§ 6049. Returns regarding payments of interest

Footnotes

1. 1 See References in Text note below.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1962

   Revenue Act of 1962

   Pub. L. 87–834 § 19(c) · 76 Stat. 960

   Enacted · 26 U.S.C. § 6049

   Added Pub. L. 87–834, § 19(c), Oct. 16, 1962, 76 Stat. 1055

   Source evidence

   Code source credit
   Added Pub. L. 87–834, § 19(c), Oct. 16, 1962, 76 Stat. 1055

2. 1969

   Tax Reform Act of 1969

   Pub. L. 91–172 § 413(c) · 83 Stat. 487

   Added · 26 U.S.C. § 6049(a)(1)(C)

   Pub. L. 91–172, § 413(c), added subpar. (C)

   Source evidence

   Code amendment note
   Subsec. (a)(1)(C). Pub. L. 91–172, § 413(c), added subpar. (C).

   Enacted provision · exact public law section
   (c) Requirement of Reporting.— Section 6049(a)(1) (relating to 76 Stat. 1056. requirements of reporting interest) is amended to read as follows: “(1) In general.— Every person— “(A) who makes payments of interest (as defined in subsection (b)) aggregating $10 or more to any other person during any calendar year, “(B) who receives payments of interest as a nominee and who makes payments aggregating $10 or more during any calendar year to any other person with respect to the interest so received, or “(C) which is a corporation that has outstanding any bond debenture, note, or certificate or other evidence of indebtedness in registered form as to which there is during any calendar year an amount of original issue discount aggregating $10 or more includible in the gross income of any holder under Ante, p. 609. section 1232(a)(3) without regard to subparagraph (B) thereof, shall make a return according to the forms or regulations prescribed by the Secretary or his delegate, setting forth the aggregate amount of such payments and such aggregate amount includible in the gross income of any holder and the name and address of the person to whom paid or such holder.”

3. 1969

   Tax Reform Act of 1969

   Pub. L. 91–172 § 413(d) · 83 Stat. 487

   Changed · 26 U.S.C. § 6049(c)

   Pub. L. 91–172, § 413(d), further qualified requirement to furnish statement by reference to aggregate amount includible in gross income

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 91–172, § 413(d), further qualified requirement to furnish statement by reference to aggregate amount includible in gross income.

   Enacted provision · exact public law section
   (d) Statements To Be Furnished to Persons With Respect to Whom Information Is Furnished.— Section 6049(c) (relating to statements to be furnished to persons with respect to whom information is furnished) is amended to read as follows: “(c) Statements To Be Furnished to Persons With Respect to Whom Information Is Furnished.— Every person making a return under subsection (a)(1) shall furnish to each person whose name is set forth in such return a written statement showing— “(1) the name and address of the person making such return, and “(2) the aggregate amount of payments to, or the aggregate amount includible in the gross income of, the person as shown on such return. The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a)(1) was made. No statement shall be required to be furnished to any person under this subsection if the aggregate amount of payments to, or the aggregate amount includible in the gross income of, such person shown on the return made with respect to subparagraph (A), (B), or (C), as the case may be, of subsection (a)(1) is less than $10.”

4. 1976

   Pub. L. 94–455 § 1906(b)(13)(A) · 90 Stat. 1520

   Struck · 26 U.S.C. § 6049(a)

   Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing.

   Enacted provision · exact public law section
   (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.

5. 1976

   Pub. L. 94–455 title XIX · 90 Stat. 1520

   1. Substituted · 26 U.S.C. § 6049(b)(1); 26 U.S.C. § 6049(2)(A); 26 U.S.C. § 6049(b)(B)

      Pub. L. 94–455, §§ 1901(b)(6)(A), 1906(b)(13)(A), substituted “section 103(a)” for “section 103(a)(1) or (3)”

   2. Struck · 26 U.S.C. § 6049(b)(1); 26 U.S.C. § 6049(2)(A); 26 U.S.C. § 6049(b)(B)

      Pub. L. 94–455, §§ 1901(b)(6)(A), 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing

   Source evidence

   Code amendment note
   Subsec. (b)(1), (2)(A), (B). Pub. L. 94–455, §§ 1901(b)(6)(A), 1906(b)(13)(A), substituted “section 103(a)” for “section 103(a)(1) or (3)”, and struck out “or his delegate” after “Secretary” wherever appearing.

