturing bonded
warehouse, see 19 U.S.C. 1311.
(5) For provisions relating to foreign-trade zones, see 19 U.S.C.
81c.
(6) For provisions authorizing regulations for withdrawal of
distilled spirits free of tax for use of the United States, see section
7510.
(7) For provisions authorizing removal of distillates to bonded wine
cellars for use in the production of distilling material, see section
5373(c).
(8) For provisions relating to distilled spirits for use of foreign
embassies, legations, etc., see section 5066.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1362;
amended Pub. L. 91-172, title I, 101(j)(29), Dec. 30, 1969, 83 Stat.
529; Pub. L. 94-455, title XIX, 1905(c)(2), 1906(b)(13)(A), Oct. 4,
1976, 90 Stat. 1823, 1834; Pub. L. 95-176, 3(a), (d), 4(a), Nov. 14,
1977, 91 Stat. 1365; Pub. L. 96-39, title VIII, 807(a)(28), July 26,
1979, 93 Stat. 285; Pub. L. 96-223, title II, 232(e)(2)(B), Apr. 2,
1980, 94 Stat. 280; Pub. L. 98-369, div. A, title IV, 455(a), July 18,
1984, 98 Stat. 823.)
A prior section 5214, act Aug. 16, 1954, ch. 736, 68A Stat. 639,
related to regulation of traffic in containers of distilled spirits,
prior to the general revision of this chapter by Pub. L. 85-859. See
section 5301(a), (c), (d) of this title.
Provisions similar to those comprising subsecs. (a), (1) to (4),
(9), (b)(3) to (5) of this section were contained in prior sections of
act Aug. 16, 1954, prior to the general revision of this chapter by
Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 646-648, 658, 661, 662, 667.
1984 -- Subsec. (a)(13). Pub. L. 98-369 added par. (13).
1980 -- Subsec. (a)(12). Pub. L. 96-223 added par. (12).
1979 -- Subsec. (a)(6). Pub. L. 96-39, 807(a)(28)(A), inserted
''for manufacturing in such warehouses for export'' after ''bonded
warehouses'' and substituted ''by law'' for ''by section 5522(a)''.
Subsec. (a)(9). Pub. L. 96-39, 807(a)(28)(B), struck out ''in the
case of distilled spirits bottled in bond for export under section 5233
or distilled spirits returned to bonded premises under section
5215(b),'' after ''payment of tax,''.
Subsec. (a)(10). Pub. L. 96-39, 807(a)(28)(C), (D), substituted
''distilled spirits operations'' for ''distillery operations''.
Subsec. (a)(11). Pub. L. 96-39, 807(a)(28)(D), added par. (11).
Subsec. (b)(4) to (8). Pub. L. 96-39, 807(a)(28)(E), added par.
(4) and redesignated former pars. (4) to (7) as (5) to (8),
respectively.
1977 -- Subsec. (a)(9). Pub. L. 95-176, 3(a), substituted
provisions for withdrawal of distilled spirits from bonded premises
without payment of tax where the distilled spirits are bottled in bond
for export or are returned to bonded premises for transfer (for the
purpose of storage pending exportation) to any customs bonded warehouse
for exportation and requiring the transferred distilled spirits to be
entered, stored, and accounted for, for prior provision for tax free
withdrawals for use as samples in making tests or laboratory analyses.
Subsec. (a)(10). Pub. L. 95-176, 4(a), added par. (10).
Subsec. (b)(7). Pub. L. 95-176, 3(d), added par. (7).
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary'' in introductory provisions and struck out ''or
Territory'' after ''State'' in par. (2).
1969 -- Subsec. (a)(3)(A). Pub. L. 91-172 substituted ''section
170(b)(1)(A)(ii)'' for ''section 503(b)(2)''.
Amendment by Pub. L. 98-369 effective July 18, 1984, see section
456(c) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by Pub. L. 96-223 effective on first day of first calendar
month beginning more than 60 days after Apr. 2, 1980, see section
232(h)(3) of Pub. L. 96-223, set out as an Effective Date note under
section 5181 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 95-176 effective on first day of first calendar
month beginning more than 90 days after Nov. 14, 1977, see section 7 of
Pub. L. 95-176, set out as a note under section 5003 of this title.
Amendment by section 1905(c)(2) of Pub. L. 94-455 effective on first
day of first month which begins more than 90 days after Oct. 4, 1976,
see section 1905(d) of Pub. L. 94-455, set out as a note under section
5005 of this title.
Amendment by Pub. L. 91-172 effective Jan. 1, 1970, see section
101(k)(1) of Pub. L. 91-172, set out as an Effective Date note under
section 4940 of this title.
26 USC 5215. Return of tax determined distilled spirits to bonded
premises
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
Under such regulations as the Secretary may prescribe, distilled
spirits on which tax has been determined or paid may be returned to the
bonded premises of a distilled spirits plant but only for destruction,
denaturation, redistillation, reconditioning, or rebottling.
(b) Applicability of chapter to distilled spirits returned to a
distilled spirits plant
All provisions of this chapter applicable to distilled spirits in
bond shall be applicable to distilled spirits returned to bonded
premises under the provisions of this section on such return.
(c) Return of bottled distilled spirits for relabeling and reclosing
Under such regulations as the Secretary shall prescribe, bottled
distilled spirits withdrawn from bonded premises may be returned to
bonded premises for relabeling or reclosing, and the tax under section
5001 shall not again be collected on such spirits.
(d) Cross reference
For provisions relating to the abatement, credit, or refund of tax on
distilled spirits returned to a distilled spirits plant under this
section, see section 5008(c).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1364;
amended Pub. L. 89-44, title VIII, 805(c), June 21, 1965, 79 Stat.
161; Pub. L. 91-659, 2(c), Jan. 8, 1971, 84 Stat. 1964; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub.
L. 95-176, 2(a), Nov. 14, 1977, 91 Stat. 1363; Pub. L. 96-39, title
VIII, 807(a)(29), July 26, 1979, 93 Stat. 285; Pub. L. 98-369, div. A,
title IV, 454(c)(7), July 18, 1984, 98 Stat. 821.)
A prior section 5215, act Aug. 16, 1954, ch. 736, 68A Stat. 640,
related to exemption of distillers of fruit brandy from certain
requirements, prior to the general revision of this chapter by Pub. L.
85-859. See sections 5201(c), 5312(a), (c), 5373(a) and 5562 of this
title.
1984 -- Subsec. (c). Pub. L. 98-369 substituted ''reclosing'' for
''restamping'' in heading and text.
1979 -- Pub. L. 96-39 amended section generally thereby authorizing
the return of distilled spirits to the bonded premises of the distilled
spirits plant for certain enumerated purposes except mere storage.
1977 -- Subsec. (a). Pub. L. 95-176 reenacted existing provisions
but struck out last sentence relating to applicability of chapter to
distilled spirits returned to bonded premises, which was covered in
subsec. (d).
Subsecs. (b), (c). Pub. L. 95-176 added subsecs. (b) and (c) and
redesignated former subsec. (b) as (e).
Subsec. (d). Pub. L. 95-176 redesignated last sentence of former
subsec. (a) as subsec. (d) and inserted introductory phrase ''Except
as otherwise provided in this section,''.
Subsec. (e). Pub. L. 95-176 redesignated former subsec. (b) as par.
(1) and added par. (2).
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
1971 -- Subsec. (a). Pub. L. 91-659, 2(c)(1), struck out
requirements that withdrawn distilled spirits be returned when found
unsuitable, in bulk containers, before processing and before removal
from the original container and permitted return of withdrawn distilled
spirits other than products to which any alcoholic ingredients other
than such distilled spirits have been added and made additional
authorization under section 5234(a)(1)(B) for mingling returned
distilled spirits.
Subsec. (b). Pub. L. 91-659, 2(c)(2), (3), repealed subsec. (b)
which provided for definition of ''original container in which such
distilled spirits were withdrawn from bonded premises'' in the case of
distilled spirits withdrawn by pipeline. Former subsec. (c)
redesignated (b).
1965 -- Subsec. (a). Pub. L. 89-44 inserted reference to destruction
to redistillation, denaturation, and mingling in second sentence on list
of options which might be used in disposing of returned distilled
spirits.
Amendment by Pub. L. 98-369 effective July 1, 1985, see section
456(b) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 95-176 effective on first day of first calendar
month beginning more than 90 days after Nov. 14, 1977, see section 7 of
Pub. L. 95-176, set out as a note under section 5003 of this title.
Amendment by Pub. L. 91-659 effective on first day of first calendar
month which begins more than 90 days after January 8, 1971, see section
6 of Pub. L. 91-659, set out as an Effective Date note under section
5066 of this title.
Amendment by Pub. L. 89-44 effective July 1, 1965, see section
805(g)(1) of Pub. L. 89-44, set out as a note under section 5008 of
this title.
Subsec. (a) of this section to apply to distilled spirits to which
alcoholic ingredients other than distilled spirits have been added and
which have been withdrawn from a distilled spirits plant before Jan. 1,
1980, only if such spirits are returned to the distilled spirits plant
from which withdrawn, see section 808(e) of Pub. L. 96-39, set out as a
note under section 5061 of this title.
26 USC 5216. Regulation of operations
TITLE 26 -- INTERNAL REVENUE CODE
For general provisions relating to operations on bonded premises see
part I of this subchapter.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1364.)
A prior section 5216, act Aug. 16, 1954, ch. 736, 68A Stat. 640,
related to ''mash, wort and vinegar; vinegar factories'', prior to the
general revision of this chapter by Pub. L. 85-859. See sections
5178(c)(4), 5222(a)(1), (2)(D), (d), 5501, 5502(a), 5503, 5504(a), (b),
5505(a), (c) and 5601(a)(7), (8), (9)(A) of this title.
A prior section 5217, acts Aug. 16, 1954, ch. 736, 68A Stat. 641;
July 11, 1956, ch. 573, 1, 70 Stat. 530; July 11, 1958, Pub. L.
85-517, 72 Stat. 357, related to national emergency transfers, prior to
the general revision of this chapter by Pub. L. 85-859.
26 USC Subpart B -- Production
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5221. Commencement, suspension, and resumption of operations.
5222. Production, receipt, removal, and use of distilling materials.
5223. Redistillation of spirits, articles, and residues.
1965 -- Pub. L. 89-44, title VIII, 805(f)(9), June 21, 1965, 79
Stat. 161, inserted reference to articles and residues in item 5223.
26 USC 5221. Commencement, suspension, and resumption of operations
TITLE 26 -- INTERNAL REVENUE CODE
(a) Commencement, suspension, and resumption
The proprietor of a distilled spirits plant authorized to produce
distilled spirits shall not commence production operations until written
notice has been given to the Secretary stating when operations will
begin. Any proprietor of a distilled spirits plant desiring to suspend
production of distilled spirits shall give notice in writing to the
Secretary, stating when he will suspend such operations. Pursuant to
such notice, an internal revenue officer shall take such action as the
Secretary shall prescribe to prevent the production of distilled
spirits. No proprietor, after having given such notice, shall, after
the time stated therein, produce distilled spirits on such premises
until he again gives notice in writing to the Secretary stating the time
when he will resume operations. At the time stated in the notice of
resuming such operations an internal revenue officer shall take such
action as is necessary to permit operations to be resumed. The notices
submitted under this section shall be in such form and submitted in such
manner as the Secretary may by regulations require. Nothing in this
section shall apply to suspensions caused by unavoidable accidents; and
the Secretary shall prescribe regulations to govern such cases of
involuntary suspension.
(b) Penalty
For penalty and forfeiture for carrying on the business of distiller
after having given notice of suspension, see sections 5601(a)(14) and
5615(3).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1364;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 806(b), July 26, 1979, 93 Stat.
279.)
Provisions similar to those comprising subsec. (a) of this section
were contained in prior section 5191(a), act Aug. 16, 1954, ch. 736,
68A Stat. 632, prior to the general revision of this chapter by Pub.
L. 85-859.
1979 -- Subsec. (a). Pub. L. 96-39 substituted ''until written
notice has been given to the Secretary stating when operations will
begin'' for ''until an internal revenue officer has been assigned to the
premises''.
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC 5222. Production, receipt, removal, and use of distilling
materials
TITLE 26 -- INTERNAL REVENUE CODE
(a) Production, removal, and use
(1) No mash, wort, or wash fit for distillation or for the production
of distilled spirits shall be made or fermented in any building or on
any premises other than on the bonded premises of a distilled spirits
plant duly authorized to produce distilled spirits according to law;
and no mash, wort, or wash so made or fermented shall be removed from
any such premises before being distilled, except as authorized by the
Secretary; and no person other than an authorized distiller shall, by
distillation or any other process, produce distilled spirits from any
mash, wort, wash, or other material.
(2) Nothing in this subsection shall be construed to apply to --
(A) authorized operations performed on the premises of vinegar plants
established under part I of subchapter H;
(B) authorized production and removal of fermented materials produced
on authorized brewery or bonded wine cellar premises as provided by law;
(C) products exempt from tax under the provisions of section 5042 or
5053(e); or
(D) fermented materials used in the manufacture of vinegar by
fermentation.
(b) Receipt
Under such regulations as the Secretary may prescribe, fermented
materials to be used in the production of distilled spirits may be
received on the bonded premises of a distilled spirits plant authorized
to produce distilled spirits as follows --
(1) from the premises of a bonded wine cellar authorized to remove
such material by section 5362(c)(6);
(2) conveyed without payment of tax from contiguous brewery premises
where produced; or
(3) cider exempt from tax under the provisions of section 5042(a)(1).
(c) Processing of distilled spirits containing extraneous substances
The Secretary may by regulations provide for the removal from the
distilling system, and the addition to the fermented or unfermented
distilling material, of distilled spirits containing substantial
quantities of fusel oil or aldehydes, or other extraneous substances.
(d) Penalty
For penalty and forfeiture for unlawful production, removal, or use
of material fit for distillation or for the production of distilled
spirits, and for penalty and forfeiture for unlawful production of
distilled spirits, see sections 5601(a)(7), 5601(a)(8), and 5615(4).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1365;
amended Pub. L. 94-455, title XIX, 1905(b)(6)(D), 1906(b)(13)(A),
Oct. 4, 1976, 90 Stat. 1823, 1834; Pub. L. 95-458, 2(b)(4), Oct. 14,
1978, 92 Stat. 1256; Pub. L. 96-39, title VIII, 807(a)(30), July 26,
1979, 93 Stat. 286.)
Provisions similar to those comprising subsecs. (a)(1), (2)(D), (b),
and (d) of this section were contained in prior sections of act Aug.
16, 1954, prior to the general revision of this chapter by Pub. L.
85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 640, 641, 658, 665, 675.
1979 -- Subsec. (c). Pub. L. 96-39 struck out '', in the production
facilities of a distilled spirits plant'' after ''distilling material''.
1978 -- Subsec. (a)(2)(C). Pub. L. 95-458 inserted reference to
section 5053(e).
1976 -- Subsecs. (a)(1), (b), (c). Pub. L. 94-455, 1906(b)(13)(A),
struck out ''or his delegate'' after ''Secretary''.
Subsec. (d). Pub. L. 94-455, 1905(b)(6)(D), struck out ''5601(b)(3),
5601(b)(4),'' after ''5601(a)(8),''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 95-458 effective on first day of first calendar
month beginning more than 90 days after Oct. 14, 1978, see section 2(c)
of Pub. L. 95-458, set out as a note under section 5042 of this title.
Amendment by section 1905(b)(6)(D) of Pub. L. 94-455 effective on
first day of first month which begins more than 90 days after Oct. 4,
1976, see section 1905(d) of Pub. L. 94-455, set out as a note under
section 5005 of this title.
26 USC 5223. Redistillation of spirits, articles, and residues
TITLE 26 -- INTERNAL REVENUE CODE
(a) Spirits on bonded premises
The proprietor of a distilled spirits plant authorized to produce
distilled spirits may, under such regulations as the Secretary shall
prescribe, redistill any distilled spirits which have not been withdrawn
from bonded premises.
(b) Distilled spirits returned for redistillation
Distilled spirits which have been lawfully removed from bonded
premises free of tax or without payment of tax may, under such
regulations as the Secretary may prescribe, be returned for
redistillation to the bonded premises of a distilled spirits plant
authorized to produce distilled spirits.
(c) Redistillation of articles and residues
Articles, containing denatured distilled spirits, which were
manufactured under the provisions of subchapter D or on the bonded
premises of a distilled spirits plant, and the spirits residues of
manufacturing processes related thereto, may be received, and the
distilled spirits therein recovered by redistillation, on the bonded
premises of a distilled spirits plant authorized to produce distilled
spirits, under such regulations as the Secretary may prescribe.
(d) Denatured distilled spirits, articles, and residues
Distilled spirits recovered by the redistillation of denatured
distilled spirits, or by the redistillation of the articles or residues
described in subsection (c), may not be withdrawn from bonded premises
except for industrial use or after denaturation thereof in the manner
prescribed by law.
(e) Products of redistillation
All distilled spirits redistilled on bonded premises subsequent to
production gauge shall be treated the same as if such spirits had been
originally produced by the redistiller and all provisions of this
chapter applicable to the original production of distilled spirits shall
be applicable thereto. Any prior obligation as to taxes, liens, and
bonds with respect to such distilled spirits shall be extinguished on
redistillation. Nothing in this subsection shall be construed as
affecting any provision of law relating to the labeling of distilled
spirits or as limiting the authority of the Secretary to regulate the
marking, branding, or identification of distilled spirits redistilled
under this section.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1365;
amended Pub. L. 89-44, title VIII, 805(d), (f)(8), (10), June 21,
1965, 79 Stat. 161, 162; Pub. L. 94-455, title XIX, 1906(b)(13)(A),
Oct. 4, 1976, 90 Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(31),
July 26, 1979, 93 Stat. 286.)
Provisions similar to those comprising subsecs. (a) and (d) of this
section were contained in prior sections of act Aug. 16, 1954, prior to
the general revision of this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 635, 641, 657.
1979 -- Subsec. (c). Pub. L. 96-39, 807(a)(31)(A), inserted ''or on
the bonded premises of a distilled spirits plant'' after ''subchapter
D,''.
Subsec. (e). Pub. L. 96-39, 807(a)(31)(B), struck out provisions
relating to the treatment of the processing of distilled spirits,
subsequent to production gauge, in the manufacture of vodka in the
production facilities of a distilled spirits plant as a redistillation
of the spirits for purposes of this subsection, subsection (a), and
sections 5025(d) and 5215.
1976 -- Subsecs. (a) to (c), (e). Pub. L. 94-455 struck out ''or
his delegate'' after ''Secretary'' wherever appearing.
1965 -- Pub. L. 89-44, 805(f)(8), substituted ''spirits, articles,
and residues'' for ''spirits'' in section catchline.
Subsec. (c). Pub. L. 89-44, 805(d), added subsec. (c). Former
subsecs. (c) redesignated (d).
Subsec. (d). Pub. L. 89-44, 805(d), (f)(10), redesignated subsec.
(c) as (d), inserted '', articles, and residues'' after ''distilled
spirits'' in heading, and inserted '', or by the redistillation of the
articles or residues described in subsection (c),'' after ''denatured
distilled spirits'' in text. Former subsec. (d) redesignated (e).
Subsec. (e). Pub. L. 89-11, 805(d), redesignated former subsec. (d)
as (e).
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 89-44 effective Oct. 1, 1965, see section
805(g)(2) of Pub. L. 89-44, set out as a note under section 5004 of
this title.
26 USC Subpart C -- Storage
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5231. Entry for deposit.
5232. Imported distilled spirits.
(5233, 5234. Repealed.)
5235. Bottling of alcohol for industrial purposes.
5236. Discontinuance of storage facilities and transfer of distilled
spirits.
1979 -- Pub. L. 96-39, title VIII, 807(b)(6), July 26, 1979, 93
Stat. 290, substituted ''Entry for deposit'' for ''Entry for deposit in
storage'' in item 5231 and struck out items 5233 ''Bottling of distilled
spirits in bond'' and 5234 ''Mingling and blending of distilled
spirits''.
26 USC 5231. Entry for deposit
TITLE 26 -- INTERNAL REVENUE CODE
All distilled spirits entered for deposit on the bonded premises of a
distilled spirits plant under section 5211 shall, under such regulations
as the Secretary shall prescribe, be deposited in the facilities on the
bonded premises designated in the entry for deposit.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1366;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(32), July 26, 1979, 93
Stat. 286.)
A prior section 5231, act Aug. 16, 1954, ch. 736, 68A Stat. 643,
related to authority to establish internal revenue bonded warehouses,
prior to the general revision of this chapter by Pub. L. 85-859. See
sections 5171(a), 5172, 5173(a), and 5178(a)(1)(A)(B), (3)(A)(B) of this
title.
Provisions similar to those comprising this section were contained in
prior section 5242(a), (b)(5), act Aug. 16, 1954, ch. 736, 68A Stat.
645, prior to the general revision of this chapter by Pub. L. 85-859.
1979 -- Pub. L. 96-39 struck out in section catchline ''in storage''
after ''for deposit'' and subsec. (a) catchline and in text substituted
''on the bonded premises of a distilled spirits plant'' for ''in
storage'' and ''in the facilities'' for ''in storage facilities'' and
repealed subsec. (b) which related to a cross reference to section
5006(a)(2) for provisions requiring that all distilled spirits entered
for deposit be withdrawn within 20 years from date of original entry for
deposit.
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC 5232. Imported distilled spirits
TITLE 26 -- INTERNAL REVENUE CODE
(a) Transfer to distilled spirits plant without payment of tax
Distilled spirits imported or brought into the United States in bulk
containers may, under such regulations as the Secretary shall prescribe,
be withdrawn from customs custody and transferred in such bulk
containers or by pipeline to the bonded premises of a distilled spirits
plant without payment of the internal revenue tax imposed on such
distilled spirits. The person operating the bonded premises of the
distilled spirits plant to which such spirits are transferred shall
become liable for the tax on distilled spirits withdrawn from customs
custody under this section upon release of the spirits from customs
custody, and the importer, or the person bringing such distilled spirits
into the United States, shall thereupon be relieved of his liability for
such tax.
(b) Withdrawals, etc.
Distilled spirits transferred pursuant to subsection (a) --
(1) may be redistilled or denatured only if of 185 degrees or more of
proof, and
(2) may be withdrawn for any purpose authorized by this chapter, in
the same manner as domestic distilled spirits.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1366;
amended Pub. L. 90-630, 3(a), Oct. 22, 1968, 82 Stat. 1328; Pub. L.
91-659, 7, Jan. 8, 1971, 84 Stat. 1967; Pub. L. 94-455, title XIX,
1905(a)(15), Oct. 4, 1976, 90 Stat. 1820; Pub. L. 96-39, title VIII,
807(a)(33), July 26, 1979, 93 Stat. 286.)
A prior section 5232, acts Aug. 16, 1954, ch. 736, 68A Stat. 643;
Sept. 2, 1958, Pub. L. 85-859, title II, 206(b), 72 Stat. 1431,
related to bond requirements of internal revenue bonded warehouses,
prior to the general revision of this chapter by Pub. L. 85-859. See
sections 5005(c)(1), 5006(a)(2), 5173(a), (c)(1), 5174(a)(1), 5176(a),
(b), and 5177(b)(1) of this title.
