Public Law 85–321

That chapter 77 of the Internal Revenue Code of 1954 (relating to miscellaneous administrative provisions) is amended by adding at the end thereof the following new section:

“SEC. 7512. SEPARATE ACCOUNTING FOR CERTAIN COLLECTED TAXES, ETC.

“(a)“(a)

General Rule.—

Whenever any person who is required to collect, account for, and pay over any tax imposed by subtitle C or by

68A Stat. 415, 497.

26 USC 3101 et seq, 4231–4293.

chapter 33—

“(1)“(1)

at the time and in the manner prescribed by law or regulations (A) fails to collect, truthfully account for, or pay over such tax, or (B) fails to make deposits, payments, or returns of such tax, and

#

“(2)“(2)

is notified, by notice delivered in hand to such person, of any such failure,

#

then all the requirements of subsection (b) shall be complied with. In the case of a corporation, partnership, or trust, notice delivered in hand to an officer, partner, or trustee, shall, for purposes of this section, be deemed to be notice delivered in hand to such corporation, partnership, or trust and to all officers, partners, trustees, and employees thereof.

#

“(b)“(b)

Requirements.—

Any person who is required to collect, account for, and pay over any tax imposed by subtitle C or by chapter 33, if notice has been delivered to such person in accordance with subsection (a), shall collect the taxes imposed by subtitle C or chapter 33 which become collectible after delivery of such notice, shall (not later than the end of the second banking day after any amount of such taxes is collected) deposit such amount in a separate account in a bank (as defined in section 581), and shall keep the amount of such taxes in such

68A Stat. 202.

26 USC 581.

account until payment over to the United States. Any such account shall be designated as a special fund in trust for the United States, payable to the United States by such person as trustee.

#

“(c)“(c)

Relief From Further Compliance With Subsection (b).—

Whenever the Secretary or his delegate is satisfied, with respect to any notification made under subsection (a), that all requirements of law and regulations with respect to the taxes imposed by subtitle C or chapter 33, as the case may be, will henceforth he complied with, he may cancel such notification. Such cancellation shall take effect at such time as is specified in the notice of such cancellation.”

#

#

Sec. 2.

Part I of subchapter A of chapter 75 of such Code (relating to general provisions concerning crimes, other offenses, and forfeitures) is amended by adding at the end thereof the following new section:

“SEC. 7215. OFFENSES WITH RESPECT TO COLLECTED TAXES.

“(a)“(a)

Penalty.—

Any person who fails to comply with any provision of section 7512 (b) shall, in addition to any other penalties provided by law, be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than $5,000, or imprisoned not more than one year, or both, together with the costs of prosecution.

#

“(b)“(b)

Exceptions.—

This section shall not apply—

“(1)“(1)

to any person, if such person shows that there was reasonable doubt as to (A) whether the law required collection of tax, or (B) who was required by law to collect tax, and

#

“(2)“(2)

to any person, if such person shows that the failure to comply with the provisions of section 7512 (b) was due to circumstances beyond his control.

#

For purposes of paragraph (2), a lack of funds existing immediately after the payment of wages (whether or not created by the payment of such wages) shall not be considered to be circumstances beyond the control of a person.”

#

#

Sec. 3.

Sec. 4.

Notification may be made under section 7512 (a) of the Internal Revenue Code of 1954 (as added by the first section of this Act)—