   Enacted provision · exact public law
   TITLE XIX— REPEAL AND REVISION OF OBSOLETE, RARELY USED, ETC., PROVISIONS OF INTERNAL REVENUE CODE OF 1954 SUBTITLE A— AMENDMENTS OF INTERNAL REVENUE CODE GENERALLY SEC. 1901. AMENDMENTS OF SUBTITLE A; INCOME TAXES. (a) In General.— (1) Amendment of section 2.— Subsection (c) of section 2 (relating to certain married individuals living apart) is amended to read as follows: “(c) Certain Married Individuals Living Apart.— For purposes of this part, an individual shall be treated as not married at the close of the taxable year if such individual is so treated under the provisions of section 143 (b).” (2) Repeal of section 36.— Section 35 (relating to partially tax-exempt interest received by individuals) is repealed. (3) Amendment of section 39.— Section 39 (relating to certain uses of gasoline, special fuels, and lubricating oil) is amended by striking out subsections (b) and (c) and inserting after subsection (a) the following new subsection: “(b) Exception.— Credit shall not be allowed under subsection (a) for any amount payable under section 6421, 6424, or 6427, if a claim for such amount is timely filed and, under section 6421 (i), 6424 (f), or 6427(f), is payable under such section.” (4) Amendments of section 46.— (A) The second sentence of section 46(a)(4), as redesignated by this Act, is amended by striking out “section 408(e)” and inserting in lieu thereof “section 408(f)”. (B) Clause (iii) of section 46(c)(3)(B) (relating to public utility property) is amended by striking out “47 U.S.C., sec. 222(a)(5)” and inserting in lieu thereof “47 U.S.C. 222(a)(5)”. (5) Amendments or section 48.— (A) Section 48(a)(2)(B)(vi) (relating to section 38 property used outside the United States) is amended by striking out “; 43 U.S.C., sec. 1331)” and inserting in lieu thereof “(43 U.S.C. 1331))”. (B) Section 48(a)(2)(B)(viii) is amended by striking out “47 U.S.C., sec. 702” and inserting in lieu thereof “47 U.S.C. 702”. (6) Amendment of section 50a.— The second sentence of section 50A (a)(3) (relating to liability for tax) is amended by 26 USC 50A. striking out “section 408 (e)” and inserting in lieu thereof “section 408(f)”. (7) Repeal of section 51.— Subchapter A of chapter 1 is 26 USC 51. amended by striking out part V (relating to tax surcharge). (8) Amendments op section 62.— Section 62 (relating to definition 26 USC 62. of adjusted gross income) is amended by redesignating paragraph (11), as added by the Act of October 26, 1974 (Public Law 93–483), as paragraph (12). (9) Additional amendment of section 62.— Section 62(12), as redesignated by subparagraph (A) of this paragraph, is amended by striking out “trade or business to the extent” and inserting in lieu thereof “trade or business, to the extent”. (10) Definition of ordinary income.— Part I of subchapter B of chapter 1 (relating to definitions of gross income, adjusted 26 USC 61. gross income, and taxable income) is amended by adding at the end thereof the following new section: “SEC. 64. ORDINARY INCOME DEFINED. “For purposes of this subtitle, the term ‘ordinary income’ includes any gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b). Any gain from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as ‘ordinary income’ shall be treated as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b).” (11) Definition of ordinary loss.— Part I of subchapter B of chapter 1 (relating to definitions of gross 26 USC 61. income, adjusted gross income, and taxable income) is amended by adding at the end thereof the following new section: “SEC. 65. ORDINARY LOSS DEFINED. “For purposes of this subtitle, the term ‘ordinary loss’ includes any loss from the sale or exchange of property which is not a capital asset. Any loss from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as ‘ordinary loss’ shall be treated as loss from the sale or exchange of property which is not a capital asset.” (12) Amendment of section 72.— Section 72(d)(1) (relating 26 USC 72. to employees’ annuities) is amended by striking out “(whether or not before January 1, 1954)” and by striking out “(under this paragraph and prior income tax laws)”. (13) Additional amendment of section 72.— Section 72(m)(4)(A) (relating to assignments or pledges) is amended by striking out “an individual retirement amount” and inserting in lieu thereof “an individual retirement account”. (14) Repeal of section 76.— Section 76 (relating to mortgages 26 USC 76. made or obligations issued by joint stock land banks) is repealed. (15) Amendment of section 83.— Section 83(b)(2) (relating 26 USC 83. to election to include the value of restricted property in gross income) is amended by striking out “(or, if later, 30 days after 26 USC 1 note. the date of the enactment of the Tax Reform Act of 1969)”. (16) Amendment of section 101.— Section 101 is amended by 26 USC 101. striking out subsection (f) (relating to effective date of section). (17) Amendments of section 103.