Provisions similar to those comprising this section were contained in
prior section 5311, act Aug. 16, 1954, ch. 736, 68A Stat. 658, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Subsec. (b). Pub. L. 96-39 redesignated par. (2) and (3) as
(1) and (2). Former par. (1), which prohibited distilled spirits
transferred pursuant to subsection (a) from being bottled in bond under
section 5233, was struck out.
1976 -- Subsec. (a). Pub. L. 94-455 inserted '', or the person
bringing such distilled spirits into the United States,'' after ''and
the importer''.
1971 -- Subsec. (a). Pub. L. 91-659, 7(a), extended privilege of
transfer of distilled spirits to the plant without payment of tax to
distilled spirits imported, or brought into the United States, and
struck out reference to section 5001.
Subsec. (b). Pub. L. 91-659, 7(b), struck out ''Imported'' before
''distilled spirits'' and thus applied subsection to all distilled
spirits.
1968 -- Pub. L. 90-630 permitted withdrawal in bulk containers or by
pipeline from customs custody to internal revenue bond without payment
of internal revenue taxes of all imported distilled spirits in bulk
containers, regardless of proof, extended to all such imported distilled
spirits the withdrawal privileges already available to imported
distilled spirits of at least 185 proof, whether or not they have been
redistilled or denatured, provided that transferor's liability for the
internal revenue tax ceases when the transferee's liability attaches,
and established that imported bulk spirits are not eligible for the
bottled in bond privileges available to domestic spirits.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
Amendment by Pub. L. 91-659 effective on first day of first calendar
month which begins more than 90 days after Jan. 8, 1971, see section 6
of Pub. L. 91-659, set out as an Effective Date note under section 5066
of this title.
Amendment by Pub. L. 90-630 applicable only to withdrawals from
customs custody on or after first day of first calendar month which
begins more than 90 days after Oct. 22, 1968, see section 4 of Pub. L.
90-630, set out as a note under section 5008 of this title.
26 USC ( 5233. Repealed. Pub. L. 96-39, title VIII, 807(a)(34), July
26, 1979, 93 Stat. 286)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72
Stat. 1366; amended Pub. L. 94-455, title XIX, 1905(a)(16),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1820, 1834, related to the
bottling of distilled spirits in bond.
A prior section 5233, act Aug. 16, 1954, ch. 736, 68A Stat. 644,
made a cross reference provision to establishment of bottling in bond
department, prior to the general revision of this chapter by Pub. L.
85-859.
Provisions similar to those comprising subsecs. (a) to (d) and
(e)(1) of section 5233 added by Pub. L. 85-859, title II, 201, Sept.
2, 1958, 72 Stat. 1366, were contained in prior section 5243(a) to (c),
(g), act Aug. 16, 1954, ch. 736, 68A Stat. 645, as amended by Pub.
L. 85-859, title II, 206(c), Sept. 2, 1958, 72 Stat. 1431.
Repeal effective Jan. 1, 1980, see section 810 of Pub. L. 96-39,
set out as an Effective Date of 1979 Amendment note under section 5001
of this title.
26 USC ( 5234. Repealed. Pub. L. 96-39, title VIII, 807(a)(35), July
26, 1979, 93 Stat. 286)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72
Stat. 1367; amended Pub. L. 89-44, title VIII, 805(f)(11), June 21,
1965, 79 Stat. 162; Pub. L. 94-455, title XIX, 1905(a)(17),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1820, 1834; Pub. L. 95-176,
5(a), Nov. 14, 1977, 91 Stat. 1366, related to the mingling and
blending of distilled spirits.
Provisions similar to those comprising section 5234(a)(1)(A) and (b)
to (d) of this title were contained in prior sections of act Aug. 16,
1954, ch. 736, prior to the general revision of this chapter by Pub.
L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 606, 641, 649, 657.
Repeal effective Jan. 1, 1980, see section 810 of Pub. L. 96-39,
set out as an Effective Date of 1979 Amendment note under section 5001
of this title.
26 USC 5235. Bottling of alcohol for industrial purposes
TITLE 26 -- INTERNAL REVENUE CODE
Alcohol for industrial purposes may be bottled, labeled, and cased on
bonded premises of a distilled spirits plant prior to payment or
determination of tax, under such regulations as the Secretary may
prescribe.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1369;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(36), July 26, 1979, 93
Stat. 286; Pub. L. 98-369, div. A, title IV, 454(c)(8), July 18, 1984,
98 Stat. 821.)
Provisions similar to those comprising this section were contained in
prior section 5305, act Aug. 16, 1954, ch. 736, 68A Stat. 657, prior
to the general revision of this chapter by Pub. L. 85-859.
1984 -- Pub. L. 98-369 struck out ''stamped,'' before ''labeled,''
and struck out provision that section 5205(a)(1) shall not apply to
alcohol bottled, stamped, and labeled as such under this section.
1979 -- Pub. L. 96-39 substituted ''section 5205(a)(1) shall not
apply'' for ''sections 5178(a)(4)(A), 5205(a)(1), and 5233 (relating to
the bottling of distilled spirits in bond) shall not be applicable''.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Amendment by Pub. L. 98-369 effective July 1, 1985, see section
456(b) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC 5236. Discontinuance of storage facilities and transfer of
distilled spirits
TITLE 26 -- INTERNAL REVENUE CODE
When the Secretary finds any facilities for the storage of distilled
spirits on bonded premises to be unsafe or unfit for use, or the spirits
contained therein subject to great loss or wastage he may require the
discontinuance of the use of such facilities and require the spirits
contained therein to be transferred to such other storage facilities as
he may designate. Such transfer shall be made at such time and under
such supervision as the Secretary may require and the expense of the
transfer shall be paid by the owner or the warehouseman of the distilled
spirits. Whenever the owner of such distilled spirits or the
warehouseman fails to make such transfer within the time prescribed, or
to pay the just and proper expense of such transfer, as ascertained and
determined by the Secretary, such distilled spirits may be seized and
sold by the Secretary in the same manner as goods are sold on distraint
for taxes, and the proceeds of such sale shall be applied to the payment
of the taxes due thereon and the cost and expenses of such sale and
removal, and the balance paid over to the owner of such distilled
spirits.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1369;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
Provisions similar to those comprising this section were contained in
prior section 5252, act Aug. 16, 1954, ch. 736, 68A Stat. 649, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
26 USC Subpart D -- Denaturation
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5241. Authority to denature.
5242. Denaturing materials.
5243. Sale of abandoned spirits for denaturation without collection
of tax.
5244. Cross references.
26 USC 5241. Authority to denature
TITLE 26 -- INTERNAL REVENUE CODE
Under such regulations as the Secretary shall prescribe, distilled
spirits may be denatured on the bonded premises of a distilled spirits
plant qualified for the processing of distilled spirits. Distilled
spirits to be denatured under this section shall be of such kind and
such degree of proof as the Secretary shall by regulations prescribe.
Distilled spirits denatured under this section may be used on the bonded
premises of a distilled spirits plant in the manufacture of any article.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1369;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(37), July 26, 1979, 93
Stat. 286.)
A prior section 5241, act Aug. 16, 1954, ch. 736, 68A Stat. 644,
related to supervision of operations of internal revenue bonded
warehouses, prior to the general revision of this chapter by Pub. L.
85-859. See sections 5201(a), 5202 (a), (c), (d), and 7803 of this title
and section 22 of former Title 5, Executive Departments and Government
Officers and Employees.
Provisions similar to those comprising this section were contained in
prior sections 5194(c), 5303, 5310(a), 5331(a)(1), act Aug. 16, 1954,
ch. 736, 68A Stat. 635, 655, 658, 661, prior to the general revision
of this chapter by Pub. L. 85-859.
1979 -- Pub. L. 96-39 substituted ''a distilled spirits plant
qualified for the processing of distilled spirits'' for ''any distilled
spirits plant operated by a proprietor who is authorized to produce
distilled spirits at such plant or on other bonded premises'', struck
out provision that any other person operating bonded premises may, at
the discretion of the Secretary and under such regulations as he may
prescribe, be authorized to denature distilled spirits on such bonded
premises, and inserted provision that distilled spirits denatured under
this section may be used on the bonded premises of a distilled spirits
plant in the manufacture of any article.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC 5242. Denaturing materials
TITLE 26 -- INTERNAL REVENUE CODE
Methanol or other denaturing materials suitable to the use for which
the denatured distilled spirits are intended to be withdrawn shall be
used for the denaturation of distilled spirits. Denaturing materials
shall be such as to render the spirits with which they are admixed unfit
for beverage or internal human medicinal use. The character and the
quantity of denaturing materials used shall be as prescribed by the
Secretary by regulations.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1369;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5242, acts Aug. 16, 1954, ch. 736, 68A Stat. 645;
Sept. 2, 1958, Pub. L. 85-859, title II, 206(e), 72 Stat. 1431,
related to deposit of spirits in warehouses, prior to the general
revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising this section were contained in
prior sections 5303, 5310(a) and 5331(a)(1), (2), act Aug. 16, 1954,
ch. 736, 68A Stat. 655, 658, 661, prior to the general revision of
this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC 5243. Sale of abandoned spirits for denaturation without
collection of tax
TITLE 26 -- INTERNAL REVENUE CODE
Notwithstanding any other provision of law, any distilled spirits
abandoned to the United States may be sold, in such cases as the
Secretary may by regulation provide, to the proprietor of any distilled
spirits plant for denaturation, or redistillation and denaturation,
without the payment of the internal revenue tax thereon.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1370;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5243, acts Aug. 16, 1954, ch. 736, 68A Stat. 645;
Sept. 2, 1958, Pub. L. 85-859, 206(c), 72 Stat. 1431, related to
bottling of distilled spirits in bond, prior to the general revision of
this chapter by Pub. L. 85-859. See sections 5171, 5172, 5175,
5178(a)(3)(C), (4)(A), 5202(g), 5206(c), 5214(a)(4), and 5233(a) to (c),
(e)(1) of this title and section 121 of Title 27, Intoxicating Liquors.
Provisions similar to those comprising this section were contained in
prior section 5333, act Aug. 16, 1954, ch. 736, 68A Stat. 662, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC 5244. Cross references
TITLE 26 -- INTERNAL REVENUE CODE
(1) For provisions authorizing the withdrawal from the bonded
premises of a distilled spirits plant of denatured distilled spirits,
see section 5214(a)(1).
(2) For provisions requiring a permit to procure specially denatured
distilled spirits, see section 5271.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1370.)
A prior section 5244, act Aug. 16, 1954, ch. 736, 68A Stat. 647,
related to withdrawal of spirits from bonded warehouse on determination
of tax, prior to the general revision of this chapter by Pub. L.
85-859. See section 5213 of this title.
26 USC (PART III -- REPEALED)
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 5251, 5252. Repealed. Pub. L. 96-39, title VIII, 807(a)(38),
July 26, 1979, 93 Stat. 286)
TITLE 26 -- INTERNAL REVENUE CODE
Section 5251, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1370; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A),
Oct. 4, 1976, 90 Stat. 1834, required proprietors of distilled spirits
plants to give notice of their intention to rectify or compound any
distilled spirits or wines.
A prior section 5251, act Aug. 16, 1954, ch. 736, 68A Stat. 649,
made a cross reference provision to ''blending of beverage brandies in
internal revenue bonded warehouses'', prior to the general revision of
this chapter by Pub. L. 85-859.
Provisions similar to those comprising section 5251 of this title
were contained in prior section 5282(a), act Aug. 16, 1954, ch. 736,
68A Stat. 651, prior to the general revision of this chapter by Pub.
L. 85-859.
Section 5252, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1370, set out cross references to other sections with regard
to the regulation of operations.
A prior section 5252, act Aug. 16, 1954, ch. 736, 68A Stat. 649,
related to ''discontinuance of warehouse and transfer of merchandise'',
prior to the general revision of this chapter by Pub. L. 85-859. See
section 5236 of this title.
Repeal effective Jan. 1, 1980, see section 810 of Pub. L. 96-39,
set out as an Effective Date of 1979 Amendment note under section 5001
of this title.
26 USC Subchapter D -- Industrial Use of Distilled Spirits
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5271. Permits.
5272. Bonds.
5273. Sale, use, and recovery of denatured distilled spirits.
5274. Applicability of other laws.
5275. Records and reports.
5276. Occupational tax.
A prior subchapter D, Rectifying Plants, consisted of part I,
Establishment, and part II, Operation, and comprised sections 5271 to
5275 and 5281 to 5285, respectively, prior to the general revision of
this chapter by Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72
Stat. 1313.
1987 -- Pub. L. 100-203, title X, 10512(e)(2), Dec. 22, 1987, 101
Stat. 1330-449, added item 5276.
26 USC 5271. Permits
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirements
No person shall --
(1) procure or use distilled spirits free of tax under the provisions
of section 5214(a)(2) or (3); or
(2) procure, deal in, or use specially denatured distilled spirits;
or
(3) recover specially or completely denatured distilled spirits,
until he has filed an application with and received a permit to do so
from the Secretary.
(b) Form of application and permit
(1) The application required by subsection (a) shall be in such form,
shall be submitted at such times, and shall contain such information, as
the Secretary shall by regulations prescribe.
(2) Permits under this section shall, under such regulations as the
Secretary shall prescribe, designate and limit the acts which are
permitted, and the place where and time when such acts may be performed.
Such permits shall be issued in such form and under such conditions as
the Secretary may by regulations prescribe.
(c) Disapproval of application
Any application submitted under this section may be disapproved and
the permit denied if the Secretary, after notice and opportunity for
hearing, finds that --
(1) in case of an application to withdraw and use distilled spirits
free of tax, the applicant is not authorized by law or regulations
issued pursuant thereto to withdraw or use such distilled spirits; or
(2) the applicant (including, in the case of a corporation, any
officer, director, or principal stockholder, and, in the case of a
partnership, a partner) is, by reason of his business experience,
financial standing, or trade connections, not likely to maintain
operations in compliance with this chapter; or
(3) the applicant has failed to disclose any material information
required, or made any false statement as to any material fact, in
connection with his application; or
(4) the premises on which it is proposed to conduct the business are
not adequate to protect the revenue.
(d) Changes after issuance of permit
With respect to any change relating to the information contained in
the application for a permit issued under this section, the Secretary
may by regulations require the filing of written notice of such change
and, where the change affects the terms of the permit, require the
filing of an amended application.
(e) Suspension or revocation
If, after notice and hearing, the Secretary finds that any person
holding a permit issued under this section --
(1) has not in good faith complied with the provisions of this
chapter or regulations issued thereunder; or
(2) has violated the conditions of such permit; or
(3) has made any false statement as to any material fact in his
application therefor; or
(4) has failed to disclose any material information required to be
furnished; or
(5) has violated or conspired to violate any law of the United States
relating to intoxicating liquor, or has been convicted of any offense
under this title punishable as a felony or of any conspiracy to commit
such offense; or
(6) is, in the case of any person who has a permit under subsection
(a)(1) or (a)(2), by reason of his operations, no longer warranted in
procuring or using the distilled spirits or specially denatured
distilled spirits authorized by his permit; or
(7) has, in the case of any person who has a permit under subsection
(a)(2), manufactured articles which do not correspond to the
descriptions and limitations prescribed by law and regulations; or
(8) has not engaged in any of the operations authorized by the permit
for a period of more than 2 years;
such permit may, in whole or in part, be revoked or be suspended for
such period as the Secretary deems proper.
(f) Duration of permits
Permits issued under this section, unless terminated by the terms of
the permit, shall continue in effect until suspended or revoked as
provided in this section, or until voluntarily surrendered.
(g) Posting of permits
Permits issued under this section, to use distilled spirits free of
tax, to deal in, or use specially denatured distilled spirits, or to
recover specially or completely denatured distilled spirits, shall be
kept posted available for inspection on the premises covered by the
permit.
(h) Regulations
The Secretary shall prescribe all necessary regulations relating to
issuance, denial, suspension, or revocation, of permits under this
section, and for the disposition of distilled spirits (including
specially denatured distilled spirits) procured under permit pursuant to
this section which remain unused when such permit is no longer in
effect.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1370;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5271, act Aug. 16, 1954, ch. 736, 68A Stat. 650,
related to ''notice of business of rectifier'', prior to the general
revision of this chapter by Pub. L. 85-859. See sections 5171(a), (c),
5172, and 5178(a)(1)(A), (4)(B)-(D) of this title.
Provisions similar to those comprising subsecs. (a) to (f) and (h)
of this section were contained in prior section 5304(a)(1) to (4), (b),
(c), act Aug. 16, 1954, ch. 736, 68A Stat. 655, prior to the general
revision of this chapter by Pub. L. 85-859.
1976 -- Subsecs. (a) to (e), (h). Pub. L. 94-455 struck out ''or
his delegate'' after ''Secretary'' wherever appearing.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC 5272. Bonds
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirements
Before any permit required by section 5271(a) is granted, the
Secretary may require a bond, in such form and amount as he may
prescribe, to insure compliance with the terms of the permit and the
provisions of this chapter.
(b) Exceptions
No bond shall be required in the case of permits issued to the United
States or any governmental agency thereof, or to the several States or
any political subdivision thereof, or to the District of Columbia.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1372;
amended Pub. L. 94-455, title XIX, 1905(c)(3), 1906(b)(13)(A), Oct.
4, 1976, 90 Stat. 1823, 1834.)
A prior section 5272, act Aug. 16, 1954, ch. 736, 68A Stat. 650,
related to requirement and approval of bond as condition to commencing
business of rectifier of spirits, prior to the general revision of this
chapter by Pub. L. 85-859. See section 5173(a), (d) of this title.
Provisions similar to those comprising this section were contained in
prior sections 5304(a)(5) and 5310(d), act Aug. 16, 1954, ch. 736, 68A
Stat. 655, 658, prior to the general revision of this chapter by Pub.
L. 85-859.
1976 -- Subsec. (a). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (b). Pub. L. 94-455, 1905(c)(3), struck out ''and
Territories'' after ''several States''.
Amendment by section 1905(c)(3) of Pub. L. 94-455 effective on first
day of first month which begins more than 90 days after Oct. 4, 1976,
see section 1905(d) of Pub. L. 94-455, set out as a note under section
5005 of this title.
26 USC 5273. Sale, use, and recovery of denatured distilled spirits
TITLE 26 -- INTERNAL REVENUE CODE
(a) Use of specially denatured distilled spirits
Any person using specially denatured distilled spirits in the
manufacture of articles shall file such formulas and statements of
process, submit such samples, and comply with such other requirements,
as the Secretary shall by regulations prescribe, and no person shall use
specially denatured distilled spirits in the manufacture or production
of any article until approval of the article, formula, and process has
been obtained from the Secretary.
(b) Internal medicinal preparations and flavoring extracts
(1) Manufacture
No person shall use denatured distilled spirits in the manufacture of
medicinal preparations or flavoring extracts for internal human use
where any of the spirits remains in the finished product.
(2) Sale
No person shall sell or offer for sale for internal human use any
medicinal preparations or flavoring extracts manufactured from denatured
distilled spirits where any of the spirits remains in the finished
product.
(c) Recovery of spirits for reuse in manufacturing
Manufacturers employing processes in which denatured distilled
spirits withdrawn under section 5214(a)(1) are expressed, evaporated, or
otherwise removed, from the articles manufactured shall be permitted to
recover such distilled spirits and to have such distilled spirits
restored to a condition suitable solely for reuse in manufacturing
processes under such regulations as the Secretary may prescribe.
(d) Prohibited withdrawal or sale
No person shall withdraw or sell denatured distilled spirits, or sell
any article containing denatured distilled spirits for beverage
purposes.
(e) Cross references
(1) For penalty and forfeiture for unlawful use or concealment of
denatured distilled spirits, see section 5607.
(2) For applicability of all provisions of law relating to distilled
spirits that are not denatured, including those requiring payment of
tax, to denatured distilled spirits or articles produced, withdrawn,
sold, transported, or used in violation of law or regulations, see
section 5001(a)(6).
(3) For definition of ''articles'', see section 5002(a)(14).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1372;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(39), July 26, 1979, 93
Stat. 286.)
A prior section 5273, act Aug. 16, 1954, ch. 736, 68A Stat. 650,
related to premises of rectifier, prior to the general revision of this
chapter by Pub. L. 85-859. See section 5178(a)(1)(A), (4)(B), (D) and
(c)(1) of this title.
Provisions similar to those comprising this section were contained in
prior sections of act Aug. 16, 1954, prior to the general revision of
this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 655, 657, 658, 661, 662, 693.
1979 -- Subsec. (e)(3). Pub. L. 96-39 substituted ''section
5002(a)(14)'' for ''section 5002(a)(11)''.
1976 -- Subsecs. (a), (c). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC 5274. Applicability of other laws
TITLE 26 -- INTERNAL REVENUE CODE
The provisions, including penalties, of sections 9, and 10 of the
Federal Trade Commission Act (15 U.S.C., secs. 49, 50), as now or
hereafter amended, shall apply to the jurisdiction, powers, and duties
of the Secretary under this subtitle, and to any person (whether or not
a corporation) subject to the provisions of this subtitle.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1372;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5274, act Aug. 16, 1954, ch. 736, 68A Stat. 651,
related to sign required on rectifying premises, prior to the general
revision of this chapter by Pub. L. 85-859. See section 5180 of this
title.
Provisions similar to those comprising this section were contained in
prior section 5317(b), act Aug. 16, 1954, ch. 736, 68A Stat. 660,
prior to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC 5275. Records and reports
TITLE 26 -- INTERNAL REVENUE CODE
Every person procuring or using distilled spirits withdrawn under
section 5214(a)(2) or (3), or procuring, dealing in, or using specially
denatured distilled spirits, or recovering specially denatured or
completely denatured distilled spirits, shall keep such records and file
such reports of the receipt and use of distilled spirits withdrawn free
of tax, of the receipt, disposition, use, and recovery of denatured
distilled spirits, the manufacture and disposition of articles, and such
other information as the Secretary may be regulations require. The
Secretary may require any person reprocessing, bottling or repackaging
articles, or dealing in completely denatured distilled spirits or
articles, to keep such records, submit such reports, and comply with
such other requirements as he may by regulations prescribe. Records
required to be kept under this section and a copy of all reports
required to be filed shall be preserved as regulations shall prescribe
and shall be kept available for inspection by any internal revenue
officer during business hours. Such officer may also inspect and take
samples of distilled spirits, denatured distilled spirits, or articles
(including any substances for use in the manufacture thereof), to which
such records or reports relate.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1373;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5275, act Aug. 16, 1954, ch. 736, 68A Stat. 651,
related to cross references, prior to the general revision of this
chapter by Pub. L. 85-859. See sections 5179(2) and 5181 of this title.
Provisions similar to those comprising this section were contained in
prior sections 5305, 5313(b), and 5331(a)(3), act Aug. 16, 1954, ch.