— (A) Section 103(a) (relating to tax-exempt interest), as 26 USC 103. amended by this Act, is amended by inserting “and” at the end of paragraph (1), by striking out paragraphs (2) and (3), and by redesignating paragraph (4) as paragraph (2). (B) Section 103 is amended by striking out subsection (b) (relating to certain exceptions) and by redesignating subsections (c), (d), (e) (f), and (g)(as added by this Act) as subsections (b), (c), (d), (e), and (f) respectively. (C) Section 103(b)(1) (relating to industrial development bonds), as redesignated by subparagraph (B) of this paragraph, is amended by inserting “or (2)” after “(a)(1)”. (D) Section 103(c)(2)(A) (relating to definition of arbitrage bonds), as redesignated by subparagraph (B) of this paragraph, is amended by inserting “or (2)” after “(a)(1)”. (E) Section 103(e) (relating to certain cross references) as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(e) Cross References.— “For provisions relating to the taxable status of— “(1) Puerto Rican bonds, see section 3 of the Act of March 2, 1917, as amended (48 U.S.C. 745). “(2) Virgin Islands insular and municipal bonds, see section 1 of the Act of October 27, 1919 (48 U.S.C. 1403). “(3) Certain obligations issued under title I of the Housing Act of 1949, see section 102(g) of title I of such Act (42 U.S.C. 1452(g)).” (18) Amendments of section 104.— (A) Section 104(a)(4) (relating to exclusion of compensation for injuries or sickness) is amended by striking out “;60 Stat. 1021” (B) Section 104(c)(2) as redesignated by section 505 of this Act, is amended to read as follows: “(2) For exclusion of part of disability retirement pay from the application of subsection (a)(4) of this section, see section 1403 of title 10, United States Code (relating to career compensation laws).” (19) Amendment of section 115.— Section 115 (relating to income of States, municipalities, etc.) is amended to read as follows: “SEC. 115. INCOME OF STATES, MUNICIPALITIES, ETC. “Gross income does not include— “(1) income derived from any public utility or the exercise of any essential governmental function and accruing to a State or any political subdivision thereof, or the District of Columbia; or “(2) income accruing to the government of any possession of the United States, or any political subdivision thereof.” (20) Amendment of section 116.— Subsection (a) of section 116 (relating to partial exclusion of dividends received by individuals) is amended by striking out “Effective with respect to any taxable year ending after July 31, 1954, gross income” and inserting in lieu thereof “Gross income”. (21) Amendment of section 124.— Section 124 (relating to cross references to other Acts) is amended to read as follows: “SEC. 124. CROSS REFERENCES TO OTHER ACTS. “(a) For exemption of— “(1) Adjustments of indebtedness under wage earners’ plans, see section 679 of the Bankruptcy Act (11 U.S.C. 1079). “(2) Allowances and expenditures to meet losses sustained by persons serving the United States abroad, due to appreciation of foreign currencies, see section 5943 of title 5, United States Code. “(3) Amounts credited to the Maritime Administration under section 9(b)(6) of the Merchant Ship Sales Act of 1946, see section 9(c)(1) of that Act (50 U.S.C. App. 1742). “(4) Benefits under laws administered by the Veterans’ Administration, see section 3101 of title 38, United States Code. “(5) Earning of ship contractors deposited in special reserve funds, see section 607(d) of the Merchant Marine Act, 1936 (46 U.S.C. 1177). “(6) Income derived from Federal Reserve banks, including capital stock and surplus, see section 7 of the Federal Reserve Act (12 U.S.C. 531). “(7) Railroad retirement annuities and pensions, see section 12 of the Railroad Retirement Act of 1935 (45 U.S.C. 2281). “(8) Railroad unemployment benefits, see section 2(e) of the Railroad Unemployment Insurance Act (45 U.S.C. 352). “(9) Special pensions of persons on Army and Navy medal of honor roll, see 38 U.S.C. 562(a)–(c). “(b) For extension of military income-tax-exemption benefits to commissioned officers of Public Health Service in certain circumstances, see section 212 of the Public Health Service Act (42 U.S.C. 213).” (22) Amendment of section 143.— Section 143 (relating to 26 USC 143. determination of marital status) is amended by striking out “this part” each place it appears and inserting in lieu thereof “this part and part V”. (23) Amendment of section 151.— Section 151 (e)(4)(defining 26 USC 151. student and educational institution) is amended to read as follows: “(4) Student defined.— For purposes of paragraph (1)(B)(ii), the term ‘student’ means an individual who during each of 5 calendar months during the calendar year in which the taxable year of the taxpayer begins— “(A) is a full-time student at an educational organization described in section 170(b)(1)(A)(ii); or “(B) is pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of an educational organization described in section 170(b)(1)(A)(ii) or of a State or political subdivision of a State.” (24) Amendments or section 152.— (A) Section 152(a)(defining dependent) is amended— 26 USC 152. (i) by inserting “or” at the end of paragraph (8), (ii) by striking out “, or” at the end of paragraph (9) and inserting in lieu thereof a period, and (iii) by striking out paragraph (10). (B) Section 152(b)(3) (relating to rules concerning the definition of dependent) is amended to read as follows: “(3) The term ‘dependent’ does not include any individual who “Dependent.” is not a citizen or national of the United States unless such individual is a resident of the United States or of a country contiguous to the United States. The preceding sentence shall not exclude from the definition of ‘dependent’ any child of the tax-payer legally adopted by him, if, for the taxable year of the tax-payer, the child has as his principal place of abode the home of the taxpayer and is a member of the taxpayer’s household, and if the taxpayer is a citizen or national of the United States.” (25) Amendments of section 164.— Section 164(d)(2) (relating 26 USC 164. to apportionment of taxes on real property between the seller and purchaser) is amended by striking out subparagraphs (B) and (C), and by redesignating subparagraph (D) as subparagraph (B). (26) Amendments of section 165.— Section 165 (relating 26 USC 165. to deduction of losses) is amended by striking out subsection (i) (relating to property confiscated by Cuba), and by redesignating subsection (j) as subsection (i). (27) Amendments or section 167.— (A) Section 167 (d) (relating to agreement as to useful life for depreciation) is amended by striking out “after the date of enactment of this title” and inserting in lieu thereof “after August 16, 1954”. (B) Section 167(f)(2)(defining personal property) is amended by striking out “the date of the enactment of the Revenue Act of 1962” and inserting in lieu thereof “October 16, 1962”. (C) Section 167(1)(4)(A) (relating to election as to increased-capacity property) is amended by striking out “within 180 days after the date of the enactment of this subparagraph” and inserting in lieu thereof “before June 29, 1970,”. (28) Amendments of section 170.— (A) (i) Section 170 (relating to charitable deductions) is amended by striking out subsections (f)(6) and (g) (relating to unlimited charitable deductions allowed for taxable years beginning before January 1, 1975), and by redesignating subsections (h), (i), and (j) as subsections (g), (h), and (i), respectively. (ii) Section 170(b)(1) (relating to percentage limitations on deductions for individuals) is amended by striking out subparagraph (C) (relating to unlimited deductions), and by redesignating subparagraphs (D), (E), and (F) as subparagraphs (C), (D), and (E), respectively. (iii) Section 170(b)(1)(A)(vii) is amended by striking out “subparagraph (E)” and inserting in lieu thereof “subparagraph (D)”. (iv) Section 170(b)(1)(B)(ii) is amended by striking out “subparagraph (D)” and inserting in lieu thereof “subparagraph (C)”. (v) Section 170(c) (relating to definition of charitable contribution) is amended by striking out in the last sentence “subsection (h)” and inserting in lieu thereof “subsection (g)”. (vi) Section 170(e)(1)(B)(ii) (relating to certain contributions of ordinary income and capital gain property) is amended by striking out “subsection (b)(1)(E)” and inserting in lieu thereof “subsection (b)(1)(D)”. (B) Section 170(d)(1)(A) (relating to carryover of excess charitable contributions) is amended by striking out “(30 percent, in the case of a contribution year beginning before January 1, 1970)”. (C) Section 170(h) (relating to disallowance of deductions in certain cases), as redesignated by subparagraph (A)(i) of this paragraph, is amended by striking out “64 Stat. 996;”. (D) Section 170(i) (relating to cross references), as redesignated by subparagraph (A)(i) of this paragraph, is amended to read as follows: “(i) Other Cross References.— “(1) Fer charitable contributions of estates and trusts, see section 642(c). “(2) For nondeductibilit; of contributions by common trust funds, see section 584. “(3) For charitable contributions of partners, see section 702. “(4) For charitable contributions of nonresident aliens, see section 873. “(5) For treatment of gifts for benefit of or use in connection with the Naval Academy as gifts to or for use of the United States, see section 6973 of title 10, United States Code. “(6) For treatment of gifts accepted by the Secretary of State under the Foreign Service Act of 1946 as gifts to or for the use of the United States, see section 1021(e) of that Act (22 U.S.C. 809(e)). “(7) For treatment of gifts of money accepted by the Attorney General for credit to the ‘Commissary Funds, Federal Prisons’ as gifts to or for the use of the United States, see section 2 of the Act of May 15, 1952. as amended by the Act of July 9, 1952 (31 U.S.C. 7 25s–4).” (29) Amendments of section 172.