736, 68A Stat. 657, 659, 662, prior to the general revision of this
chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
26 USC 5276. Occupational tax
TITLE 26 -- INTERNAL REVENUE CODE
(a) General rule
Except as otherwise provided in this section, a permit issued under
section 5271 shall not be valid with respect to acts conducted at any
place unless the person holding such permit pays a special tax of $250
with respect to such place.
(b) Certain occupational tax rules to apply
Rules similar to the rules of subpart G of part II of subchapter A
shall apply for purposes of this section.
(c) Exception for United States
Subsection (a) shall not apply to any permit issued to an agency or
instrumentality of the United States.
(d) Exception for certain educational institutions
Subsection (a) shall not apply with respect to any scientific
university, college of learning, or institution of scientific research
which --
(1) is issued a permit under section 5271, and
(2) with respect to any calendar year during which such permit is in
effect, procures less than 25 gallons of distilled spirits free of tax
for experimental or research use but not for consumption (other than
organoleptic tests) or sale.
(Added Pub. L. 100-203, title X, 10512(e)(1), Dec. 22, 1987, 101
Stat. 1330-448; amended Pub. L. 100-647, title II, 2004(t)(1), title
VI, 6105(a), (b), Nov. 10, 1988, 102 Stat. 3609, 3711; Pub. L.
101-239, title VII, 7816(o), Dec. 19, 1989, 103 Stat. 2422.)
A prior section 5281, act Aug. 16, 1954, ch. 736, 68A Stat. 651,
related to regulation of business rectifier, prior to the general
revision of this chapter by Pub. L. 85-859.
A prior section 5282, act Aug. 16, 1954, ch. 736, 68A Stat. 651,
related to rectification of spirits, prior to the general revision of
this chapter by Pub. L. 85-859.
A prior section 5283, act Aug. 16, 1954, ch. 736, 68A Stat. 652,
related to examination of rectifying premises, prior to the general
revision of this chapter by Pub. L. 85-859.
A prior section 5284, act Aug. 16, 1954, ch. 736, 68A Stat. 652,
related to prohibited hours for removal of distilled spirits, prior to
the general revision of this chapter by Pub. L. 85-859.
A prior section 5285, act Aug. 16, 1954, ch. 736, 68A Stat. 652,
related to records and returns, prior to the general revision of this
chapter by Pub. L. 85-859.
1989 -- Subsec. (a). Pub. L. 101-239, 7816(o)(2), substituted
''Except as otherwise provided in this section,'' for ''Except as
provided in subsection (c),''.
Subsec. (c). Pub. L. 101-239, 7816(o)(1)(A), redesignated subsec.
(c), relating to exemption for certain educational institutions, as (d).
Subsec. (d). Pub. L. 101-239, 7816(o)(1)(A), redesignated subsec.
(c), relating to exemption for certain educational institutions, as (d)
and substituted ''Exception'' for ''Exemption'' in heading.
Subsec. (d)(1). Pub. L. 101-239, 7816(o)(1)(B), substituted
''section 5271'' for ''section 5271(a)(2)''.
Subsec. (d)(2). Pub. L. 101-239, 7816(o)(1)(C), substituted
''distilled spirits free of tax'' for ''specially denatured distilled
spirits''.
1988 -- Subsec. (a). Pub. L. 100-647, 6105(b), substituted ''Except
as provided in subsection (c), a permit'' for ''A permit''.
Subsec. (c). Pub. L. 100-647, 6105(a), added subsec. (c) relating
to exemption for certain educational institutions.
Pub. L. 100-647, 2004(t)(1), added subsec. (c) relating to
exception for United States.
Amendment by Pub. L. 101-239 effective, except as otherwise
provided, as if included in the provision of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such
amendment relates, see section 7817 of Pub. L. 101-239, set out as a
note under section 1 of this title.
Amendment by section 2004(t)(1) of Pub. L. 100-647 effective, except
as otherwise provided, as if included in the provisions of the Revenue
Act of 1987, Pub. L. 100-203, title X, to which such amendment relates,
see section 2004(u) of Pub. L. 100-647, set out as a note under section
56 of this title.
Section 6105(c) of Pub. L. 100-647 provided that: ''The amendments
made by this section (amending this section) shall take effect on July
1, 1989.''
Section effective Jan. 1, 1988, see section 10512(h) of Pub. L.
100-203, set out as a note under section 5081 of this title.
26 USC Subchapter E -- General Provisions Relating to Distilled Spirits
TITLE 26 -- INTERNAL REVENUE CODE
Part
I. Return of materials used in the manufacture or recovery of
distilled spirits.
II. Regulation of traffic in containers of distilled spirits.
III. Miscellaneous provisions.
A prior subchapter E, Industrial Alcohol Plants, Bonded Warehouses,
Denaturing Plants, and Denaturation, consisted of part I, Industrial
Alcohol Plants, Bonded Warehouses, and Denaturing Plants and part II,
Denaturation, and consisted of sections 5301 to 5320 and 5331 to 5334,
respectively, prior to the general revision of this chapter by Pub. L.
85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1313.
26 USC PART I -- RETURN OF MATERIALS USED IN THE MANUFACTURE OR RECOVERY
OF DISTILLED SPIRITS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5291. General.
A prior part I, Industrial Alcohol Plants, Bonded Warehouses, and
Denaturing Plants, consisted of sections 5301 to 5320, prior to the
general revision of this chapter by Pub. L. 85-859, title II, 201,
Sept. 2, 1958, 72 Stat. 1313.
26 USC 5291. General
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirement
Every person disposing of any substance of the character used in the
manufacture of distilled spirits, or disposing of denatured distilled
spirits or articles from which distilled spirits may be recovered,
shall, when required by the Secretary, render a correct return, in such
form and manner as the Secretary may by regulations prescribe, showing
the name and address of the person to whom each disposition was made,
with such details, as to the quantity so disposed of or other
information which the Secretary may require as to each such disposition,
as will enable the Secretary to determine whether all taxes due with
respect to any distilled spirits manufactured or recovered from any such
substance, denatured, distilled spirits, or articles, have been paid.
Every person required to render a return under this section shall keep
such records as will enable such person to render a correct return.
Such records shall be preserved for such period as the Secretary shall
by regulations prescribe, and shall be kept available for inspection by
any internal revenue officer during business hours.
(b) Cross references
(1) For the definition of distilled spirits, see section 5002(a)(8).
(2) For the definition of articles, see section 5002(a)(14).
(3) For penalty for violation of subsection (a), see section 5605.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1373;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(40), July 26, 1979, 93
Stat. 286.)
Provisions similar to those comprising this section were contained in
prior section 5213, act Aug. 16, 1954, ch. 736, 68A Stat. 639, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Subsec. (b)(1). Pub. L. 96-39, 807(a)(40)(A), substituted
''section 5002(a)(8)'' for ''section 5002(a)(6)''.
Subsec. (b)(2). Pub. L. 96-39, 807(a)(40)(B), substituted ''section
5002(a)(14)'' for ''section 5002(a)(11)''.
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary'' wherever appearing.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC PART II -- REGULATION OF TRAFFIC IN CONTAINERS OF DISTILLED
SPIRITS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5301. General.
A prior part II, Denaturation, consisted of section 5331 to 5334,
prior to the general revision of this chapter by Pub. L. 85-859, title
II, 201, Sept. 2, 1958, 72 Stat. 1313.
26 USC 5301. General
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirements
Whenever in his judgment such action is necessary to protect the
revenue, the Secretary is authorized, by the regulations prescribed by
him and permits issued thereunder if required by him --
(1) to regulate the kind, size, branding, marking, sale, resale,
possession, use, and reuse of containers (of a capacity of not more than
5 wine gallons) designed or intended for use for the sale of distilled
spirits (within the meaning of such term as it is used in section
5002(a)(8) for other than industrial use; and
(2) to require, of persons manufacturing, dealing in, or using any
such containers, the submission to such inspection, the keeping of such
records, and the filing of such reports as may be deemed by him
reasonably necessary in connection therewith.
Any requirements imposed under this section shall be in addition to
any other requirements imposed by, or pursuant to, law and shall apply
as well to persons not liable for tax under the internal revenue laws as
to persons so liable.
(b) Disposition
Every person disposing of containers of the character used for the
packaging of distilled spirits shall, when required by the Secretary for
protection of the revenue, render a correct return, in such form and
manner as the Secretary may by regulations prescribe, showing the name
and address of the person to whom each disposition was made, with such
details as to the quantities so disposed of or other information which
the Secretary may require as to each such disposition. Every person
required to render a return under this section shall keep such records
as will enable such person to render a correct return. Such records
shall be preserved for such period as the Secretary shall by regulations
prescribe, and shall be kept available for inspection by any internal
revenue officer during business hours.
(c) Refilling of liquor bottles
No person who sells, or offers for sale, distilled spirits, or agent
or employee of such person, shall --
(1) place in any liquor bottle any distilled spirits whatsoever other
than those contained in such bottle at the time of tax determination
under the provisions of this chapter; or
(2) possess any liquor bottle in which any distilled spirits have
been placed in violation of the provisions of paragraph (1); or
(3) by the addition of any substance whatsoever to any liquor bottle,
in any manner alter or increase any portion of the original contents
contained in such bottle at the time of tax determination under the
provisions of this chapter; or
(4) possess any liquor bottle, any portion of the contents of which
has been altered or increased in violation of the provisions of
paragraph (3);
except that the Secretary may by regulations authorize the reuse of
liquor bottles, under such conditions as he may by regulations
prescribe. When used in this subsection the term ''liquor bottle''
shall mean a liquor bottle or other container which has been used for
the bottling or packaging of distilled spirits under regulations issued
pursuant to subsection (a).
(d) Closures
The immediate container of distilled spirits withdrawn from bonded
premises, or from customs custody, on determination of tax shall bear a
closure or other device which is designed so as to require breaking in
order to gain access to the contents of such container. The preceding
sentence shall not apply to containers of bulk distilled spirits.
(e) Penalty
For penalty for violation of this section, see section 5606.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1374;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(41), July 26, 1979, 93
Stat. 287; Pub. L. 98-369, div. A, title IV, 454(b), (c)(9), July 18,
1984, 98 Stat. 820, 821.)
A prior section 5301, act Aug. 16, 1954, ch. 736, 68A Stat. 654,
related to establishment of industrial alcohol plants, prior to the
general revision of this chapter by Pub. L. 85-859. See sections
5171(a), (b)(1), 5172, 5173(a), (b) of this title.
Provisions similar to those comprising subsecs. (a), (c), and (d) of
this section were contained in prior section 5214, act Aug. 16, 1954,
ch. 736, 68A Stat. 639, prior to the general revision of this chapter
by Pub. L. 85-859.
A prior section 5302, act Aug. 16, 1954, ch. 736, 68A Stat. 645,
related to the establishment of industrial alcohol warehouses, prior to
the general revision of this chapter by Pub. L. 85-859. See sections
5171(a), (b)(1), 5172, 5173(a), (c), 5178(a)(3)(A), (B), 5201(a), and
5206(a) of this title.
A prior section 5303, act Aug. 16, 1954, ch. 736, 68A Stat. 655,
related to establishment of industrial alcohol denaturing plants, prior
to the general revision of this chapter by Pub. L. 85-859. See sections
5171(a), (b)(1), 5172, 5173(a), (c), 5178(a)(5), 5241, 5242, and
5273(b)(1), (2), (d) of this title.
A prior section 5304, act Aug. 16, 1954, ch. 736, 68A Stat. 655,
related to alcohol permits, prior to the general revision of this
chapter by Pub. L. 85-859. See sections 5171(b)(1), 5173(a), (e)(1),
5271(a) to (c), (e), (f), (h), and 5272(a) of this title.
A prior section 5305, act Aug. 16, 1954, ch. 736, 68A Stat. 657,
related to regulations for establishing, bonding, and operations of
plants and warehouses, prior to the general revision of this chapter by
Pub. L. 85-859. See sections 5171, 5172, 5173(a), 5178(a)(1)(A), (5),
5201(a), (b), 5207(a), (c), (d), 5211, 5223(a), 5235, 5273(b)(1), (2),
(d), 5275, and 5312(b) of this title.
A prior section 5306, act Aug. 16, 1954, ch. 736, 68A Stat. 657,
related to exemption of industrial alcohol plants and warehouses from
certain laws, prior to the general revision of this chapter by Pub. L.
85-859. See sections 5025(d), (e)(1), 5103, 5113(a), 5173(c), 5201(a),
(c), 5204(c), 5234(a)(1)(A), 5306, and 5312(c) of this title.
A prior section 5307, act Aug. 16, 1954, ch. 736, 68A Stat. 657,
related to production, use, or sale of alcohol, prior to the general
revision of this chapter by Pub. L. 85-859. See sections 5178(a)(2)(A)
and 5201(a) of this title.
A prior section 5308, act Aug. 16, 1954, ch. 736, 68A Stat. 657,
related to transfer of alcohol to other plants or warehouses, prior to
the general revision of this chapter by Pub. L. 85-859. See sections
5212 and 5223(a) of this title.
A prior section 5309, act Aug. 16, 1954, ch. 736, 68A Stat. 658,
related to withdrawal of fermented liquors to industrial alcohol plants,
prior to the general revision of this chapter by Pub. L. 85-859. See
section 5222(b) of this title.
A prior section 5310, act Aug. 16, 1954, ch. 736, 68A Stat. 658,
related to withdrawal of alcohol free of tax, prior to the general
revision of this chapter by Pub. L. 85-859. See sections 5214(a),
(a)(1) to (3), 5241, 5242, 5272(b), 5273(b)(1), (2), (d), and 5313 of
this title.
1984 -- Subsec. (c). Pub. L. 98-369, 454(c)(9), substituted ''tax
determination'' for ''stamping'' in pars. (1) and (3), and struck out
'', if the liquor bottles are to be again stamped under the provisions
of this chapter'' after ''by regulations prescribe'' in provisions
following par. (4).
Subsec. (d). Pub. L. 98-369, 454(b), added subsec. (d) and
redesignated former subsec. (d) as (e).
1979 -- Subsec. (a)(1). Pub. L. 96-39 substituted ''section
5002(a)(8)'' for ''section 5002(a)(6)''.
1976 -- Subsecs. (a) to (c). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Amendment by Pub. L. 98-369 effective July 1, 1985, see section
456(b) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC PART III -- MISCELLANEOUS PROVISIONS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5311. Detention of containers.
5312. Production and use of distilled spirits for experimental
research.
5313. Withdrawal of distilled spirits from customs custody free of
tax for use of the United States.
5314. Special applicability of certain provisions.
(5315. Repealed.)
1976 -- Pub. L. 94-455, title XIX, 1905(b)(4), Oct. 4, 1976, 90
Stat. 1822, struck out item 5315 ''Status of certain distilled spirits
on July 1, 1959''.
26 USC 5311. Detention of containers
TITLE 26 -- INTERNAL REVENUE CODE
It shall be lawful for any internal revenue officer to detain any
container, containing or supposed to contain, distilled spirits, wines,
or beer, when he has reason to believe that the tax imposed by law on
such distilled spirits, wines, or beer has not been paid or determined
as required by law, or that such container is being removed in violation
of law; and every such container may be held by him at a safe place
until it shall be determined whether the property so detained is liable
by law to be proceeded against for forfeiture; but such summary
detention shall not continue in any case longer than 72 hours without
process of law or intervention of the officer to whom such detention is
to be reported.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1375.)
A prior section 5311, act Aug. 16, 1954, ch. 736, 68A Stat. 658,
related to importation of alcohol for industrial purposes, prior to the
general revision of this chapter by Pub. L. 85-859. See section 5232 of
this title.
Provisions similar to those comprising this section were contained in
prior section 5211, act Aug. 16, 1954, ch. 736, 68A Stat. 638, prior
to the general revision of this chapter by Pub. L. 85-859.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC 5312. Production and use of distilled spirits for experimental
research
TITLE 26 -- INTERNAL REVENUE CODE
(a) Scientific institutions and colleges of learning
Under such regulations as the Secretary may prescribe and on the
filing of such bonds and applications as he may require, any scientific
university, college of learning, or institution of scientific research
may produce, receive, blend, treat, test, and store distilled spirits,
without payment of tax, for experimental or research use but not for
consumption (other than organoleptic tests) or sale, in such quantities
as may be reasonably necessary for such purposes.
(b) Experimental distilled spirits plants
Under such regulations as the Secretary may prescribe and on the
filing of such bonds and applications as he may require, experimental
distilled spirits plants may, at the discretion of the Secretary, be
established and operated for specific and limited periods of time solely
for experimentation in, or development of --
(1) sources of materials from which distilled spirits may be
produced;
(2) processes by which distilled spirits may be produced or refined;
or
(3) industrial uses of distilled spirits.
(c) Authority to exempt
The Secretary may by regulations provide for the waiver of any
provision of this chapter (other than this section) to the extent he
deems necessary to effectuate the purposes of this section, except that
he may not waive the payment of any tax on distilled spirits removed
from any such university, college, institution, or plant.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1375;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5312, act Aug. 16, 1954, ch. 736, 68A Stat. 659,
made a cross reference to remission and refund of tax on alcohol for
loss or leakage, prior to the general revision of this chapter by Pub.
L. 85-859.
Provisions similar to those comprising this section were contained in
prior sections of act Aug. 16, 1954, prior to the general revision of
this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 640, 657.
1976 -- Subsecs. (a) to (c). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
26 USC 5313. Withdrawal of distilled spirits from customs custody free
of tax for use of the United States
TITLE 26 -- INTERNAL REVENUE CODE
Distilled spirits may be withdrawn free of tax from customs custody
by the United States or any governmental agency thereof for its own use
for nonbeverage purposes, under such regulations as may be prescribed by
the Secretary.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1375;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5313, act Aug. 16, 1954, ch. 736, 68A Stat. 659,
related to powers and duties of persons enforcing provisions respecting
industrial alcohol plants, bonded warehouses, and denaturing plants,
prior to the general revision of this chapter by Pub. L. 85-859. See
section 5275 of this title.
Provisions similar to those comprising this section were contained in
prior section 5310(b), act Aug. 16, 1954, ch. 736, 68A Stat. 658,
prior to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC 5314. Special applicability of certain provisions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Puerto Rico
(1) Applicability
The provisions of this subsection shall not apply to the Commonwealth
of Puerto Rico unless the Legislative Assembly of the Commonwealth of
Puerto Rico expressly consents thereto in the manner prescribed in the
constitution of the Commonwealth of Puerto Rico, for the enactment of a
law.
(2) In general
Distilled spirits for the purposes authorized in section 5214(a)(2)
and (3), denatured distilled spirits, and articles, as described in this
paragraph, produced or manufactured in Puerto Rico, may be brought into
the United States free of any tax imposed by section 5001(a)(10) or
7652(a)(1) for disposal under the same conditions as like spirits,
denatured spirits, and articles, produced or manufactured in the United
States; and the provisions of this chapter and regulations promulgated
thereunder (and all other provisions of the internal revenue laws
applicable to the enforcement thereof, including the penalties of
special application thereto) relating to the production, bonded
warehousing, and denaturation of distilled spirits, to the withdrawal of
distilled spirits or denatured distilled spirits, and to the manufacture
of articles from denatured distilled spirits, shall, insofar as
applicable, extend to and apply in Puerto Rico in respect of --
(A) distilled spirits for shipment to the United States for the
purposes authorized in section 5214(a)(2) and (3);
(B) distilled spirits for denaturation;
(C) denatured distilled spirits for shipment to the United States;
(D) denatured distilled spirits for use in the manufacture of
articles for shipment to the United States; and
(E) articles, manufactured from denatured distilled spirits, for
shipment to the United States.
(3) Withdrawals authorized by Puerto Rico
Distilled spirits (including denatured distilled spirits) may be
withdrawn from the bonded premises of a distilled spirits plant in
Puerto Rico pursuant to authorization issued under the laws of the
Commonwealth of Puerto Rico; such spirits so withdrawn, and products
containing such spirits so withdrawn, may not be brought into the United
States free of tax.
(4) Costs of administration
Any expenses incurred by the Treasury Department in connection with
the enforcement in Puerto Rico of the provisions of this subtitle and
section 7652(a), and regulations promulgated thereunder, shall be
charged against and retained out of taxes collected under this title in
respect of commodities of Puerto Rican manufacture brought into the
United States. The funds so retained shall be deposited as a
reimbursement to the appropriation to which such expenses were
originally charged.
(b) Virgin Islands
(1) In general
Distilled spirits for the purposes authorized in section 5214(a)(2)
and (3), denatured distilled spirits, and articles, as described in this
paragraph, produced or manufactured in the Virgin Islands, may be
brought into the United States free of any tax imposed by section
7652(b)(1) for disposal under the same conditions as like spirits,
denatured spirits, and articles, produced or manufactured in the United
States; and the provisions of this chapter and regulations promulgated
thereunder (and all other provisions of the internal revenue laws
applicable to the enforcement thereof, including the penalties of
special application thereto) relating to the production, bonded
warehousing, and denaturation of distilled spirits, to the withdrawal of
distilled spirits or denatured distilled spirits, and to the manufacture
of articles from denatured distilled spirits, shall, insofar as
applicable, extend to and apply in the Virgin Islands in respect of --
(A) distilled spirits for shipment to the United States for the
purposes authorized in section 5214(a)(2) and (3);
(B) distilled spirits for denaturation;
(C) denatured distilled spirits for shipment to the United States;
(D) denatured distilled spirits for use in the manufacture of
articles for shipment to the United States; and
(E) articles, manufactured from denatured distilled spirits, for
shipment to the United States.
(2) Advance of funds
The insular government of the Virgin Islands shall advance to the
Treasury of the United States such funds as may be required from time to
time by the Secretary for the purpose of defraying all expenses incurred
by the Treasury Department in connection with the enforcement in the
Virgin Islands of paragraph (1) and regulations promulgated thereunder.
The funds so advanced shall be deposited in a separate trust fund in the
Treasury of the United States and shall be available to the Treasury
Department for the purposes of this subsection.
(3) Regulations issued by Virgin Islands
The Secretary may authorize the Governor of the Virgin Islands, or
his duly authorized agents, to issue or adopt such regulations, to
approve such bonds, and to issue, suspend, or revoke such permits, as
are necessary to carry out the provisions of this subsection. When
regulations have been issued or adopted under this paragraph with
concurrence of the Secretary he may exempt the Virgin Islands from any
provisions of law and regulations otherwise made applicable by the
provisions of paragraph (1), except that denatured distilled spirits,
articles and distilled spirits for tax-free purposes which are brought
into the United States from the Virgin Islands under the provisions of
this subsection shall in all respects conform to the requirements of law
and regulations imposed on like products of domestic manufacture.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1375;
amended Pub. L. 94-455, title XIX, 1905(a)(18), 1906(b)(13)(A), Oct.
4, 1976, 90 Stat. 1820, 1834.)
A prior section 5314, act Aug. 16, 1954, ch. 736, 68A Stat. 659,
related to officers and agents authorized to investigate, issue search
warrants, and prosecute for violations, prior to the general revision of
this chapter by Pub. L. 85-859. See sections 5557 of this title.
Provisions similar to those comprising subsec. (a)(2) of this
section were contained in prior section 5318, act Aug. 16, 1954, ch.
736, 68A Stat. 660, prior to the general revisions of this chapter by
Pub. L. 85-859.
1976 -- Subsec. (a)(2). Pub. L. 94-455, 1905(a)(18), substituted
''section 5001(a)(10)'' for ''section 5001(a)(4)''.
Subsec. (b)(2), (3). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary'' wherever appearing.
Amendment by section 1905(a)(18) of Pub. L. 94-455 effective on
first day of first month which begins more than 90 days after Oct. 4,
1976, see section 1905(d) of Pub. L. 94-455, set out as a note under
section 5005 of this title.
26 USC ( 5315. Repealed. Pub. L. 94-455, title XIX, 1905(a)(19), Oct.
4, 1976, 90 Stat. 1820)
TITLE 26 -- INTERNAL REVENUE CODE
Section 5315, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1377, related to status of certain distilled spirits on July
1, 1959.
A prior section 5316, act Aug. 16, 1954, ch. 736, 68A Stat. 660,
related to form of affidavit, information or indictment, prior to the
general revision of this chapter by Pub. L. 85-859. See Fed. Rules Cr.
Proc., rules 7(c), (f), and 8(a), Title 18, Appendix, Crimes and
Criminal Procedure.
A prior section 5317, act Aug. 16, 1954, ch. 736, 68A Stat. 660,
related to applicability of other laws, prior to the general revision of
this chapter by Pub. L. 85-859. See section 5274 of this title.
A prior section 5318, act Aug. 16, 1954, ch. 736, 68A Stat. 660,
related to application of this part to Puerto Rico and the Virgin
Islands, prior to the general revision of this chapter by Pub. L.
85-859. See section 5314(a)(2) of this title.
A prior section 5319, act Aug. 16, 1954, ch. 736, 68A Stat. 661,
related to definitions, etc., prior to the general revision of this
chapter by Pub. L. 85-859. See sections 5002(a)(6)(A), (9), (11) and
5201(a) of this title.
A prior section 5320, act Aug. 16, 1954, ch. 736, 68A Stat. 661,
related to cross references, prior to the general revision of this
chapter by Pub. L. 85-859.
A prior section 5331, act Aug. 16, 1954, ch. 736, 68A Stat. 661,
related to withdrawal from bond free of tax, prior to the general
revision of this chapter by Pub. L. 85-859. See sections 5171(a), 5172,
5173(a), (c), 5178(a)(5), 5202(e), 5207(a), (c), (d), 5214(a), (a)(1),
5241, 5242, 5273(a), (b)(1), (2), (d), and 5275 of this title.
A prior section 5332, act Aug. 16, 1954, ch. 736, 68A Stat. 662,
related to recovery of spirits for reuse in manufacturing, prior to the
general revision of this chapter by Pub. L. 85-859. See section 5273(c)
of this title.
A prior section 5333, act Aug. 16, 1954, ch. 736, 68A Stat. 662,
related to sale of abandoned spirits for denaturation without collection
of tax, prior to the general revision of this chapter by Pub. L.
85-859. See section 5243 of this title.
A prior section 5334, act Aug. 16, 1954, ch. 736, 68A Stat. 662,
related to cross references, prior to the general revision of this
chapter by Pub. L. 85-859. See section 5273(e)(1), (2) of this title.
Repeal effective on first day of first month which begins more than
90 days after Oct. 4, 1976, see section 1905(d) of Pub. L. 94-455,
set out as an Effective Date of 1976 Amendment note under section 5005
of this title.
26 USC Subchapter F -- Bonded and Taxpaid Wine Premises
TITLE 26 -- INTERNAL REVENUE CODE
Part
I. Establishment.
II. Operations.
III. Cellar treatment and classification of wine.
IV. General.
A prior subchapter F, Bonded and Taxpaid Wine Premises, consisted of
part I, Establishment, part II, Operations, part III, Cellar Treatment
and Classification of Wine, and part IV, General, and comprised sections
5351 to 5357, 5361 to 5373, 5381 to 5388, and 5391 to 5392,
respectively, prior to the general revision of this chapter by Pub. L.
85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1313.
26 USC PART I -- ESTABLISHMENT
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5351. Bonded wine cellar.
5352. Taxpaid wine bottling house.
5353. Bonded wine warehouse.
5354. Bond.
5355. General provisions relating to bonds.
5356. Application.
5357. Premises.
A prior part I consisted of sections 5351 to 5357 of this title,
prior to the general revision of this chapter by Pub. L. 85-859, title
II, 201, Sept. 2, 1958, 72 Stat. 1313.
26 USC 5351. Bonded wine cellar
TITLE 26 -- INTERNAL REVENUE CODE
Any person establishing premises for the production, blending, cellar
treatment, storage, bottling, packaging, or repackaging of untaxpaid
wine (other than wine produced exempt from tax under section 5042),
including the use of wine spirits in wine production, shall, before
commencing operations, make application to the Secretary and file bond
and receive permission to operate. Such premises shall be known as
''bonded wine cellars''; except that any such premises engaging in
production operations may, in the discretion of the Secretary, be
designated as a ''bonded winery''.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1378;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5351, act Aug. 16, 1954, ch. 736, 68A Stat. 663,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Operations, see section 5361 of this title.
26 USC 5352. Taxpaid wine bottling house
TITLE 26 -- INTERNAL REVENUE CODE
Any person bottling, packaging, or repackaging taxpaid wines shall,
before commencing such operations, make application to the Secretary and
receive permission to operate. Such premises shall be known as
''tax-paid wine bottling houses.''
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1378;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(42), July 26, 1979, 93
Stat. 287.)
A prior section 5352, act Aug. 16, 1954, ch. 736, 68A Stat. 663,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Pub. L. 96-39 struck out ''at premises other than the
bottling premises of a distilled spirits plant'' after ''taxpaid
wines''.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Taxpaid wine bottling house operations, see section 5363 of this
title.
26 USC 5353. Bonded wine warehouse
TITLE 26 -- INTERNAL REVENUE CODE
Any responsible warehouse company or other responsible person may,
upon filing application with the Secretary and consent of the proprietor
and the surety on the bond of any bonded wine cellar, under regulations
prescribed by the Secretary, establish on such premises facilities for
the storage of wines and allied products for credit purposes, to be
known as a ''bonded wine warehouse''. The proprietor of the bonded wine
cellar shall remain responsible in all respects for operations in the
warehouse and the tax on the wine or wine spirit stored therein.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1379;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5353, act Aug. 16, 1954, ch. 736, 68A Stat. 663,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
26 USC 5354. Bond
TITLE 26 -- INTERNAL REVENUE CODE
The bond for a bonded wine cellar shall be in such form, on such
conditions, and with such adequate surety, as regulations issued by the
Secretary shall prescribe, and shall be in a penal sum not less than the
tax on any wine or distilled spirits possessed or in transit at any one
time, but not less than $1,000 nor more than $50,000; except that where
the tax on such wine and on such distilled spirits exceeds $250,000, the
penal sum of the bond shall be not more than $100,000. Where additional
liability arises as a result of deferral of payment of tax payable on
any return, the Secretary may require the proprietor to file a
supplemental bond in such amount as may be necessary to protect the
revenue. The liability of any person on any such bond shall apply
whether the transaction or operation on which the liability of the
proprietor is based occurred on or off the proprietor's premises.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1379;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 98-369, div. A, title IV, 455(c), July 18, 1984,
98 Stat. 823.)
A prior section 5354, act Aug. 16, 1954, ch. 736, 68A Stat. 663,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1984 -- Pub. L. 98-369 substituted ''distilled spirits'' for ''wine
spirits'' in two places.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
Amendment by Pub. L. 98-369 effective July 18, 1984, see section
456(c) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
26 USC 5355. General provisions relating to bonds
TITLE 26 -- INTERNAL REVENUE CODE
The provisions of section 5551 (relating to bonds) shall be
applicable to the bonds required under section 5354.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1379.)
A prior section 5355, act Aug. 16, 1954, ch. 736, 68A Stat. 664,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
26 USC 5356. Application
TITLE 26 -- INTERNAL REVENUE CODE
The application required by this part shall disclose, as regulations
issued by the Secretary shall provide, such information as may be
necessary to enable the Secretary to determine the location and extent
of the premises, the type of operations to be conducted on such
premises, and whether the operations will be in conformity with law and
regulations.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1379;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5356, act Aug. 16, 1954, ch. 736, 68A Stat. 664,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
26 USC 5357. Premises
TITLE 26 -- INTERNAL REVENUE CODE
Bonded wine cellar premises, including noncontiguous portions
thereof, shall be so located, constructed, and equipped, as to afford
adequate protection to the revenue, as regulations prescribed by the
Secretary may provide.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1379;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5357, act Aug. 16, 1954, ch. 736, 68A Stat. 664,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC PART II -- OPERATIONS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5361. Bonded wine cellar operations.
5362. Removals of wine from bonded wine cellars.
5363. Taxpaid wine bottling house operations.
(5364. Repealed.)
5365. Segregation of operations.
5366. Supervision.
5367. Records.
5368. Gauging and marking.
5369. Inventories.
5370. Losses.
5371. Insurance coverage, etc.
5372. Sampling.
5373. Wine spirits.
A prior part II consisted of sections 5361 to 5373 of this title,
prior to the general revision of this chapter by Pub. L. 85-859, title
II, 201, Sept. 2, 1958, 72 Stat. 1313.
1979 -- Pub. L. 96-39, title VIII, 807(b)(7), July 26, 1979, 93
Stat. 290, struck out item 5364 ''Standard wine premises''.
1976 -- Pub. L. 94-455, title XIX, 1905(b)(5), Oct. 4, 1976, 90
Stat. 1822, substituted ''and marking'' for '', marking, and stamping''
in item 5368.
26 USC 5361. Bonded wine cellar operations
TITLE 26 -- INTERNAL REVENUE CODE
In addition to the operations described in section 5351, the
proprietor of a bonded wine cellar may, subject to regulations
prescribed by the Secretary, on such premises receive unmerchantable
taxpaid wine for return to bond, reconditioning, or destruction;
prepare for market and store commercial fruit products and by-products
not taxable as wines; produce or receive distilling material or vinegar
stock; produce (with or without added wine spirits, and without added
sugar) or receive on wine premises, subject to tax as wine but not for
sale or consumption as beverage wine, (1) heavy bodied blending wines
and Spanish-type blending sherries, and (2) other wine products made
from natural wine for nonbeverage purposes; and such other operations
as may be conducted in a manner that will not jeopardize the revenue or
conflict with wine operations.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1380;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(43), July 26, 1979, 93
Stat. 287.)
A prior section 5361, act Aug. 16, 1954, ch. 736, 68A Stat. 664,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Pub. L. 96-39 substituted ''or receive on wine premises''
for ''or receive on standard wine premises only''.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Refund of tax on unmerchantable wine, see section 5044 of this title.
26 USC 5362. Removals of wine from bonded wine cellars
TITLE 26 -- INTERNAL REVENUE CODE
(a) Withdrawals on determination of tax
Wine may be withdrawn from bonded wine cellars on payment or
determination of the tax thereon, under such regulations as the
Secretary shall prescribe.
(b) Transfers of wine between bonded premises
(1) In general
Wine on which the tax has not been paid or determined may, under such
regulations as the Secretary shall prescribe, be transferred in bond
between bonded premises.
(2) Wine transferred to a distilled spirits plant may not be removed
for consumption or sale as wine
Any wine transferred to the bonded premises of a distilled spirits
plant --
(A) may be used in the manufacture of a distilled spirits product,
and
(B) may not be removed from such bonded premises for consumption or
sale as wine.
(3) Continued liability for tax
The liability for tax on wine transferred to the bonded premises of a
distilled spirits plant pursuant to paragraph (1) shall (except as
otherwise provided by law) continue until the wine is used in a
distilled spirits product.
(4) Transfer in bond not treated as removal for consumption or sale
For purposes of this chapter, the removal of wine for transfer in
bond between bonded premises shall not be treated as a removal for
consumption or sale.
(5) Bonded premises
For purposes of this subsection, the term ''bonded premises'' means a
bonded wine cellar or the bonded premises of a distilled spirits plant.
(c) Withdrawals of wine free of tax or without payment of tax
Wine on which the tax has not been paid or determined may, under such
regulations and bonds as the Secretary may deem necessary to protect the
revenue, be withdrawn from bonded wine cellars --
(1) without payment of tax for export by the proprietor or by any
authorized exporter;
(2) without payment of tax for transfer to any foreign-trade zone;
(3) without payment of tax for use of certain vessels and aircraft as
authorized by law;
(4) without payment of tax for transfer to any customs bonded
warehouse;
(5) without payment of tax for use in the production of vinegar;
(6) without payment of tax for use in distillation in any distilled
spirits plant authorized to produce distilled spirits;
(7) free of tax for experimental or research purposes by any
scientific university, college of learning, or institution of scientific
research;
(8) free of tax for use by or for the account of the proprietor or
his agents for analysis or testing, organoleptic or otherwise; and
(9) free of tax for use by the United States or any agency thereof,
and for use for analysis, testing, research, or experimentation by the
governments of the several States and the District of Columbia or of any
political subdivision thereof or by any agency of such governments. No
bond shall be required of any such government or agency under this
paragraph.
(d) Withdrawal free of tax of wine and wine products unfit for
beverage use
Under such regulations as the Secretary may deem necessary to protect
the revenue, wine, or wine products made from wine, when rendered unfit
for beverage use, on which the tax has not been paid or determined, may
be withdrawn from bonded wine cellars free of tax. The wine or wine
products to be so withdrawn may be treated with methods or materials
which render such wine or wine products suitable for their intended use.
No wine or wine products so withdrawn shall contain more than 21
percent of alcohol by volume, or be used in the compounding of distilled
spirits or wine for beverage use or in the manufacture of any product
intended to be used in such compounding.
(e) Withdrawal from customs bonded warehouses for use of foreign
embassies, legations, etc.
(1) In general
Notwithstanding any other provision of law, wine entered into customs
bonded warehouses under subsection (c)(4) may, under such regulations as
the Secretary may prescribe, be withdrawn from such warehouses for
consumption in the United States by and for the official or family use
of such foreign governments, organizations, and individuals who are
entitled to withdraw imported wines from such warehouses free of tax.
Wines transferred to customs bonded warehouses under subsection (c)(4)
shall be entered, stored, and accounted for in such warehouses under
such regulations and bonds as the Secretary may prescribe, and may be
withdrawn therefrom by such governments, organizations, and individuals
free of tax under the same conditions and procedures as imported wines.
(2) Withdrawal for domestic use
Wine entered into customs bonded warehouses under subsection (c)(4)
for purposes of removal under paragraph (1) may be withdrawn therefrom
for domestic use. Wines so withdrawn shall be treated as American goods
exported and returned.
(3) Sale or unauthorized use prohibited
Wine withdrawn from customs bonded warehouses or otherwise brought
into the United States free of tax for the official or family use of
foreign governments, organizations, or individuals authorized to obtain
wine free of tax shall not be sold and shall not be disposed of or
possessed for any use other than an authorized use. The provisions of
paragraphs (1)(B) and (3) of section 5043(a) are hereby extended and
made applicable to any person selling, disposing of, or possessing any
wine in violation of the preceding sentence, and to the wine involved in
any such violation.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1380;
amended Pub. L. 90-73, 1(a), Aug. 29, 1967, 81 Stat. 175; Pub. L.
94-455, title XIX, 1905(c)(4), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat.
1823, 1834; Pub. L. 96-39, title VIII, 807(a)(44), July 26, 1979, 93
Stat. 287; Pub. L. 96-601, 2(a), (b), Dec. 24, 1980, 94 Stat. 3495.)
A prior section 5362, act Aug. 16, 1954, ch. 736, 68A Stat. 665,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1980 -- Subsec. (c)(4). Pub. L. 96-601, 2(a), substituted ''customs
bonded'' for ''class 6 customs manufacturing''.
Subsec. (e). Pub. L. 96-601, 2(b), added subsec. (e).
1979 -- Subsec. (b). Pub. L. 96-39 substituted references to bonded
premises for references to bonded wine cellars and inserted provisions
relating to wine transferred in bond to a distilled spirits plant which
may not be removed for consumption or sale as wine, provisions relating
to continued liability for tax on wine transferred to bonded premises,
and provisions defining ''bonded premises''.
1976 -- Subsecs. (a) to (c). Pub. L. 94-455, 1906(b)(13)(A),
struck out ''or his delegate'' after ''Secretary'' wherever appearing.
Subsec. (c)(9). Pub. L. 94-455, 1905(c)(4), struck out ''and
Territories'' after ''the several States''.
Subsec. (d). Pub. L. 94-455, 1906(b)(13)(A), struck out ''or his
delegate'' after ''Secretary''.
1967 -- Subsec. (d). Pub. L. 90-73 added subsec. (d).
Section 2(c) of Pub. L. 96-601 provided that: ''The amendments made
by this section (amending this section) shall take effect on the first
day of the first calendar month which begins more than 90 days after the
date of the enactment of this Act (Dec. 24, 1980).''
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by section 1905(c)(4) of Pub. L. 94-455 effective on first
day of first month which begins more than 90 days after Oct. 4, 1976,
see section 1905(d) of Pub. L. 94-455, set out as a note under section
5005 of this title.
Section 1(b) of Pub. L. 90-73 provided that: ''The amendment made
by subsection (a) (amending this section) shall become effective on the
first day of the first month which begins 90 days or more after the date
of the enactment of this Act (Aug. 29, 1967).''
Collection of taxes on wines, see section 5043 of this title.
26 USC 5363. Taxpaid wine bottling house operations
TITLE 26 -- INTERNAL REVENUE CODE
In addition to the operations described in section 5352, the
proprietor of a taxpaid wine bottling house may, subject to regulations
issued by the Secretary, on such premises mix wine of the same kind and
taxable grade to facilitate handling; preserve, filter, or clarify
wine; and conduct operations not involving wine where such operations
will not jeopardize the revenue or conflict with wine operations.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1381;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(45), July 26, 1979, 93
Stat. 287.)
A prior section 5363, act Aug. 16, 1954, ch. 736, 68A Stat. 665,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Pub. L. 96-39 struck out provision that this subchapter
apply to any wine received on the bottling premises of any distilled
spirits plant for bottling, packaging, or repackaging, and to all
operations relative thereto and provision that sections 5021, 5081, and
5082, not apply to the mixing or treatment of taxpaid wine under this
section.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC ( 5364. Repealed. Pub. L. 96-39, title VIII, 807(a)(46), July
26, 1979, 93 Stat. 287)
TITLE 26 -- INTERNAL REVENUE CODE
Section, added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72
Stat. 1381, limited proprietors of bonded wine cellars or taxpaid wine
bottling houses to the production, reception, storage, or use of only
standard wine.
A prior section 5364, act Aug. 16, 1954, ch. 736, 68A Stat. 665,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Repeal effective Jan. 1, 1980, see section 810 of Pub. L. 96-39,
set out as an Effective Date of 1979 Amendment note under section 5001
of this title.
26 USC 5365. Segregation of operations
TITLE 26 -- INTERNAL REVENUE CODE
The Secretary may require by regulations such segregation of
operations within the premises, by partitions or otherwise, as may be
necessary to prevent jeopardy to the revenue, to prevent confusion
between untaxpaid wine operations and such other operations as are
authorized in this subchapter, to prevent substitution with respect to
the several methods of producing effervescent wines, and to prevent the
commingling of standard wines with other than standard wines.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1381;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, 807(a)(47), July 26, 1979, 93
Stat. 287.)
A prior section 5365, act Aug. 16, 1954, ch. 736, 68A Stat. 665,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Pub. L. 96-39 authorized segregation of operations to
prevent the commingling of standard wines with other than standard
wines.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC 5366. Supervision
TITLE 26 -- INTERNAL REVENUE CODE
The Secretary may by regulations require that operations at a bonded
wine cellar or taxpaid wine bottling house be supervised by an internal
revenue officer where necessary for the protection of the revenue or for
the proper enforcement of this subchapter.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1381;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5366, act Aug. 16, 1954, ch. 736, 68A Stat. 666,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC 5367. Records
TITLE 26 -- INTERNAL REVENUE CODE
The proprietor of a bonded wine cellar or a tax-paid wine bottling
house shall keep such records and file such returns, in such form and
containing such information, as the Secretary may by regulations
provide.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1381;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5367, act Aug. 16, 1954, ch. 736, 68A Stat. 666,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC 5368. Gauging and marking
TITLE 26 -- INTERNAL REVENUE CODE
(a) Gauging and marking
All wine or wine spirits shall be locked, sealed, and gauged, and
shall be marked, branded, labeled, or otherwise identified, in such
manner as the Secretary may by regulations prescribe.
(b) Marking
Wines shall be removed in such containers (including vessels,
vehicles, and pipelines) bearing such marks and labels evidencing
compliance with this chapter, as the Secretary may by regulations
prescribe.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1381;
amended Pub. L. 94-455, title XIX, 1905(a)(20), 1906(b)(13)(A), Oct.
4, 1976, 90 Stat. 1820, 1834.)
A prior section 5368, act Aug. 16, 1954, ch. 736, 68A Stat. 666,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 substituted ''Gauging and marking'' for
''Gauging, marking, and stamping'' in section catchline, substituted
''Marking'' for ''Stamping'' in heading for subsec. (b), and, in text
of subsec. (b), substituted ''marks and labels'' for ''marks, labels,
and stamps'' and struck out ''or his delegate'' after ''Secretary''
wherever appearing.
Amendment by section 1905(a)(20) of Pub. L. 94-455 effective on
first day of first month which begins more than 90 days after Oct. 4,
1976, see section 1905(d) of Pub. L. 94-455, set out as a note under
section 5005 of this title.
26 USC 5369. Inventories
TITLE 26 -- INTERNAL REVENUE CODE
Each proprietor of premises subject to the provisions of this
subchapter shall take and report such inventories as the Secretary may
by regulations prescribe.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1381;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5369, act Aug. 16, 1954, ch. 736, 68A Stat. 666,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC 5370. Losses
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
No tax shall be collected in respect of any wines lost or destroyed
while in bond, except that tax shall be collected --
(1) Theft
In the case of loss by theft, unless the Secretary shall find that
the theft occurred without connivance, collusion, fraud, or negligence
on the part of the proprietor or other person responsible for the tax,
or the owner, consignor, consignee, bailee, or carrier, or the agents or
employees of any of them; and
(2) Voluntary destruction
In the case of voluntary destruction, unless the wine was destroyed
under Government supervision, or on such adequate notice to, and
approval by, the Secretary as regulations shall provide.
(b) Proof of loss
In any case in which the wine is lost or destroyed, whether by theft
or otherwise, the Secretary may require by regulations the proprietor of
the bonded wine cellar or other person liable for the tax to file a
claim for relief from the tax and submit proof as to the cause of such
loss. In every case where it appears that the loss was by theft, the
burden shall be on the proprietor or other person liable for the tax to
establish to the satisfaction of the Secretary, that such loss did not
occur as the result of connivance, collusion, fraud, or negligence on
the part of the proprietor, owner, consignor, consignee, bailee, or
carrier, or the agents or employees of any of them.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1381;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5370, act Aug. 16, 1954, ch. 736, 68A Stat. 666,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
26 USC 5371. Insurance coverage, etc.
TITLE 26 -- INTERNAL REVENUE CODE
Any remission, abatement, refund, or credit of, or other relief from,
taxes on wines or wine spirits authorized by law shall be allowed only
to the extent that the claimant is not indemnified or recompensed for
the tax.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1382.)
A prior section 5371, act Aug. 16, 1954, ch. 736, 68A Stat. 667,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
26 USC 5372. Sampling
TITLE 26 -- INTERNAL REVENUE CODE
Under regulations prescribed by the Secretary, wine may be utilized
in any bonded wine cellar for testing, tasting, or sampling, free of
tax.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1382;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5372, act Aug. 16, 1954, ch. 736, 68A Stat. 667,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC 5373. Wine spirits
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
The wine spirits authorized to be used in wine production shall be
brandy or wine spirits produced in a distilled spirits plant (with or
without the use of water to facilitate extraction and distillation)
exclusively from --
(1) fresh or dried fruit, or their residues,
(2) the wine or wine residues, therefrom, or
(3) special natural wine under such conditions as the Secretary may
by regulations prescribe;
except that where, in the production of natural wine or special
natural wine, sugar has been used, the wine or the residuum thereof may
not be used if the unfermented sugars therein have been refermented.
Such wine spirits shall not be reduced with water from distillation
proof, nor be distilled, unless regulations otherwise provide, at less
than 140 degrees of proof (except that commercial brandy aged in wood
for a period of not less than 2 years, and barreled at not less than 100
degrees of proof, shall be deemed wine spirits for the purpose of this
subsection).
(b) Withdrawal of wine spirits
(1) The proprietor of any bonded wine cellar may withdraw and receive
wine spirits without payment of tax from the bonded premises of any
distilled spirits plant, or from any bonded wine cellar as provided in
paragraph (2), for use in the production of natural wine, for addition
to concentrated or unconcentrated juice for use in wine production, or
for such other uses as may be authorized in this subchapter.
(2) Wine spirits so withdrawn, and not used in wine production or as
otherwise authorized in this subchapter, may, as provided by regulations
prescribed by the Secretary, be transferred to the bonded premises of
any distilled spirits plant or bonded wine cellar, or may be taxpaid and
removed as provided by law.
(3) On such use, transfer, or taxpayment, the Secretary shall credit
the proprietor with the amount of wine spirits so used or transferred or
taxpaid and, in addition, with such portion of wine spirits so withdrawn
as may have been lost either in transit or on the bonded wine cellar
premises, to the extent allowable under section 5008(a). Where the
proprietor has used wine spirits in actual wine production but in
violation of the requirements of this subchapter, the Secretary shall
also extend such credit to the wine spirits so used if the proprietor
satisfactorily shows that such wine spirits were not knowingly used in
violation of law.
(4) Suitable samples of brandy or wine spirits may, under regulations
prescribed by the Secretary, be withdrawn free of tax from the bonded
premises of any distilled spirits plant, bonded wine cellar, or
authorized experimental premises, for analysis or testing.
(c) Distillates containing aldehydes
When the Secretary deems such removal and use will not jeopardize the
revenue nor unduly increase administrative supervision, distillates
containing aldehydes may, under such regulations as the Secretary may
prescribe, be removed without payment of tax from the bonded premises of
a distilled spirits plant to an adjacent bonded wine cellar and used
therein in fermentation of wine to be used as distilling material at the
distilled spirits plant from which such unfinished distilled spirits
were removed.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1382;
amended Pub. L. 90-619, 1, Oct. 22, 1968, 82 Stat. 1236; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
A prior section 5373, act Aug. 16, 1954, ch. 736, 68A Stat. 667,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1968 -- Subsec. (a). Pub. 90-619 inserted special natural wine,
under conditions prescribed by regulations, as one of the materials from
which wine spirits may be produced and extended to special natural wines
the existing prohibition on the use of natural wine whose sugars have
been refermented.
Section 6 of Pub. L. 90-619 provided that: ''The amendments made by
this Act (amending this section and sections 5382 to 5387 of this title)
shall take effect on the first day of the first month which begins 90
days or more after the date of the enactment of this Act (Oct. 22,
1968).''
26 USC PART III -- CELLAR TREATMENT AND CLASSIFICATION OF WINE
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5381. Natural wine.
5382. Cellar treatment of natural wine.
5383. Amelioration and sweetening limitations for natural grape
wines.
5384. Amelioration and sweetening limitations for natural fruit and
berry wines.
5385. Specially sweetened natural wines.
5386. Special natural wines.
5387. Agricultural wines.
5388. Designation of wines.
A prior part III consisted of sections 5381 to 5388 of this title,
prior to the general revision of this chapter by Pub. L. 85-859, title
II, Sept. 2, 1958, 72 Stat. 1313.
26 USC 5381. Natural wine
TITLE 26 -- INTERNAL REVENUE CODE
Natural wine is the product of the juice or must of sound, ripe
grapes or other sound, ripe fruit, made with such cellar treatment as
may be authorized under section 5382 and containing not more than 21
percent by weight of total solids. Any wine conforming to such
definition except for having become substandard by reason of its
condition shall be deemed not to be natural wine, unless the condition
is corrected.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1383;
amended Pub. L. 96-39, title VIII, 807(a)(48), July 26, 1979, 93 Stat.
288.)
A prior section 5381, act Aug. 16, 1954, ch. 736, 68A Stat. 668,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Pub. L. 96-39 struck out provisions authorizing removal for
distillation of wine deemed not to be natural wine, destruction of such
wine under government supervision, and transfer of such wine to premises
in which other than natural wine may be stored or used.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Definitions, see section 5392 of this title.
26 USC 5382. Cellar treatment of natural wine
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
Proper cellar treatment of natural wine constitutes those practices
and procedures in the United States and elsewhere, whether historical or
newly developed, of using various methods and materials to correct or
stabilize the wine, or the fruit juice from which it is made, so as to
produce a finished product acceptable in good commercial practice.
Where a particular treatment has been used in customary commercial
practice, it shall continue to be recognized as a proper cellar
treatment in the absence of regulations prescribed by the Secretary
finding such treatment not to be a proper cellar treatment within the
meaning of this subsection.
(b) Specifically authorized treatments
The practices and procedures specifically enumerated in this
subsection shall be deemed proper cellar treatment for natural wine:
(1) The preparation and use of pure concentrated or unconcentrated
juice or must. Concentrated juice or must reduced with water to its
original density or to not less than 22 degrees Brix or unconcentrated
juice or must reduced with water to not less than 22 degrees Brix shall
be deemed to be juice or must, and shall include such amounts of water
to clear crushing equipment as regulations prescribed by the Secretary
may provide.
(2) The addition to natural wine, or to concentrated or
unconcentrated juice or must, from one kind of fruit, of wine spirits
(whether or not tax-paid) distilled in the United States from the same
kind of fruit; except that (A) the wine, juice, or concentrate shall
not have an alcoholic content in excess of 24 percent by volume after
the addition of wine spirits, and (B) in the case of still wines, wine
spirits may be added in any State only to natural wines produced by
fermentation in bonded wine cellars located within the same State.
(3) Amelioration and sweetening of natural grape wines in accordance
with section 5383.
(4) Amelioration and sweetening of natural wines from fruits other
than grapes in accordance with section 5384.
(5) In the case of effervescent wines, such preparations for
refermentation and for dosage as may be acceptable in good commercial
practice, but only if the alcoholic content of the finished product does
not exceed 14 percent by volume.
(6) The natural darkening of the sugars or other elements in juice,
must, or wine due to storage, concentration, heating processes, or
natural oxidation.
(7) The blending of natural wines with each other or with
heavy-bodied blending wine or with concentrated or unconcentrated juice,
whether or not such juice contains wine spirits, if the wines, juice, or
wine spirits are from the same kind of fruit.
(8) Such use of acids to correct natural deficiencies and stabilize
the wine as may be acceptable in good commercial practice.
(9) The addition --
(A) to natural grape or berry wine of the winemaker's own production,
of volatile fruit-flavor concentrate produced from the same kind and
variety of grape or berry at a plant qualified under section 5511, or
(B) to natural fruit wine (other than grape or berry) of the
winemaker's own production, of volatile fruit-flavor concentrate
produced from the same kind of fruit at such a plant,
so long as the proportion of the volatile fruit-flavor concentrate to
the wine does not exceed the proportion of the volatile fruit-flavor
concentrate to the original juice or must from which it was produced.
The transfer of volatile fruit-flavor concentrate from a plant qualified
under section 5511 to a bonded wine cellar and its storage and use in
such a cellar shall be under such applications and bonds, and under such
other requirements, as may be provided in regulations prescribed by the
Secretary.
(c) Other authorized treatment
The Secretary may by regulations prescribe limitations on the
preparation and use of clarifying, stabilizing, preserving, fermenting,
and corrective methods or materials, to the extent that such preparation
or use is not acceptable in good commercial practice.
(d) Use of juice or must from which volatile fruit flavor has been
removed
For purposes of this part, juice, concentrated juice, or must
processed at a plant qualified under section 5511 may be deemed to be
pure juice, concentrated juice, or must even though volatile fruit
flavor has been removed if, at a plant qualified under section 5511 or
at the bonded wine cellar, there is added to such juice, concentrated
juice, or must, or (in the case of a bonded wine cellar) to wine of the
winemaker's own production made therefrom, either the identical volatile
flavor removed or --
(1) in the case of natural grape or berry wine of the winemaker's own
production, an equivalent quantity of volatile fruit-flavor concentrate
produced at such a plant and derived from the same kind and variety of
grape or berry, or
(2) in the case of natural fruit wine (other than grape or berry
wine) of the winemaker's own production, an equivalent quantity of
volatile fruit-flavor concentrate produced at such a plant and derived
from the same kind of fruit.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1383;
amended Pub. L. 88-653, 1, 2, Oct. 13, 1964, 78 Stat. 1085; Pub. L.
89-44, title VIII, 806(c)(1), June 21, 1965, 79 Stat. 164; Pub. L.
90-619, 2, Oct. 22, 1968, 82 Stat. 1237; Pub. L. 94-455, title XIX,
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
A prior section 5382, act Aug. 16, 1954, ch. 736, 68A Stat. 668,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1968 -- Subsec. (b)(2)(B). Pub. L. 90-619 permitted wine spirits to
be added to natural wine produced by fermentation in any bonded wine
cellars located within the same State in which the addition is to take
place.
1965 -- Subsec. (b)(2). Pub. L. 89-44 struck out ''made without
added sugar or reserved as provided in sections 5383(b) and 5384(b)''
after ''winemaker's own production''.
1964 -- Subsec. (b)(9). Pub. L. 88-653, 1, added par. (9).
Subsec. (d). Pub. L. 88-653, 2, added subsec. (d).
Amendment by Pub. L. 90-619 effective on first day of first month
which begins 90 days or more after Oct. 22, 1968, see section 6 of Pub.
L. 90-619, set out as a note under section 5373 of this title.
Amendment by Pub. L. 89-44 effective Jan. 1, 1966, see section
806(d)(2) of Pub. L. 89-44, set out as a note under section 5383 of
this title.
Section 4 of Pub. L. 88-653 provided that: ''The amendments made by
the first section (amending this section) and sections 2 and 3 of this
Act (amending this section and section 5511 of this title) shall take
effect on the first day of the second month which begins more than 10
days after the date on which this Act is enacted (Oct. 13, 1964).''
26 USC 5383. Amelioration and sweetening limitations for natural grape
wines
TITLE 26 -- INTERNAL REVENUE CODE
(a) Sweetening of grape wines
Any natural grape wine may be sweetened after fermentation and before
taxpayment with pure dry sugar or liquid sugar if the total solids
content of the finished wine does not exceed 12 percent of the weight of
the wine and the alcoholic content of the finished wine after sweetening
is not more than 14 percent by volume; except that the use under this
subsection of liquid sugar shall be limited so that the resultant volume
will not exceed the volume which could result from the maximum
authorized use of pure dry sugar only.
(b) High acid wines
(1) Amelioration
Before, during, and after fermentation, ameliorating materials
consisting of pure dry sugar or liquid sugar, water, or a combination of
sugar and water, may be added to natural grape wines of a winemaker's
own production when such wines are made from juice having a natural
fixed acid content of more than five parts per thousand (calculated
before fermentation and as tartaric acid). Ameliorating material so
added shall not reduce the natural fixed acid content of the juice to
less than five parts per thousand, nor exceed 35 percent of the volume
of juice (calculated exclusive of pulp) and ameliorating material
combined.
(2) Sweetening
Any wine produced under this subsection may be sweetened by the
producer thereof, after amelioration and fermentation, with pure dry
sugar or liquid sugar if the total solids content of the finished wine
does not exceed (A) 17 percent by weight if the alcoholic content is
more than 14 percent by volume, or (B) 21 percent by weight if the
alcoholic content is not more than 14 percent by volume. The use under
this paragraph of liquid sugar shall be limited to cases where the
resultant volume does not exceed the volume which could result from the
maximum authorized use of pure dry sugar only.
(3) Wine spirits
Wine spirits may be added (whether or not wine spirits were
previously added) to wine produced under this subsection only if the
wine contains not more than 14 percent of alcohol by volume derived from
fermentation.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1384;
amended Pub. L. 89-44, title VIII, 806(b)(1), June 21, 1965, 79 Stat.
162; Pub. L. 90-619, 3, Oct. 22, 1968, 82 Stat. 1237.)
A prior section 5383, act Aug. 16, 1954, ch. 736, 68A Stat. 669,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1968 -- Subsec. (a). Pub. L. 90-619, 3(b), substituted ''not more
than 14 percent'' for ''less than 14 percent''.
Subsec. (b). Pub. L. 90-619, 3(a), simplified production procedures
and calculations, provided that the limitation on sweetening high acid
wine is to be based upon the total solids content of the finished wine,
authorized the use of liquid sugar but only to the extent that it did
not increase the total volume of the finished wine above what it would
be if the maximum authorized use had been made of dry sugar only, and
inserted provisions making it clear that wine spirits may be added at
more than one stage in the process of wine production.
1965 -- Pub. L. 89-44 divided subsec. (b) relating to high acid
wines into pars. (1) and (2) and par. (2) into subpars. (A) to (E),
struck out reserve inventory requirement with respect to the
amelioration and sweetening of wines, authorized use of other than pure,
dry sugar, and allowed limited use of liquid sugar at appropriate points
where use of pure dry sugar had formerly been prescribed.
Amendment by Pub. L. 90-619 effective on first day of first month
which begins 90 days or more after Oct. 22, 1968, see section 6 of Pub.
L. 90-619, set out as a note under section 5373 of this title.
Section 806(d)(2) of Pub. L. 89-44 provided that: ''The amendments
made by subsections (b) and (c) (amending this section and sections
5382, 5384, 5385, and 5392) shall take effect on January 1, 1966.''
26 USC 5384. Amelioration and sweetening limitations for natural fruit
and berry wines
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
To natural wine made from berries or fruit other than grapes, pure
dry sugar or liquid sugar may be added to the juice in the fermenter, or
to the wine after fermentation; but only if such wine has not more than
14 percent alcohol by volume after complete fermentation, or after
complete fermentation and sweetening, and a total solids content not in
excess of 21 percent by weight; and except that the use under this
subsection of liquid sugar shall be limited so that the resultant volume
will not exceed the volume which could result from the maximum
authorized use of pure dry sugar only.
(b) Ameliorated fruit and berry wines
(1) Any natural fruit or berry wine (other than grape wine) of a
winemaker's own production may, if not made under subsection (a) of this
section, be ameliorated to correct high acid content. Ameliorating
material calculations and accounting shall be separate for wines made
from each different kind of fruit.
(2) Pure dry sugar or liquid sugar may be used in the production of
wines under this subsection for the purpose of correcting natural
deficiencies, but not to such an extent as would reduce the natural
fixed acid in the corrected juice or wine to five parts per thousand.
The quantity of sugar so used shall not exceed the quantity which would
have been required to adjust the juice, prior to fermentation, to a
total solids content of 25 degrees (Brix). Such sugar shall be added
prior to the completion of fermentation of the wine. After such
addition of the sugar, the wine or juice shall be treated and accounted
for as provided in section 5383(b), covering the production of high acid
grape wines, except that --
(A) Natural fixed acid shall be calculated as malic acid for apple
wine and as citric acid for other fruit and berry wines, instead of
tartaric acid;
(B) Juice adjusted with pure dry sugar or liquid sugar as provided in
this paragraph shall be treated in the same manner as original natural
juice under the provisions of section 5383(b); except that if liquid
sugar is used, the volume of water contained therein must be deducted
from the volume of ameliorating material authorized;
(C) Wines made under this subsection shall have a total solids
content of not more than 21 percent by weight, whether or not wine
spirits have been added; and
(D) Wines made exclusively from loganberries, currants, or
gooseberries, shall be entitled to a volume of ameliorating material not
in excess of 60 percent (in lieu of 35 percent).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1385;
amended Pub. L. 89-44, title VIII, 806(b)(2), (c)(2), (3), June 21,
1965, 79 Stat. 163, 164; Pub. L. 90-619, 3(b), Oct. 22, 1968, 82 Stat.
1237.)
A prior section 5384, act Aug. 16, 1954, ch. 736, 68A Stat. 670,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1968 -- Subsec. (a). Pub. 90-619 substituted ''not more than 14
percent'' for ''less than 14 percent''.
1965 -- Subsec. (a). Pub. L. 89-44, 806(b)(2)(A), authorized
addition of liquid sugar provided resultant volume will not exceed
volume which could result from maximum authorized use of pure dry sugar
only.
Subsec. (b). Pub. L. 89-44, 806(c)(3), substituted ''Ameliorated''
for ''Reserve'' in heading.
Subsec. (b)(1). Pub. L. 89-44, 806(b)(2)(B), struck out references
to reserves and reserve inventories.
Subsec. (b)(2). Pub. L. 89-44, 806(b)(2)(C), amended first sentence
by authorizing use of liquid sugar but limiting use of any sugar if it
reduced natural fixed acid in corrected juice or wine to five parts per
thousand.
Pub. L. 89-44, 806(c)(2), struck out ''reserved'' after ''covering
the production of'' in fourth sentence.
Subsec. (b)(2)(B). Pub. L. 89-44, 806(b)(2)(D), required that, if
liquid sugar is used, the volume of water contained therein be deducted
from the volume of ameliorating material authorized.
Subsec. (b)(2)(C). Pub. L. 89-44, 806(b)(2)(E), substituted ''shall
have'' for ''may be withdrawn from reserve inventory with''.
Amendment by Pub. L. 90-619 effective on first day of first month
which begins 90 days or more after Oct. 22, 1968, see section 6 of Pub.
90-619, set out as a note under section 5373 of this title.
Amendment by Pub. L. 89-44 effective Jan. 1, 1966, see section
806(d)(2) of Pub. L. 89-44, set out as a note under section 5383 of
this title.
26 USC 5385. Specially sweetened natural wines
TITLE 26 -- INTERNAL REVENUE CODE
(a) Definition
Specially sweetened natural wine is the product made by adding to
natural wine of the winemaker's own production a sufficient quantity of
pure dry sugar, or juice or concentrated juice from the same kind of
fruit, separately or in combination, to produce a finished product
having a total solids content in excess of 17 percent by weight and an
alcoholic content of not more than 14 percent by volume, and shall
include extra sweet kosher wine and similarly heavily sweetened wines.
(b) Cellar treatment
Specially sweetened natural wines may be blended with each other, or
with natural wine or heavy bodied blending wine in the further
production of specially sweetened natural wine only, if the wines so
blended are made from the same kind of fruit. Wines produced under this
section may be cellar treated under the provisions of section 5382(a)
and (c). Wine spirits may not be added to specially sweetened natural
wine.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1386;
amended Pub. L. 89-44, title VIII, 806(c)(4), June 21, 1965, 79 Stat.
164; Pub. L. 90-619, 3(b), 4, Oct. 22, 1968, 82 Stat. 1237.)
A prior section 5385, act Aug. 16, 1954, ch. 736, 68A Stat. 671,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1968 -- Subsec. (a). Pub. L. 90-619, 3(b), substituted ''not more
than 14 percent'' for ''less than 14 percent''.
Subsec. (b). Pub. L. 90-619, 4, authorized cellar treatment of
specially sweetened natural wines, special natural wines, and
agricultural wines.
1965 -- Subsec. (a). Pub. L. 89-44 substituted ''total solids
content in excess of 17'' for ''sugar solids content in excess of 15''.
Amendment by Pub. L. 90-619 effective on first day of first month
which begins 90 days or more after Oct. 22, 1968, see section 6 of Pub.
L. 90-619, set out as a note under section 5373 of this title.
Amendment by Pub. L. 89-44 effective Jan. 1, 1966, see section
806(d)(2) of Pub. L. 89-44, set out as a note under section 5383 of
this title.
Definitions, see section 5392 of this title.
Penalties and forfeitures for violation of laws and regulations
relating to wine, see section 5661 of this title.
26 USC 5386. Special natural wines
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
Special natural wines are the products made, pursuant to a formula
approved under this section, from a base of natural wine (including
heavy-bodied blending wine) exclusively, with the addition, before,
during or after fermentation, of natural herbs, spices, fruit juices,
aromatics, essences, and other natural flavorings in such quantities or
proportions as to enable such products to be distinguished from any
natural wine not so treated, and with or without carbon dioxide
naturally or artificially added, and with or without the addition,
separately or in combination, of pure dry sugar or a solution of pure
dry sugar and water, or caramel. No added wine spirits or alcohol or
other spirits shall be used in any wine under this section except as may
be contained in the natural wine (including heavy-bodied blending wine)
used as a base or except as may be necessary in the production of
approved essences or similar approved flavorings. The Brix degree of
any solution of pure dry sugar and water used may be limited by
regulations prescribed by the Secretary in accordance with good
commercial practice.
(b) Cellar treatment
Special natural wines may be cellar treated under the provisions of
section 5382(a) and (c).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1386;
amended Pub. L. 90-619, 5, Oct. 22, 1968, 82 Stat. 1237; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
A prior section 5386, act Aug. 16, 1954, ch. 736, 68A Stat. 671,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1968 -- Subsec. (b). Pub. L. 90-619 inserted reference to subsec.
(a) of section 5382.
Amendment by Pub. L. 90-619 effective on first day of first month
which begins 90 days or more after Oct. 22, 1968, see section 6 of Pub.
L. 90-619, set out as a note under section 5373 of this title.
Definitions, see section 5392 of this title.
26 USC 5387. Agricultural wines
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
Wines made from agricultural products other than the juice of fruit
shall be made in accordance with good commercial practice as may be
prescribed by the Secretary by regulations. Wines made in accordance
with such regulations shall be classed as ''standard agricultural
wines''. Wines made under this section may be cellar treated under the
provisions of section 5382(a) and (c).
(b) Limitations
No wine spirits may be added to wines produced under this section,
nor shall any coloring material or herbs or other flavoring material
(except hops in the case of honey wine) be used in their production.
(c) Restriction on blending
Wines from different agricultural commodities shall not be blended
together.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1386;
amended Pub. L. 90-619, 5, Oct. 22, 1968, 82 Stat. 1237; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
A prior section 5387, act Aug. 16, 1954, ch. 736, 68A Stat. 671,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1968 -- Subsec. (a). Pub. L. 90-619 inserted reference to subsec.
(a) of section 5382.
Amendment by Pub. L. 90-619 effective on first day of first month
which begins 90 days or more after Oct. 22, 1968, see section 6 of Pub.
L. 90-619, set out as a note under section 5373 of this title.
Definitions, see section 5392 of this title.
26 USC 5388. Designation of wines
TITLE 26 -- INTERNAL REVENUE CODE
(a) Standard wines
Standard wines may be removed from premises subject to the provisions
of this subchapter and be marked, transported, and sold under their
proper designation as to kind and origin, or, if there is no such
designation known to the trade or consumers, then under a truthful and
adequate statement of composition.
(b) Other wines
Wines other than standard wines may be removed for consumption or
sale and be marked, transported, or sold only under such designation as
to kind and origin as adequately describes the true composition of such
products and as adequately distinguish them from standard wines, as
regulations prescribed by the Secretary shall provide.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1387;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5388, act Aug. 16, 1954, ch. 736, 68A Stat. 672,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC PART IV -- GENERAL
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5391. Exemption from distilled spirits taxes.
5392. Definitions.
A prior part IV consisted of sections 5391 and 5392 of this title,
prior to the general revision of this chapter by Pub. L. 85-859, title
II, 201, Sept. 2, 1958, 72 Stat. 1313.
1979 -- Pub. L. 96-39, title VIII, 807(b)(8), July 26, 1979, 93
Stat. 290, substituted ''Exemption from distilled spirits taxes'' for
''Exemption from rectifying and spirits taxes'' in item 5391.
26 USC 5391. Exemption from distilled spirits taxes
TITLE 26 -- INTERNAL REVENUE CODE
Notwithstanding any other provision of law, the tax imposed by
section 5001 on distilled spirits shall not, except as provided in this
subchapter, be assessed, levied, or collected from the proprietor of any
bonded wine cellar with respect to his use of wine spirits in wine
production, in such premises; except that, whenever wine or wine
spirits are used in violation of this subchapter, the applicable tax
imposed by section 5001 shall be collected unless the proprietor
satisfactorily shows that such wine or wine spirits were not knowingly
used in violation of law.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1387;
amended Pub. L. 96-39, title VIII, 807(a)(49), July 26, 1979, 93 Stat.
288.)
A prior section 5391, act Aug. 16, 1954, ch. 736, 68A Stat. 672,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1979 -- Pub. L. 96-39 substituted ''distilled'' for ''rectifying
and'' in section catchline and struck out provisions relating to
exemption from taxes imposed on rectified spirits and wines and the
status of any proprietor of a bonded wine cellar as a rectifier of such
spirits in text.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC 5392. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Standard wine
For purposes of this subchapter the term ''standard wine'' means
natural wine, specially sweetened natural wine, special natural wine,
and standard agricultural wine, produced in accordance with the
provisions of sections 5381, 5385, 5386, and 5387, respectively.
(b) Heavy bodied blending wine
For purposes of this subchapter the term ''heavy bodied blending
wine'' means wine made from fruit without added sugar, and with or
without added wine spirits, and conforming to the definition of natural
wine in all respects except as to maximum total solids content.
(c) Pure sugar
For purposes of this subchapter the term ''pure sugar'' means pure
refined sugar, suitable for human consumption, having a dextrose
equivalent of not less than 95 percent on a dry basis, and produced from
cane, beets, or fruit, or from grain or other sources of starch. Invert
sugar syrup produced from such pure sugar by recognized methods of
inversion may be used to prepare any sugar syrup, or solution of water
and pure sugar, authorized in this subchapter.
(d) Total solids
For purposes of this subchapter the term ''total solids'', in the
case of wine, means the degrees Brix of the dealcoholized wine.
(e) Same kind of fruit
For purposes of this subchapter the term ''same kind of fruit''
includes, in the case of grapes, all of the several species and
varieties of grapes. In the case of fruits other than grapes, this term
includes all of the several species and varieties of any given kind;
except that this shall not preclude a more precise identification of the
composition of the product for the purpose of its designation.
(f) Own production
For purposes of this subchapter the term ''own production'', when
used with reference to wine in a bonded wine cellar, means wine produced
by fermentation in the same bonded wine cellar, whether or not produced
by a predecessor in interest at such bonded wine cellar. This term may
also include, under regulations, wine produced by fermentation in bonded
wine cellars owned or controlled by the same or affiliated persons or
firms when located within the same State; the term ''affiliated'' shall
be deemed to include any one or more bonded wine cellar proprietors
associated as members of any farm cooperative, or any one or more bonded
wine cellar proprietors affiliated within the meaning of section
17(a)(5) of the Federal Alcohol Administration Act, as amended (27
U.S.C. 211). /1/
(g) Liquid sugar
For purposes of this subchapter the term ''liquid sugar'' means a
substantially colorless pure sugar and water solution containing not
less than 60 percent pure sugar by weight (60 degrees Brix.)
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1387;
amended Pub. L. 89-44, title VIII, 806(b)(3), June 21, 1965, 79 Stat.
163; Pub. L. 94-455, title XIX, 1905(a)(21), Oct. 4, 1976, 90 Stat.
1820.)
Section 17(a)(5) of the Federal Alcohol Administration Act, as
amended (27 U.S.C. 211), referred to in subsec. (f), was renumbered
section 117(a)(5) of the Federal Alcohol Administration Act by Pub. L.
100-690, title VIII, 8001(a)(2), Nov. 18, 1988, 102 Stat. 4517, and
is classified to section 211(a)(5) of Title 27, Intoxicating Liquors.
A prior section 5392, act Aug. 16, 1954, ch. 736, 68A Stat. 672,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Subsec. (f). Pub. L. 94-455 struck out ''49 Stat. 990;''
before ''27 U.S.C. 211''.
1965 -- Subsec. (c). Pub. L. 89-44, 806(b)(3)(A), added fruit,
grain, or other sources of starch to cane and beets as sources of ''pure
sugar''.
Subsec. (g). Pub. L. 89-44, 806(b)(3)(B), added subsec. (g).
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
Amendment by Pub. L. 89-44 effective Jan. 1, 1966, see section
806(d)(2) of Pub. L. 89-44, set out as a note under section 5383 of
this title.
/1/ See References in Text note below.
26 USC Subchapter G -- Breweries
TITLE 26 -- INTERNAL REVENUE CODE
Part
I. Establishment.
II. Operations.
A prior subchapter G consisted of parts I and II, contained sections
5401 to 5403 and 5411 to 5416, respectively, prior to the general
revision of this chapter by Pub. L. 85-859, title II, 201, Sept. 2,
1958, 72 Stat. 1313.
26 USC PART I -- ESTABLISHMENT
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5401. Qualifying documents.
5402. Definitions.
5403. Cross references.
A prior part I consisted of sections 5401 to 5403 of this title,
prior to the general revision of this chapter by Pub. L. 85-859, title
II, 201, Sept. 2, 1958, 72 Stat. 1313.
26 USC 5401. Qualifying documents
TITLE 26 -- INTERNAL REVENUE CODE
(a) Notice
Every brewer shall, before commencing or continuing business, file
with the officer designated for that purpose by the Secretary a notice
in writing, in such form and containing such information as the
Secretary shall by regulations prescribe as necessary to protect and
insure collection of the revenue.
(b) Bonds
Every brewer, on filing notice as provided by subsection (a) of his
intention to commence business, shall execute a bond to the United
States in such reasonable penal sum as the Secretary shall by regulation
prescribe as necessary to protect and insure collection of the revenue.
The bond shall be conditioned (1) that the brewer shall pay, or cause to
be paid, as herein provided, the tax required by law on all beer,
including all beer removed for transfer to the brewery from other
breweries owned by him as provided in section 5414; (2) that he shall
pay or cause to be paid the tax on all beer removed free of tax for
export as provided in section 5053(a), which beer is not exported or
returned to the brewery; and (3) that he shall in all respects
faithfully comply, without fraud or evasion, with all requirements of
law relating to the production and sale of any beer aforesaid. Once in
every 4 years, or whenever required so to do by the Secretary, the
brewer shall execute a new bond or a continuation certificate, in the
penal sum prescribed in pursuance of this section, and conditioned as
above provided, which bond or continuation certificate shall be in lieu
of any former bond or bonds, or former continuation certificate or
certificates, of such brewer in respect to all liabilities accruing
after its approval. If the contract of surety between the brewer and
the surety on an expiring bond or continuation certificate is continued
in force between the parties for a succeeding period of not less than 4
years, the brewer may submit, in lieu of a new bond, a certificate
executed, under penalties of perjury, by the brewer and the surety
attesting to continuation of the bond, which certificate shall
constitute a bond subject to all provisions of law applicable to bonds
given pursuant to this section.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1388;
amended Pub. L. 91-673, 3(a), Jan. 12, 1971, 84 Stat. 2056; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
A prior section 5401, act Aug. 16, 1954, ch. 736, 68A Stat. 674,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1971 -- Subsec. (b). Pub. L. 91-673 permitted bonding requirement to
be satisfied by continuation of an existing bond, with such continuation
being subject to Government approval in the same manner as a new bond
and required that the continuation certificate be executed by both the
brewer and the surety, under penalties of perjury.
Amendment by Pub. L. 91-673 effective on first day of first calendar
month which begins more than 90 days after Jan. 12, 1971, see section 5
of Pub. L. 91-673, set out as a note under section 5056 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC 5402. Definitions
TITLE 26 -- INTERNAL REVENUE CODE
(a) Brewery
The brewery shall consist of the land and buildings described in the
brewer's notice. The continuity of the brewery must be unbroken except
where separated by public passageways, streets, highways, waterways, or
carrier rights-of-way, or partitions; and if parts of the brewery are
so separated they must abut on the dividing medium and be adjacent to
each other. Notwithstanding the preceding sentence, facilities under
the control of the brewer for case packing, loading, or storing which
are located within reasonable proximity to the brewery packaging
facilities may be approved by the Secretary as a part of the brewery if
the revenue will not be jeopardized thereby.
(b) Brewer
For definition of brewer, see section 5092.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1389;
amended Pub. L. 91-673, 3(b), Jan. 12, 1971, 84 Stat. 2057; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
A prior section 5402, act Aug. 16, 1954, ch. 736, 68A Stat. 674,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
1971 -- Subsec. (a). Pub. L. 91-673 inserted proviso to definition
of ''Brewery'' that the continuity of the brewery must be unbroken
except where separated by public passageways, streets, highways,
waterways, or carrier rights-of-way, or partitions, with the exception
that the Secretary approve facilities under the control of the brewer
for case packing, loading, or storing, which are located within
reasonable proximity to the brewery as a part of the brewery if the
revenue will not be jeopardized thereby.
Amendment by Pub. L. 91-673 effective on first day of first calendar
month which begins more than 90 days after Jan. 12, 1971, see section 5
of Pub. L. 91-673, set out as a note under section 5056 of this title.
26 USC 5403. Cross references
TITLE 26 -- INTERNAL REVENUE CODE
(1) For authority of Secretary to disapprove brewers' bonds, see
section 5551.
(2) For authority of Secretary to require the installation and use of
meters, tanks, and other apparatus, see section 5552.
(3) For deposit of United States bonds or notes in lieu of sureties,
see section 9303 of title 31, United States Code.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1389;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 97-258, 3(f)(3), Sept. 13, 1982, 96 Stat. 1064.)
A prior section 5403, act Aug. 16, 1954, ch. 736, 68A Stat. 674,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1982 -- Par. (3). Pub. L. 97-258 substituted ''section 9303 of title
31, United States Code'' for ''6 U.S.C. 15''.
1976 -- Par. (1). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
26 USC PART II -- OPERATIONS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5411. Use of brewery.
5412. Removal of beer in containers or by pipeline.
5413. Brewers procuring beer from other brewers.
5414. Removals from one brewery to another belonging to the same
brewer.
5415. Records and returns.
5416. Definitions of package and packaging.
5417. Pilot brewing plants.
A prior part II consisted of sections 5411 to 5416, prior to the
general revision of this chapter by Pub. L. 85-859, title II, 201,
Sept. 2, 1958, 72 Stat. 1313.
1971 -- Pub. L. 91-673, 4(b), Jan. 12, 1971, 84 Stat. 2058,
substituted ''Definitions of package and packaging'' for ''Definitions
of bottle and bottling'' in item 5416 and added item 5417.
26 USC 5411. Use of brewery
TITLE 26 -- INTERNAL REVENUE CODE
The brewery shall be used under regulations prescribed by the
Secretary only for the purpose of producing, packaging, and storing
beer, cereal beverages containing less than one-half of 1 percent of
alcohol by volume, vitamins, ice, malt, malt sirup, and other byproducts
and of soft drinks; for the purpose of processing spent grain, carbon
dioxide, and yeast; and for such other purposes as the Secretary by
regulation may find will not jeopardize the revenue.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1389;
amended Pub. L. 91-673, 3(c), Jan. 12, 1971, 84 Stat. 2057; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
A prior section 5411, act Aug. 16, 1954, ch. 736, 68A Stat. 675,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1971 -- Pub. L. 91-673 struck out requirement of separate facilities
for bottling of beer and cereal beverages and permitted use of brewery
for packaging and storing beer and other cereal beverages.
Amendment by Pub. L. 91-673 effective on first day of first calendar
month which begins more than 90 days after Jan. 12, 1971, see section 5
of Pub. L. 91-673, set out as a note under section 5056 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Applicability of revenue laws, effective date of this section, see
section 7851 of this title.
26 USC 5412. Removal of beer in containers or by pipeline
TITLE 26 -- INTERNAL REVENUE CODE
Beer may be removed from the brewery for consumption or sale only in
hogsheads, packages, and similar containers, marked, branded, or labeled
in such manner as the Secretary may by regulation require, except that
beer may be removed from the brewery by pipeline to contiguous distilled
spirits plants under section 5222.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1389;
amended Pub. L. 91-673, 3(d), Jan. 12, 1971, 84 Stat. 2057; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
A prior section 5412, act Aug. 16, 1954, ch. 736, 68A Stat. 675,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
1971 -- Pub. L. 91-673 substituted ''packages,'' for ''barrels,
kegs, bottles,''.
Amendment by Pub. L. 91-673 effective on first day of first calendar
month which begins more than 90 days after Jan. 12, 1971, see section 5
of Pub. L. 91-673, set out as a note under section 5056 of this title.
Penalty for intentional removal or defacement of brewer's marks and
brands, see section 5675 of this title.
26 USC 5413. Brewers procuring beer from other brewers
TITLE 26 -- INTERNAL REVENUE CODE
A brewer, under such regulations as the Secretary shall prescribe,
may obtain beer in his own hogsheads, barrels, and kegs, marked with his
name and address, from another brewer, with taxpayment thereof to be by
the producer in the manner prescribed by section 5054.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1389;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5413, act Aug. 16, 1954, ch. 736, 68A Stat. 675,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Exemptions, see section 5113 of this title.
Imposition and rate of tax, see section 5091 of this title.
26 USC 5414. Removals from one brewery to another belonging to the
same brewer
TITLE 26 -- INTERNAL REVENUE CODE
Beer may be removed from one brewery to another brewery belonging to
the same brewer, without payment of tax, and may be mingled with beer at
the receiving brewery, subject to such conditions, including payment of
the tax, and in such containers, as the Secretary by regulations shall
prescribe. The removal from one brewery to another brewery belonging to
the same brewer shall be deemed to include any removal from a brewery
owned by one corporation to a brewery owned by another corporation when
(1) one such corporation owns the controlling interest in the other such
corporation, or (2) the controlling interest in each such corporation is
owned by the same person or persons.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1389;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5414, act Aug. 16, 1954, ch. 736, 68A Stat. 675,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC 5415. Records and returns
TITLE 26 -- INTERNAL REVENUE CODE
(a) Records
Every brewer shall keep records, in such form and containing such
information as the Secretary shall prescribe by regulations as necessary
for protection of the revenue. These records shall be preserved by the
person required to keep such records for such period as the Secretary
shall by regulations prescribe, and shall be available during business
hours for examination and taking of abstracts therefrom by any internal
revenue officer.
(b) Returns
Every brewer shall make true and accurate returns of his operations
and transactions in the form, at the times, and for such periods as the
Secretary shall by regulation prescribe.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1390;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5415, act Aug. 16, 1954, ch. 736, 68A Stat. 675,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Subsecs. (a), (b). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Penalties and forfeitures --
Fraudulent noncompliance, see section 5671 of this title.
Noncompliance without intent to defraud, see section 5672 of this
title.
26 USC 5416. Definitions of package and packaging
TITLE 26 -- INTERNAL REVENUE CODE
For purposes of this subchapter, the term ''package'' means a bottle,
can, keg, barrel, or other original consumer container, and the term
''packaging'' means the filling of any package.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1390;
amended Pub. L. 91-673, 3(e), Jan. 12, 1971, 84 Stat. 2057.)
A prior section 5416, act Aug. 16, 1954, ch. 736, 68A Stat. 676,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1971 -- Pub. L. 91-673 substituted definitions of package and
packaging for definitions of bottle and bottling.
Amendment by Pub. L. 91-673 effective on first day of first calendar
month which begins more than 90 days after Jan. 12, 1971, see section 5
of Pub. L. 91-673, set out as a note under section 5056 of this title.
26 USC 5417. Pilot brewing plants
TITLE 26 -- INTERNAL REVENUE CODE
Under such regulations as the Secretary may prescribe, and on the
filing of such bonds and applications as he may require, pilot brewing
plants may, at the discretion of the Secretary be established and
operated off the brewery premises for research, analytical,
experimental, or development purposes with regard to beer or brewery
operations. Nothing in this section shall be construed as authority to
waive the filing of any bond or the payment of any tax provided for in
this chapter.
(Added Pub. L. 91-673, 4(a), Jan. 12, 1971, 84 Stat. 2057; amended
Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat.
1834.)
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
Section effective on first day of first calendar month which begins
more than 90 days after Jan. 12, 1971, see section 5 of Pub. L.
91-673, set out as an Effective Date of 1971 Amendment note under
section 5056 of this title.
26 USC Subchapter H -- Miscellaneous Plants and Warehouses
TITLE 26 -- INTERNAL REVENUE CODE
Part
I. Vinegar plants.
II. Volatile fruit-flavor concentrate plants.
(III. Repealed.)
A prior subchapter H consisted of parts I to III, prior to the
general revision of this chapter by Pub. L. 85-859, title II, 201,
Sept. 2, 1958, 72 Stat. 1313.
1979 -- Pub. L. 96-39, title VIII, 807(b)(9), July 26, 1979, 93
Stat. 291, struck out item relating to Part III ''Manufacturing bonded
warehouses'' in table of Parts comprising Subchapter H.
26 USC PART I -- VINEGAR PLANTS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5501. Establishment.
5502. Qualification.
5503. Construction and equipment.
5504. Operation.
5505. Applicability of provisions of this chapter.
A prior part I consisted of sections 5501 and 5502, prior to the
general revision of this chapter by Pub. L. 85-859, title II, 201,
Sept. 2, 1958, 72 Stat. 1313.
26 USC 5501. Establishment
TITLE 26 -- INTERNAL REVENUE CODE
Plants for the production of vinegar by the vaporizing process, where
distilled spirits of not more than 15 percent of alcohol by volume are
to be produced exclusively for use in the manufacture of vinegar on the
premises, may be established under this part.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1390.)
A prior section 5501, act Aug. 16, 1954, ch. 736, 68A Stat. 677,
made a cross reference to provisions pertaining to establishment and
operation of vinegar factories, prior to the general revision of this
chapter by Pub. L. 85-859.
Provisions similar to those comprising this section were contained in
prior section 5216(a)(1), act Aug. 16, 1954, ch. 736, 68A Stat. 640,
prior to the general revision of this chapter by Pub. L. 85-859.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
26 USC 5502. Qualification
TITLE 26 -- INTERNAL REVENUE CODE
(a) Requirements
Every person, before commencing the business of manufacturing vinegar
by the vaporizing process, and at such other times as the Secretary may
by regulations prescribe, shall make application to the Secretary for
the registration of his plant and receive permission to operate. No
application required under this section shall be approved until the
applicant has complied with all requirements of law, and regulations
prescribed by the Secretary, in relation to such business. With respect
to any change in such business after approval of an application, the
Secretary may by regulations authorize the filing of written notice of
such change or require the filing of an application to make such change.
(b) Form of application
The application required by subsection (a) shall be in such form and
contain such information as the Secretary shall by regulations prescribe
to enable him to determine the identity of the applicant, the location
and extent of the premises, the type of operations to be conducted on
such premises, and whether the operations will be in conformity with law
and regulations.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1390;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5502, act Aug. 16, 1954, ch. 736, 68A Stat. 677,
related to distilled vinegar, prior to the general revision of this
chapter by Pub. L. 85-859.
Provisions similar to those comprising subsec. (a) of this section
were contained in prior section 5216(a)(1), act Aug. 16, 1954, ch.
736, 68A Stat. 640, prior to the general revision of this chapter by
Pub. L. 85-859.
1976 -- Subsecs. (a), (b). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
26 USC 5503. Construction and equipment
TITLE 26 -- INTERNAL REVENUE CODE
Plants established under this part for the manufacture of vinegar by
the vaporizing process shall be constructed and equipped in accordance
with such regulations as the Secretary shall prescribe.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1391;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
Provisions similar to those comprising this section were contained in
prior sections 5216(a)(1) and 5552, act Aug. 16, 1954, ch. 736, 68A
Stat. 640, 680, prior to the general revision of this chapter by Pub.
L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC 5504. Operation
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
Any manufacturer of vinegar qualified under this part may, under such
regulations as the Secretary shall prescribe, separate by a vaporizing
process the distilled spirits from the mash produced by him, and
condense the vapor by introducing it into the water or other liquid used
in making vinegar in his plant.
(b) Removals
No person shall remove, or cause to be removed, from any plant
established under this part any vinegar or other fluid or material
containing a greater proportion than 2 percent of proof spirits.
(c) Records
Every person manufacturing vinegar by the vaporizing process shall
keep such records and file such reports as the Secretary shall by
regulations prescribe of the kind and quantity of materials received on
his premises and fermented or mashed, the quantity of low wines
produced, the quantity of such low wines used in the manufacture of
vinegar, the quantity of vinegar produced, the quantity of vinegar
removed from the premises, and such other information as may by
regulations be required. Such records, and a copy of such reports,
shall be preserved as regulations shall prescribe, and shall be kept
available for inspection by any internal revenue officer during business
hours.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1391;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
Provisions similar to those comprising subsecs. (a) and (b) of this
section were contained in prior section 5216(a)(1)(2), act Aug. 16,
1954, ch. 736, 68A Stat. 640, prior to the general revision of this
chapter by Pub. L. 85-859.
1976 -- Subsecs. (a), (c). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
26 USC 5505. Applicability of provisions of this chapter
TITLE 26 -- INTERNAL REVENUE CODE
(a) Tax
The taxes imposed by subchapter A shall be applicable to any
distilled spirits produced in violation of section 5501 or removed in
violation of section 5504(b).
(b) Prohibited premises
Plants established under this part shall not be located on any
premises where distilling is prohibited under section 5601(a)(6).
(c) Entry and examination of premises
The provisions of section 5203(b), (c), and (d), relating to right of
entry and examination, furnishing facilities and assistance, and
authority to break up grounds or walls, shall be applicable to all
premises established under this part, and to all proprietors thereof,
and their workmen or other persons employed by them.
(d) Registration of stills
Stills on the premises of plants established under this part shall be
registered as provided in section 5179.
(e) Installation of meters, tanks, and other apparatus
The provisions of section 5552 relating to the installation of
meters, tanks, and other apparatus shall be applicable to plants
established under this part.
(f) Assignment of internal revenue officers
The provisions of section 5553(a) relating to the assignment of
internal revenue officers shall be applicable to plants established
under this part.
(g) Authority to waive records, statements, and returns
The provisions of section 5555(b) relating to the authority of the
Secretary to waive records, statements, and returns shall be applicable
to records, statements, or returns required by this part.
(h) Regulations
The provisions of section 5556 relating to the prescribing of
regulations shall be applicable to this part.
(i) Penalties
The penalties and forfeitures provided in sections 5601(a)(1), (6),
and (12), 5603, 5615(1) and (4), 5686, and 5687 shall be applicable to
this part.
(j) Other provisions
This chapter (other than this part and the provisions referred to in
subsection (a), (b), (c), (d), (e), (f), (g), (h), (i) shall not be
applicable with respect to plants established or operations conducted
under this part.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1391;
amended Pub. L. 94-455, title XIX, 1905(b)(6)(E), Oct. 4, 1976, 90
Stat. 1823.)
Provisions similar to those comprising subsecs. (a) to (i) of this
section were contained in prior sections of act Aug. 16, 1954, prior to
the general revision of this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 627, 630, 640, 680, 681, 683-685, 700.
1976 -- Subsec. (i). Pub. L. 94-455 struck out ''5601(b)(1),'' after
''5601(a)(1), (6), and (12),''.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
26 USC PART II -- VOLATILE FRUIT-FLAVOR CONCENTRATE PLANTS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5511. Establishment and operation.
5512. Control of products after manufacture.
A prior part II consisted of sections 5511 and 5512, prior to the
general revision of this chapter by Pub. L. 85-859, title II, 201,
Sept. 2, 1958, 72 Stat. 1313.
26 USC 5511. Establishment and operation
TITLE 26 -- INTERNAL REVENUE CODE
This chapter (other than sections 5178(a)(2)(C), 5179, 5203(b), (c),
and (d), and 5552) shall not be applicable with respect to the
manufacture, by any process which includes evaporations from the mash or
juice of any fruit, of any volatile fruit-flavor concentrate if --
(1) such concentrate, and the mash or juice from which it is
produced, contains no more alcohol than is reasonably unavoidable in the
manufacture of such concentrate; and
(2) such concentrate is rendered unfit for use as a beverage before
removal from the place of manufacture, or (in the case of a concentrate
which does not exceed 24 percent alcohol by volume) such concentrate is
transferred to a bonded wine cellar for use in production of natural
wine as provided in section 5382; and
(3) the manufacturer thereof makes such application, keeps such
records, renders such reports, files such bonds, and complies with such
other requirements with respect to the production, removal, sale,
transportation, and use of such concentrate and of the mash or juice
from which such concentrate is produced, as the Secretary may by
regulations prescribe as necessary for the protection of the revenue.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1392;
amended Pub. L. 88-653, 3, Oct. 13, 1964, 78 Stat. 1085; Pub. L.
94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
A prior section 5511, act Aug. 16, 1954, ch. 736, 68A Stat. 677,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Par. (3). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
1964 -- Par. (2). Pub. L. 88-653 inserted ''or (in the case of a
concentrate which does not exceed 24 percent alcohol by volume) such
concentrate is transferred to a bonded wine cellar for use in production
of natural wine as provided in section 5382''.
Amendment by Pub. L. 88-653 effective on first day of second month
which begins more than 10 days after Oct. 13, 1964, see section 4 of
Pub. L. 88-653, set out as a note under section 5383 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Fruit flavor concentrates, imposition of tax, see section 5001 of
this title.
26 USC 5512. Control of products after manufacture
TITLE 26 -- INTERNAL REVENUE CODE
For applicability of all provisions of this chapter pertaining to
distilled spirits and wines, including those requiring payment of tax,
to volatile fruit-flavor concentrates sold, transported, or used in
violation of law or regulations, see section 5001(a)(7).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1392.)
A prior section 5512, act Aug. 16, 1954, ch. 736, 68A Stat. 677,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
26 USC (PART III -- REPEALED)
TITLE 26 -- INTERNAL REVENUE CODE
26 USC ( 5521 to 5523. Repealed. Pub. L. 96-39, title VIII,
807(a)(50), July 26, 1979, 93 Stat. 288)
TITLE 26 -- INTERNAL REVENUE CODE
Section 5521, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1392; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A),
Oct. 4, 1976, 90 Stat. 1834, related to establishment and operation of
manufacturing bonded warehouses.
A prior section 5521, act Aug. 16, 1954, ch. 736, 68A Stat. 678,
related to establishment and operation of manufacturing bonded
warehouses, prior to the general revision of this chapter by Pub. L.
85-859.
Section 5522, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1393; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A),
Oct. 4, 1976, 90 Stat. 1834, related to withdrawal of distilled
spirits to manufacturing bonded warehouses.
A prior section 5522, act Aug. 16, 1954, ch. 736, 68A Stat. 679,
related to withdrawal of distilled spirits to manufacturing bonded
warehouses, prior to general revision of this chapter by Pub. L.
85-859. See sections 5008(f)(2) and 5214(a) of this title.
Section 5523, added Pub. L. 85-859, title II, 201, Sept. 2, 1958,
72 Stat. 1394; amended Pub. L. 94-455, title XIX, 1906(b)(13)(A),
Oct. 4, 1976, 90 Stat. 1834, made special provision for distilled
spirits and wines rectified in manufacturing bonded warehouses.
A prior section 5523, act Aug. 16, 1954, ch. 736, 68A Stat. 679,
made special provision for distilled spirits and wines rectified in
manufacturing bonded warehouses, prior to general revision of this
chapter by Pub. L. 85-859.
Repeal effective Jan. 1, 1980, see section 810 of Pub. L. 96-39,
set out as an Effective Date of 1979 Amendment note under section 5001
of this title.
26 USC Subchapter I -- Miscellaneous General Provisions
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5551. General provisions relating to bonds.
5552. Installation of meters, tanks, and other apparatus.
5553. Supervision of premises and operations.
5554. Pilot operations.
5555. Records, statements, and returns.
5556. Regulations.
5557. Officers and agents authorized to investigate, issue search
warrants, and prosecute for violations.
5558. Authority of enforcement officers.
5559. Determinations.
5560. Other provisions applicable.
5561. Exemptions to meet the requirements of the national defense.
5562. Exemptions from certain requirements in cases of disaster.
A prior subchapter I consisted of sections 5551 to 5557, prior to the
general revision of this chapter by Pub. L. 85-859, title II, 201,
Sept. 2, 1958, 72 Stat. 1313.
26 USC 5551. General provisions relating to bonds
TITLE 26 -- INTERNAL REVENUE CODE
(a) Approval as condition to commencing business
No individual, firm, partnership, corporation, or association,
intending to commence or to continue the business of a distiller,
warehouseman, processor, brewer, or winemaker, shall commence or
continue the business of a distiller, warehouseman, processor, brewer,
or winemaker until all bonds in respect of such a business, required by
any provision of law, have been approved by the Secretary of the
Treasury or the officer designated by him.
(b) Disapproval
The Secretary of the Treasury or any officer designated by him may
disapprove any such bond or bonds if the individual, firm, partnership,
or corporation, or association giving such bond or bonds, or owning,
controlling, or actively participating in the management of the business
of the individual, firm, partnership, corporation, or association giving
such bond or bonds, shall have been previously convicted, in a court of
competent jurisdiction, of --
(1) any fraudulent noncompliance with any provision of any law of the
United States, if such provision related to internal revenue or customs
taxation of distilled spirits, wines, or beer, or if such an offense
shall have been compromised with the individual, firm, partnership,
corporation, or association on payment of penalties or otherwise, or
(2) any felony under a law of any State, or the District of Columbia,
or the United States, prohibiting the manufacture, sale, importation, or
transportation of distilled spirits, wine, beer, or other intoxicating
liquor.
(c) Appeal from disapproval
In case the disapproval is by an officer designated by the Secretary
of the Treasury to approve or disapprove such bonds, the individual,
firm, partnership, corporation, or association giving the bond may
appeal from such disapproval to the Secretary of the Treasury or an
officer designated by him to hear such appeals, and the disapproval of
the bond by the Secretary of the Treasury or officer designated to hear
such appeals shall be final.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1394;
amended Pub. L. 94-455, title XIX, 1905(c)(5), 1906(b)(13)(B), Oct.
4, 1976, 90 Stat. 1823, 1834; Pub. L. 96-39, title VIII, 807(a)(51),
July 26, 1979, 93 Stat. 288.)
A prior section 5551, act Aug. 16, 1954, ch. 736, 68A Stat. 680,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
Provisions similar to those comprising subsec. (c) of this section
were contained in prior section 5177(c), act Aug. 16, 1954, ch. 736,
68A Stat. 630, prior to the general revision of this chapter by Pub.
L. 85-859.
1979 -- Subsec. (a). Pub. L. 96-39 substituted ''warehouseman,
processor'' for ''bonded warehouseman, rectifier'' in two places.
1976 -- Subsec. (a). Pub. L. 94-455, 1906(b)(13)(B), substituted
''Secretary of the Treasury'' for ''Secretary''.
Subsec. (b). Pub. L. 94-455, 1905(c)(5), 1906(b)(13)(B),
substituted ''Secretary of the Treasury'' for ''Secretary'' in
provisions preceding par. (1) and struck out ''Territory, or'' after
''State,'' in par. (2).
Subsec. (c). Pub. L. 94-455, 1906(b)(13)(B), substituted ''Secretary
of the Treasury'' for ''Secretary''.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by section 1905(c)(5) of Pub. L. 94-455 effective on first
day of first month which begins more than 90 days after Oct. 4, 1976,
see section 1905(d) of Pub. L. 94-455, set out as a note under section
5005 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Section as applicable to bond for bonded wine cellar, see section
5355 of this title.
26 USC 5552. Installation of meters, tanks, and other apparatus
TITLE 26 -- INTERNAL REVENUE CODE
The Secretary is authorized to require at distilled spirits plants,
breweries, and at any other premises established pursuant to this
chapter as in his judgment may be deemed advisable, the installation of
meters, tanks, pipes, or any other apparatus for the purpose of
protecting the revenue, and such meters, tanks, and pipes and all
necessary labor incident thereto shall be at the expense of the person
on whose premises the installation is required. Any such person
refusing or neglecting to install such apparatus when so required by the
Secretary shall not be permitted to conduct business on such premises.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1395;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5552, act Aug. 16, 1954, ch. 736, 68A Stat. 680,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
For application to vinegar plants of provisions of prior section 5552
relating to installation of meters, tanks, and other apparatus, see also
sections 5503 and 5505(e) of this title.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
26 USC 5553. Supervision of premises and operations
TITLE 26 -- INTERNAL REVENUE CODE
(a) Assignment of internal revenue officers
The Secretary is authorized to assign to any premises established
under the provisions of this chapter such number of internal revenue
officers as may be deemed necessary.
(b) Functions of internal revenue officer
When used in this chapter, the term ''internal revenue officer
assigned to the premises'' means the internal revenue officer assigned
by the Secretary to duties at premises established and operated under
the provisions of this chapter.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1395;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5553, act Aug. 16, 1954, ch. 736, 68A Stat. 681,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
For application to vinegar plants of provisions of prior section
5553(a) relating to assignment of storekeeper-gaugers, see also section
5505(f) of this title.
1976 -- Subsecs. (a), (b). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
26 USC 5554. Pilot operations
TITLE 26 -- INTERNAL REVENUE CODE
For the purpose of facilitating the development and testing of
improved methods of governmental supervision (necessary for the
protection of the revenue) over distilled spirits plants established
under this chapter, the Secretary is authorized to waive any regulatory
provisions of this chapter for temporary pilot or experimental
operations. Nothing in this section shall be construed as authority to
waive the filing of any bond or the payment of any tax provided for in
this chapter.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1395;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5554, act Aug. 16, 1954, ch. 736, 68A Stat. 681,
consisted of provisions similar to those comprising this section, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Applicability of revenue laws, effective date of this section, see
section 7851 of this title.
26 USC 5555. Records, statements, and returns
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
Every person liable to any tax imposed by this chapter, or for the
collection thereof, shall keep such records, render such statements,
make such returns, and comply with such rules and regulations as the
Secretary may prescribe.
(b) Authority to waive
Whenever in this chapter any record is required to be made or kept,
or statement or return is required to be made by any person, the
Secretary may by regulation waive, in whole or in part, such requirement
when he deems such requirement to no longer serve a necessary purpose.
This subsection shall not be construed as authorizing the waiver of the
payment of any tax.
(c) Photographic copies
Whenever in this chapter any record is required to be made and
preserved by any person, the Secretary may by regulations authorize such
person to record, copy, or reproduce by any photographic, photostatic,
microfilm, microcard, miniature photographic, or other process, which
accurately reproduces or forms a durable medium for so reproducing the
original of such record and to retain such reproduction in lieu of the
original. Every person who is authorized to retain such reproduction in
lieu of the original shall, under such regulations as the Secretary may
prescribe, preserve such reproduction in conveniently accessible files
and make provision for examining, viewing, and using such reproduction
the same as if it were the original. Such reproduction shall be treated
and considered for all purposes as though it were the original record
and all provisions of law applicable to the original shall be applicable
to such reproduction. Such reproduction, or enlargement or facsimile
thereof, shall be admissible in evidence in the same manner and under
the same conditions as provided for the admission of reproductions,
enlargements, or facsimiles of records made in the regular course of
business under section 1732(b) of title 28 of the United States Code.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1395;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 98-369, div. A, title IV, 454(c)(10), July 18,
1984, 98 Stat. 821.)
A prior section 5555, act Aug. 16, 1954, ch. 736, 68A Stat. 681,
consisted of provisions similar to those comprising subsecs. (a) and
(b) of this section, prior to the general revision of this chapter by
Pub. L. 85-859.
Prior section 5555(a), relating to general provisions respecting
records, statements, and returns, is also incorporated in section
5207(b) to (d) of this title.
Prior section 5555(b), relating to authority to waive records,
statements, and returns, is also incorporated in section 5505(g) of this
title.
1984 -- Subsec. (a). Pub. L. 98-369 struck out ''or for the affixing
of any stamp required to be affixed by this chapter,'' after ''the
collection thereof,''.
1976 -- Subsecs. (a) to (c). Pub. L. 94-455 struck out ''or his
delegate'' after ''Secretary'' wherever appearing.
Amendment by Pub. L. 98-369 effective July 1, 1985, see section
456(b) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
26 USC 5556. Regulations
TITLE 26 -- INTERNAL REVENUE CODE
The regulations prescribed by the Secretary for enforcement of this
chapter may make such distinctions in requirements relating to
construction, equipment, or methods of operation as he deems necessary
or desirable due to differences in materials or variations in methods
used in production, processing, or storage of distilled spirits.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1396;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
A prior section 5556, act Aug. 16, 1954, ch. 736, 68A Stat. 681,
authorized the Secretary to prescribe regulations, prior to the general
revision of this chapter by Pub. L. 85-859.
For application to vinegar plants of regulatory provisions of prior
section 5556, see also section 5505(h) of this title.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
Section 210(e) of title II of Pub. L. 85-859 provided that: ''Until
regulations are promulgated under any provision of this title (enacting
sections 5849, 5854, 5855, and 7608 of this title, amending this
chapter, chapter 52 of this title and sections 5801, 5811, 5814, 5821,
5843, 5848, 5851, 6071, 6207, 6422, 7214, 7272, 7301, 7324 to 7326,
7609, 7652 and 7655 of this title, and enacting notes set out under
sections 5001, 5006, 5025, 5064, 5175, 5304 and 5601 of this title)
which depends for its application upon the promulgation of regulations
(or which is to be applied in such manner as may be prescribed by
regulations) all instructions, rules, or regulations which are in effect
immediately prior to the effective date of such provision shall, to the
extent such instructions, rules, or regulations could be prescribed as
regulations under authority of such provision, be applied as is
promulgated as regulations under such provision.''
26 USC 5557. Officers and agents authorized to investigate, issue
search warrants, and prosecute for violations
TITLE 26 -- INTERNAL REVENUE CODE
(a) General
The Secretary shall investigate violations of this subtitle and in
any case in which prosecution appears warranted the Secretary shall
report the violation to the United States Attorney for the district in
which such violation was committed, who is hereby charged with the duty
of prosecuting the offenders, subject to the direction of the Attorney
General, as in the case of other offenses against the laws of the United
States; and the Secretary may swear out warrants before United States
commissioners or other officers or courts authorized to issue warrants
for the apprehension of such offenders, and may, subject to the control
of such United States Attorney, conduct the prosecution at the
committing trial for the purpose of having the offenders held for the
action of a grand jury. Section 3041 of title 18 of the United States
Code is hereby made applicable in the enforcement of this subtitle.
(b) Cross reference
For provisions relating to the issuance of search warrants, see the
Federal Rules of Criminal Procedure.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1396;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
The Federal Rules of Criminal Procedure, referred to in subsec. (b),
are set out in the Appendix of Title 18, Crimes and Criminal Procedure.
A prior section 5557, act Aug. 16, 1954, ch. 736, 68A Stat. 681,
related to applicability of other provisions, prior to the general
revision of this chapter by Pub. L. 85-859. See section 5560 of this
title.
Provisions similar to those comprising this section were contained in
prior section 5314, act Aug. 16, 1954, ch. 736, 68A Stat. 659, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary'' wherever appearing.
26 USC 5558. Authority of enforcement officers
TITLE 26 -- INTERNAL REVENUE CODE
For provisions relating to the authority of internal revenue
enforcement officers, see section 7608.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1396.)
26 USC 5559. Determinations
TITLE 26 -- INTERNAL REVENUE CODE
Whenever the Secretary is required or authorized, in this chapter, to
make or verify any quantitative determination, such determination or
verification may be made by actual court, weight, or measurement, or by
the application of statistical methods, or by other means, under such
regulations as the Secretary may prescribe.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1396;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
26 USC 5560. Other provisions applicable
TITLE 26 -- INTERNAL REVENUE CODE
All provision of subtitle F, insofar as applicable and not
inconsistent with the provisions of this subtitle, are hereby extended
to and made a part of this subtitle.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1396.)
Provisions similar to those comprising this section were contained in
prior section 5557, act Aug. 16, 1954, ch. 736, 68A Stat. 681, prior
to the general revision of this chapter by Pub. L. 85-859.
26 USC 5561. Exemptions to meet the requirements of the national
defense
TITLE 26 -- INTERNAL REVENUE CODE
The Secretary may temporarily exempt proprietors of distilled spirits
plants from any provision of the internal revenue laws relating to
distilled spirits, except those requiring payment of the tax thereon,
whenever in his judgment it may seem expedient to do so to meet the
requirements of the national defense. Whenever the Secretary shall
exercise the authority conferred by this section he may prescribe such
regulations as may be necessary to accomplish the purpose which caused
him to grant the exemption.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1397;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
Provisions similar to those comprising this section were contained in
prior section 5217(b), act Aug. 16, 1954, ch. 736, 68A Stat. 641,
prior to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
26 USC 5562. Exemptions from certain requirements in cases of disaster
TITLE 26 -- INTERNAL REVENUE CODE
Whenever the Secretary finds that it is necessary or desirable, by
reason of disaster, to waive provisions of internal revenue law with
regard to distilled spirits, he may temporarily exempt proprietors of
distilled spirits plants from any provision of the internal revenue laws
relating to distilled spirits, except those requiring payment of the tax
thereon, to the extent he may deem necessary or desirable.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1397;
amended Pub. L. 94-455, title XIX, 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834.)
Provisions similar to those comprising this section were contained in
prior section 5215, act Aug. 16, 1954, ch. 736, 68A Stat. 640, prior
to the general revision of this chapter by Pub. L. 85-859.
1976 -- Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary''.
26 USC Subchapter J -- Penalties, Seizures, and Forfeitures Relating to
Liquors
TITLE 26 -- INTERNAL REVENUE CODE
Part
I. Penalty, seizure, and forfeiture provisions applicable to
distilling, rectifying, and distilled and rectified products.
II. Penalty and forfeiture provisions applicable to wine and wine
production.
III. Penalty, seizure, and forfeiture provisions applicable to beer
and brewing.
IV. Penalty, seizure, and forfeiture provisions common to liquors.
V. Penalties applicable to occupational taxes.
A prior subchapter J consisted of parts I to V, prior to the general
revision of this chapter by Pub. L. 85-859, title II, 201, Sept. 2,
1958, 72 Stat. 1313.
26 USC PART I -- PENALTY, SEIZURE, AND FORFEITURE PROVISIONS APPLICABLE
TO DISTILLING, RECTIFYING, AND DISTILLED AND RECTIFIED PRODUCTS
TITLE 26 -- INTERNAL REVENUE CODE
Sec.
5601. Criminal penalties.
5602. Penalty for tax fraud by distiller.
5603. Penalty relating to records, returns, and reports. /1/
5604. Penalties relating to marks, brands, and containers.
5605. Penalty relating to return of materials used in the
manufacture of distilled spirits, or from which distilled spirits may be
recovered.
5606. Penalty relating to containers of distilled spirits.
5607. Penalty and forfeiture for unlawful use, recovery, or
concealment of denatured distilled spirits, or articles.
5608. Penalty and forfeiture for fraudulent claims for export
drawback or unlawful relanding.
5609. Destruction of unregistered stills, distilling apparatus,
equipment, and materials.
5610. Disposal of forfeited equipment and material for distilling.
5611. Release of distillery before judgment.
5612. Forfeiture of taxpaid distilled spirits remaining on bonded
premises.
5613. Forfeiture of distilled spirits not closed, marked, or branded
as required by law.
5614. Burden of proof in cases of seizure of spirits.
5615. Property subject to forfeiture.
A prior part I consisted of sections 5601 to 5650, prior to the
general revision of this chapter by Pub. L. 85-859, title II, 201,
Sept. 2, 1958, 72 Stat. 1313.
1984 -- Pub. L. 98-369, div. A, title IV, 454(c)(11)(B), (12)(C),
July 18, 1984, 98 Stat. 822, struck out ''stamps,'' in item 5604, and
substituted ''closed'' for ''stamped'' in item 5613.
Fines, penalties and forfeitures --
Generally, see chapter 163 of Title 28, Judiciary and Judicial
Procedure.
Costs in action for recovery of, see section 1918 of Title 28.
Jurisdiction and venue of actions for recovery of, see sections 1355,
1395 of Title 28.
Remission or mitigation of forfeitures under liquor laws, see section
3668 of Title 18, Crimes and Criminal Procedure.
/1/ So in original. Does not conform to section catchline.
26 USC 5601. Criminal penalties
TITLE 26 -- INTERNAL REVENUE CODE
(a) Offenses
Any person who --
(1) Unregistered stills
has in his possession or custody, or under his control, any still or
distilling apparatus set up which is not registered, as required by
section 5179(a); or
(2) Failure to file application
engages in the business of a distiller or processor without having
filed application for and received notice of registration, as required
by section 5171(c); or
(3) False or fraudulent application
engages, or intends to engage, in the business of distiller,
warehouseman, or processor of distilled spirits, and files a false or
fraudulent application under section 5171; or
(4) Failure or refusal of distiller, warehouseman, or processor to
give bond
carries on the business of a distiller, warehouseman, or processor
without having given bond as required by law; or
(5) False, forged, or fraudulent bond
engages, or intends to engage, in the business of distiller,
warehouseman, or processor of distilled spirits, and gives any false,
forged, or fraudulent bond, under subchapter B; or
(6) Distilling on prohibited premises
uses, or possesses with intent to use, any still, boiler, or other
utensil for the purpose of producing distilled spirits, or aids or
assists therein, or causes or procures the same to be done, in any
dwelling house, or in any shed, yard, or inclosure connected with such
dwelling house (except as authorized under section 5178(a)(1)(C)), or on
board any vessel or boat, or on any premises where beer or wine is made
or produced, or where liquors of any description are retailed, or on
premises where any other business is carried on (except when authorized
under section 5178(b)); or
(7) Unlawful production, removal, or use of material fit for
production of distilled spirits
except as otherwise provided in this chapter, makes or ferments mash,
wort, or wash, fit for distillation or for the production of distilled
spirits, in any building or on any premises other than the designated
premises of a distilled spirits plant lawfully qualified to produce
distilled spirits, or removes, without authorization by the Secretary,
any mash, wort, or wash, so made or fermented, from the designated
premises of such lawfully qualified plant before being distilled; or
(8) Unlawful production of distilled spirits
not being a distiller authorized by law to produce distilled spirits,
produces distilled spirits by distillation or any other process from any
mash, wort, wash, or other material; or
(9) Unauthorized use of distilled spirits in manufacturing processes
except as otherwise provided in this chapter, uses distilled spirits
in any process of manufacture unless such spirits --
(A) have been produced in the United States by a distiller authorized
by law to produce distilled spirits and withdrawn in compliance with
law; or
(B) have been imported (or otherwise brought into the United States)
and withdrawn in compliance with law; or
(10) Unlawful processing
engages in or carries on the business of a processor --
(A) with intent to defraud the United States of any tax on the
distilled spirits processed by him; or
(B) with intent to aid, abet, or assist any person or persons in
defrauding the United States of the tax on any distilled spirits; or
(11) Unlawful purchase, receipt, or processing of distilled spirits
purchases, receives, or processes any distilled spirits, knowing or
having reasonable grounds to believe that any tax due on such spirits
has not been paid or determined as required by law; or
(12) Unlawful removal or concealment of distilled spirits
removes, other than as authorized by law, any distilled spirits on
which the tax has not been paid or determined, from the place of
manufacture or storage, or from any instrument of transportation, or
conceals spirits so removed; or
(13) Creation of fictitious proof
adds, or causes to be added, any ingredient or substance (other than
ingredients or substances authorized by law to be added) to any
distilled spirits before the tax is paid thereon, or determined as
provided by law, for the purpose of creating fictitious proof; or
(14) Distilling after notice of suspension
after the time fixed in the notice given under section 5221(a) to
suspend operations as a distiller, carries on the business of a
distiller on the premises covered by the notice of suspension, or has
mash, wort, or beer on such premises, or on any premises connected
therewith, or has in his possession or under his control any mash, wort,
or beer, with intent to distill the same on such premises; or
(15) Unauthorized withdrawal, use, sale, or distribution of distilled
spirits for fuel use
Withdraws, /1/ uses, sells, or otherwise disposes of distilled
spirits produced under section 5181 for other than fuel use;
shall be fined not more than $10,000, or imprisoned not more than 5
years, or both, for each such offense.
(b) Presumptions
Whenever on trial for violation of subsection (a)(4) the defendant is
shown to have been at the site or place where, and at the time when, the
business of a distiller or processor was so engaged in or carried on,
such presence of the defendant shall be deemed sufficient evidence to
authorize conviction, unless the defendant explains such presence to the
satisfaction of the jury (or of the court when tried without jury).
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1398;
amended Pub. L. 94-455, title XIX, 1905(a)(22), 1906(b)(13)(A), Oct.
4, 1976, 90 Stat. 1820, 1834; Pub. L. 96-39, title VIII, 807(a)(52),
July 26, 1979, 93 Stat. 288; Pub. L. 96-223, title II, 232(e)(2)(A),
Apr. 2, 1980, 94 Stat. 280.)
A prior section 5601, act Aug. 16, 1954, ch. 736, 68A Stat. 683,
consisted of provisions similar to those comprising subsec. (a)(1) of
this section, and also related to forfeiture for possession of
unregistered still or distilling apparatus, prior to the general
revision of this chapter by Pub. L. 85-859. See section 5615(1) of this
title.
Provisions similar to those comprising subsecs. (a)(2) to (8),
(9)(A), (10) to (14) of this section were contained in prior sections of
act Aug. 16, 1954, prior to the general revision of this chapter by
Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 627, 640, 641, 684, 685, 689, 690, 692, 693, 695.
1980 -- Subsec. (a)(15). Pub. L. 96-223 added par. (15).
1979 -- Subsec. (a)(2). Pub. L. 96-39, 807(a)(52)(A), struck out
''distiller or rectifier'' in heading and substituted ''processor'' for
''rectifier'' and ''section 5171(c)'' for ''section 5171(a)'' in text.
Subsec. (a)(3). Pub. L. 96-39, 807(a)(52)(B), substituted
''warehouseman, or processor'' for ''bonded warehouseman, rectifier, or
bottler''.
Subsec. (a)(4). Pub. L. 96-39, 807(a)(52)(C), substituted
''warehouseman, or processor'' for ''or rectifier'' in heading and in
text.
Subsec. (a)(5). Pub. L. 96-39, 807(a)(52)(B), substituted
''warehouseman, or processor'' for ''bonded warehouseman, rectifier, or
bottler''.
Subsec. (a)(10). Pub. L. 96-39, 807(a)(52)(D), substituted
''processing'' for ''rectifying or bottling'' in par. (10) heading,
''processor'' for ''rectifier, or a bottler of distilled spirits'' in
text preceding subpar. (A), and ''processed'' for ''rectified or
bottled'' in subpar. (A).
Subsec. (a)(11). Pub. L. 96-39, 807(a)(52)(E), substituted ''or
processing'' for ''rectification, or bottling'' in heading and ''or
processes'' for ''rectifies, or bottles'' in text.
Subsec. (b). Pub. L. 96-39, 807(a)(52)(F), substituted ''processor''
for ''rectifier''.
1976 -- Subsec. (a)(7). Pub. L. 94-455, 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (b). Pub. L. 94-455, 1905(a)(22), struck out par. (1)
relating to presumptions in the matter of unregistered stills, par. (3)
relating to presumptions in the matter of unlawful production, removal,
or use of material fit for production of distilled spirits, and par.
(4) relating to presumptions in the matter of unlawful production of
distilled spirits, and struck out the number designation ''(2)'' and
heading for former par. (2), leaving only the text for former par. (2)
relating to presumptions in the matter of failure or refusal of
distiller or rectifier to give bond.
Amendment by Pub. L. 96-223 effective on first day of first calendar
month beginning more than 60 days after Apr. 2, 1980, see section
232(h)(3) of Pub. L. 96-223, set out as an Effective Date note under
section 5181 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section 1905(d)
of Pub. L. 94-455, set out as a note under section 5005 of this title.
Section effective July 1, 1959, see section 210(a)(1) of Pub. L.
85-859, set out as a note under section 5001 of this title.
Section 210(c) of title II of Pub. L. 85-859 provided that: ''All
offenses committed, and all penalties or forfeitures incurred, under any
provision of law amended by this title (enacting sections 5849, 5854,
5855 and 7608 of this title, amending this chapter, chapter 52 of this
title and sections 5801, 5811, 5814, 7272, 7301, 7224 to 7326, 7609,
7652 and 7655 of this title, and enacting notes set out under this
section and sections 5001, 5006, 5025, 5064, 5175, and 5304 of this
title), may be prosecuted and punished in the same manner and with the
same effect as if this title had not been enacted.''
/1/ So in original. Probably should not be capitalized.
26 USC 5602. Penalty for tax fraud by distiller
TITLE 26 -- INTERNAL REVENUE CODE
Whenever any person engaged in or carrying on the business of a
distiller defrauds, attempts to defraud, or engages in such business
with intent to defraud the United States of the tax on the spirits
distilled by him, or of any part thereof, he shall be fined not more
than $10,000, or imprisoned not more than 5 years, or both. No
discontinuance or nolle prosequi of any prosecution under this section
shall be allowed without the permission in writing of the Attorney
General.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1400.)
A prior section 5602, act Aug. 16, 1954, ch. 736, 68A Stat. 863,
related to penalty and forfeiture for setting up still without a permit,
prior to the general revision of this chapter by Pub. L. 85-859. See
sections 5615(2) and 5687 of this title.
Provisions similar to those comprising this section were contained in
prior sections 5606, 5626, act Aug. 16, 1954, ch. 736, 68A Stat. 684,
688, prior to the general revision of this chapter by Pub. L. 85-859.
26 USC 5603. Penalty relating to records, returns and reports
TITLE 26 -- INTERNAL REVENUE CODE
(a) Fraudulent noncompliance
Any person required by this chapter (other than subchapters F and G)
or regulations issued pursuant thereto to keep or file any record,
return, report, summary, transcript, or other document, who, with intent
to defraud the United States, shall --
(1) fail to keep any such document or to make required entries
therein; or
(2) make any false entry in such document; or
(3) cancel, alter, or obliterate any part of such document or any
entry therein, or destroy any part of such document or any entry
therein; or
(4) hinder or obstruct any internal revenue officer from inspecting
any such document or taking any abstracts therefrom; or
(5) fail or refuse to preserve or produce any such document, as
required by this chapter or regulations issued pursuant thereto;
or who shall, with intent to defraud the United States, cause or
procure the same to be done, shall be fined not more than $10,000, or
imprisoned not more than 5 years, or both, for each such offense.
(b) Failure to comply
Any person required by this chapter (other than subchapters F and G)
or regulations issued pursuant thereto to keep or file any record,
return, report, summary, transcript, or other document, who, otherwise
than with intent to defraud the United States, shall --
(1) fail to keep any such document or to make required entries
therein; or
(2) make any false entry in such document; or
(3) cancel, alter, or obliterate any part of such document or any
entry therein, or destroy any part of such document, or any entry
therein, except as provided by this title or regulations issued pursuant
thereto; or
(4) hinder or obstruct any internal revenue officer from inspecting
any such document or taking any abstracts therefrom; or
(5) fail to refuse to preserve or produce any such document, as
required by this chapter or regulations issued pursuant thereto;
or who shall, otherwise than with intent to defraud the United
States, cause or procure the same to be done, shall be fined not more
than $1,000, or imprisoned not more than 1 year, or both, for each such
offense.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1400.)
A prior section 5603, act Aug. 16, 1954, ch. 736, 68A Stat. 684,
related to penalty for failure or refusal of distiller or rectifier to
give notice of intention to engage in such business, prior to the
general revision of this chapter by Pub. L. 85-859. See section
5601(a)(2), (3) of this title.
Provisions similar to those comprising this section were contained in
prior sections 5610, 5611, 5620, 5621, 5692, act Aug. 16, 1954, ch.
736, 68A Stat. 685 to 687, 703, prior to the general revision of this
chapter by Pub. L. 85-859.
26 USC 5604. Penalties relating to marks, brands, and containers
TITLE 26 -- INTERNAL REVENUE CODE
(a) In general
Any person who shall --
(1) transport, possess, buy, sell, or transfer any distilled spirits
unless the immediate container bears the type of closure or other device
required by section 5301(d),
(2) with intent to defraud the United States, empty a container
bearing the closure or other device required by section 5301(d) without
breaking such closure or other device,
(3) empty, or cause to be emptied, any distilled spirits from an
immediate container bearing any mark or brand required by law without
effacing and obliterating such mark or brand as required by section
5206(d),
(4) place any distilled spirits in any bottle, or reuse any bottle
for the purpose of containing distilled spirits, which has once been
filled and fitted with a closure or other device under the provisions of
this chapter, without removing and destroying such closure or other
device,
(5) willfully and unlawfully remove, change, or deface any mark,
brand, label, or seal affixed to any case of distilled spirits, or to
any bottle contained therein,
(6) with intent to defraud the United States, purchase, sell, receive
with intent to transport, or transport any empty cask or package having
thereon any mark or brand required by law to be affixed to any cask or
package containing distilled spirits, or
(7) change or alter any mark or brand on any cask or package
containing distilled spirits, or put into any cask or package spirits of
greater strength than is indicated by the inspection mark thereon, or
fraudulently use any cask or package having any inspection mark thereon,
for the purpose of selling other spirits, or spirits of quantity or
quality different from the spirits previously inspected,
shall be fined not more than $10,000 or imprisoned not more than 5
years, or both, for each such offense.
(b) Cross references
For provisions relating to the authority of internal revenue officers
to enforce provisions of this section, see sections 5203, 5557, and
7608.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1401;
amended Pub. L. 96-39, title VIII, 807(a)(53), July 26, 1979, 93 Stat.
289; Pub. L. 98-369, div. A, title IV, 454(c)(11)(A), July 18, 1984,
98 Stat. 821.)
A prior section 5604, act Aug. 16, 1954, ch. 736, 68A Stat. 684,
related to penalty and forfeiture for failure or refusal of distiller to
give bond, prior to the general revision of this chapter by Pub. L.
85-859. See sections 5601(a)(4), (5) and 5615(3) of this title.
Provisions similar to those comprising this section were contained in
prior sections of act Aug. 16, 1954, prior to the general revision of
this chapter by Pub. L. 85-859, as follows:
The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A
Stat. 602, 690 to 693.
1984 -- Subsec. (a). Pub. L. 98-369, 454(c)(11)(A), in amending
subsec. (a) generally, struck out references to stamps in pars. (1) to
(3), redesignated pars. (12), (16), (17), (18) as pars. (4)-(7),
respectively, in pars. (4) to (7) as so redesignated, struck out all
references to stamps, and struck out former pars. (4) to (11), (13) to
(15), and (19), which had consisted of additional provisions concerning
penalties relating to stamps, marks, brands and containers.
Subsec. (b). Pub. L. 98-369, 454(c)(11)(A), in amending subsec. (b)
generally, substituted provisions relating to cross references for
provisions relating to officers authorized to enforce this section.
1979 -- Subsec. (a)(1). Pub. L. 96-39, 807(a)(53)(A), substituted
''section 5205(a)(1)'' for ''section 5205(a)(2)''.
Subsec. (a)(2). Pub. L. 96-39, 807(a)(53)(B), substituted ''section
5205(a)(1)'' for ''section 5205(a)(1) or (2)'' and ''section
5205(a)(2)'' for ''section 5205(a)(3)''.
Subsec. (a)(3). Pub. L. 96-39, 807(a)(53)(C), substituted ''section
5205(f)'' for ''section 5205(g)''.
Subsec. (a)(6). Pub. L. 96-39, 807(a)(53)(D), substituted ''section
5205(a)(2)'' for ''section 5205(a)(3)''.
Subsec. (a)(13). Pub. L. 96-39, 807(a)(53)(E), substituted ''section
5205(a)'' for ''section 5205(a)(2) and (3)''.
Amendment by Pub. L. 98-369 effective July 1, 1985, see section
456(b) of Pub. L. 98-369, set out as an Effective Date note under
section 5101 of this title.
Amendment by Pub. L. 96-39 effective Jan. 1, 1980, see section 810
of Pub. L. 96-39, set out as a note under section 5001 of this title.
26 USC 5605. Penalty relating to return of materials used in the
manufacture of distilled spirits, or from which distilled spirits may be
recovered
TITLE 26 -- INTERNAL REVENUE CODE
Any person who willfully violates any provision of section 5291(a),
or of any regulation issued pursuant thereto, and any officer, director,
or agent of any such person who knowingly participates in such
violation, shall be fined not more than $1,000, or imprisoned not more
than 2 years, or both.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1402.)
A prior section 5605, act Aug. 16, 1954, ch. 736, 68A Stat. 684,
related to penalty for improper approval of distiller's bond, prior to
the general revision of this chapter by Pub. L. 85-859. See section
7214 of this title.
Provisions similar to those comprising this section were contained in
prior section 5609, act Aug. 16, 1954, ch. 736, 68A Stat. 685, prior
to the general revision of this chapter by Pub. L. 85-859.
26 USC 5606. Penalty relating to containers of distilled spirits
TITLE 26 -- INTERNAL REVENUE CODE
Whoever violates any provision of section 5301, or of any regulation
issued pursuant thereto, or the terms or conditions of any permit issued
pursuant to the authorization contained in such section, and any
officer, director, or agent of any corporation who knowingly
participates in such violation, shall, upon conviction, be fined not
more than $1,000, or imprisoned not more than 1 year, or both, for each
such offense.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1402.)
A prior section 5606, act Aug. 16, 1954, ch. 736, 68A Stat. 684,
related to penalty and forfeiture for distilling without giving bond,
prior to the general revision of this chapter by Pub. L. 85-859. See
sections 5601(a)(4), 5602, and 5615(3) of this title.
Provisions similar to those comprising this section were contained in
prior section 5641, act Aug. 16, 1954, ch. 736, 68A Stat. 692, prior
to the general revision of this chapter by Pub. L. 85-859.
26 USC 5607. Penalty and forfeiture for unlawful use, recovery, or
concealment of denatured distilled spirits, or articles
TITLE 26 -- INTERNAL REVENUE CODE
Any person who --
(1) uses denatured distilled spirits withdrawn free of tax under
section 5214(a)(1) in the manufacture of any medicinal preparation or
flavoring extract in violation of the provisions of section 5273(b)(1)
or knowingly sells, or offers for sale, any such medicinal preparation
or flavoring extract in violation of section 5273(b)(2); or
(2) knowingly withdraws any denatured distilled spirits free of tax
under section 5214(a)(1) for beverage purposes; or
(3) knowingly sells any denatured distilled spirits withdrawn free of
tax under section 5214(a)(1), or any articles containing such denatured
distilled spirits, for beverage purposes; or
(4) recovers or attempts to recover by redistillation or by any other
process or means (except as authorized in section 5223 or in section
5273(c)) any distilled spirits from any denatured distilled spirits
withdrawn free of tax under section 5214(a)(1), or from any articles
manufactured therefrom, or knowingly uses, sells, conceals, or otherwise
disposes of distilled spirits so recovered or redistilled;
shall be fined not more than $10,000, or imprisoned not more than 5
years, or both, for each such offense; and all personal property used
in connection with his business, together with the buildings and ground
constituting the premises on which such unlawful acts are performed or
permitted to be performed shall be forfeited to the United States.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat.
1402.)
A prior section 5607, act Aug. 16, 1954, ch. 736, 68A Stat. 684,
related to penalty for distilling on prohibited premises, prior to the
general revision of this chapter by Pub. L. 85-859. See sections
5505(i) and 5601(a)(6) of this title.
Provisions similar to those comprising this section were contained in
prior section 5647, act Aug. 16, 1954, ch. 736, 68A Stat. 693, prior
to the general revision of this chapter by Pub. L. 85-859.
26 USC 5608. Penalty and forfeiture for fraudulent claims for export
drawback or unlawful relanding
TITLE 26 -- INTERNAL REVENUE CODE
(a) Fraudulent claim for drawback
Every person who fraudulently claims, or seeks, or obtains an
allowance of drawback on any distilled spirits, or fraudulently claims
any greater allowance or drawback than the tax actually paid or
determined thereon, shall forfeit and pay to the Government of the
United States triple the amount wrongfully and fraudulently sought to be
obtained, and shall be imprisoned not more than 5 years; and every
owner, agent, or master of any vessel or other person who knowingly aids
or abets in the fraudulent collection or fraudulent attempts to collect
any drawback upon, or knowingly aids or permits any fraudulent change in
the spirits so shipped, shall be fined not more than $5,000, or
imprisoned not more than 3 years, or both, and the ship or vessel on
board of which such shipment was made or pretended to be made shall be
forfeited to the United States, whether a conviction of the master or
owner be had or otherwise, and proceedings may be had in admiralty by
libel for such forfeiture.
(b) Unlawful relanding
Every person who, with intent to defraud the United States, relands
within the jurisdiction of the United States any distilled spirits which
have been shipped for exportation under the provisions of this chapter,
or who receives such relanded distilled spirits, and every person who
aids or abets in such relanding or receiving of such spirits, shall be
fined not more than $5,000, or imprisoned not more than 3 years, or
both; and all distilled spirits so relanded, together with the vessel
from which the same were relanded within the jurisdiction of the United
States, and all vessels, vehicles, or aircraft used in relanding and
removing such distilled spirits, shall be forfeited to the United
States.
(Added Pub. L. 85-859, title II, 201, Sept. 2, 1958, 72 Stat. 1403;
amended Pub. L. 89-44, title VIII, 805(e), June 21, 1965, 79 Stat.
161.)
A prior section 5608, act Aug. 16, 1954, ch. 736, 68A Stat. 685,
related to penalty for making or fermenting mash on unauthorized
premises, illegal use of spirits, unlawful removal of vinegar, etc.,
prior to the general revision of this chapter by Pub. L. 85-859. See
sections 5505(i), 5601(a)(7), (8), (9)(A), (12), 5615(4), and 5687 of
this title.
Provisions similar to those comprising this section were contained in
prior section 5648, act Aug. 16, 1954, ch. 736, 68A Stat. 694, prior
to the general revision of this chapter by Pub. L. 85-859.
1965 -- Subsec. (b). Pub. L. 89-44 substituted '', with intent to
defraud the United States,'' for ''intentionally'' after ''Every person
who''.
Amendment by Pub. L. 89-44 effective July 1, 1965, see section
805(g)(1) of Pub. L. 89-44, set out as a note under section 5008 of
this title.
Admiralty and maritime rules of practice (which included libel
procedures) were superseded, and civil and admiralty procedures in
United States district courts were unified, effective July 1, 1966, see
rule 1 and Supplemental Rules for Certain Admiralty and Maritime Claims,
Title 28, Appendix, Judiciary and Judicial Procedure.