— (A) (i) Section 172(b)(1) (relating to years to which loss Ante, p. 1755. may be carried) is amended by striking out subparagraph (E). (ii) Section 172(b)(3) is amended by striking out subparagraphs 26 USC 172. (E) and (F). (B) Section 172(c) (relating to definition of net operating loss) is amended by striking out “(for any taxable year ending after December 31, 1953)”. (C) (i) Section 172 (relating to net operating loss deduction) is amended by striking out subsections (f), (g), and (i), and by redesignating subsections (h), (j), (k), and (1) as subsections (f) , (g). (h), and (i), respectively. (ii) Section 172(b)(1)(C) (relating to regulated transportation corporations) is amended by striking out “subsection (j)(1)” and “subsection (j)”, and inserting in lieu thereof “subsection (g)(1)” and “subsection (g)”, respectively. (iii) Paragraphs (1)(D) and (3)(C)(i) of section 172 Post, p. 1920. (b) (relating to net operating loss carryovers and carry-backs) are each amended by striking out “subsection (k)” and inserting in lieu thereof “subsection (h)”. (iv) Section 172(b)(2) (relating to amount of carrybacks and carryovers) is amended by striking out “subsections (i) and (j)” and inserting in lieu thereof Subsection (g)”. (D) Section 172(e) (relating to law applicable to computations) is amended by striking out the last sentence. (E) Section 172(g)(2) (relating to certain regulated transportation corporations), as redesignated by subparagraph (C) of this paragraph, is amended by striking out paragraph (4). (30) Amendments of sections 174 and 175.— Section 174(a)(2) 26 USC 174, 175. (A)(1) (relating to research and development expenditures) and section 175(d)(1)(A) (relating to soil and water conservation expenditures) are each amended by striking out “the date on which this title is enacted,” and inserting in lieu thereof “August. 16, 1954,”. (31) Repeal of section 187.— Section 187 (relating to rapid 26 USC 187. amortization for certain coal mine safety equipment) is repealed. (32) Amendment of section 219.— Section 219(b)(2)(A)(iv) 26 USC 219. (disqualifying governmental plan participants from contributing to individual retirement accounts, etc.) is amended by striking out “division” and inserting in lieu thereof “subdivision”. (33) Repeat of section 242.— Section 242 (relating to partially 26 USC 242. tax-exempt interest received by corporations) is repealed. (34) Amendments of section 243.— (A) Section 243(a)(2) (relating to the dividends received deduction) is amended by inserting after “Small Business Investment Act of 1958” the following: “(15 U.S.C. 661 and following)”. (B) Section 243(b)(2)(A) (relating to dividends received by a member of an affiliated group) is amended by striking out “(except that in the case of a taxable year of a member beginning in 1963 and ending in 1964, if the election is effective for the taxable year of the common parent corporation which includes the last day of such taxable year of such member, such election shall be effective for such taxable year of such member, if such member consents to such election with respect to such taxable year)”. (35) Amendment of section 247.— Section 247(b)(2) (relating to preferred stock) is amended to read as follows: “(2) Preferred stock.— “(A) In general.— The term ‘preferred stock’ means stock issued before October 1, 1942, which during the whole of the taxable year (or the part of the taxable year after its issue) was stock the dividends in respect of which were cumulative, limited to the same amount, and payable in preference to the payment of dividends on other stock. “(B) Certain stock issued on or after October 1, 1942.— Stock issued on or after October 1, 1942, shall be deemed for purposes of this paragraph to have been issued before October 1, 1942, if it was issued to refund or replace bonds or debentures issued before October 1, 1942, or to refund or replace other preferred stock (including stock which is preferred stock by reason of this subparagraph or subparagraph (D)), but only to the extent that the par or stated value of the new stock does not exceed the par, stated, or face value of the bonds or debentures issued before October 1, 1942, or the other preferred stock, which such new stock is issued to refund or replace. “(C) Determination under regulations.— The determination of whether stock was issued to refund or replace bonds or debentures issued before October 1, 1942, or to refund or replace other preferred stock, shall be made under regulations prescribed by the Secretary. “(D) Issuance of stock.— For purposes of subparagraph (B), issuance of stock includes issuance either by the same or another corporation in a transaction which is a reorganization (as defined in section 368(a)), a transaction to which section 371 (relating to insolvency reorganizations) applies, 26 USC 1081. or a transaction subject to part VI of subchapter 0 (relating to exchanges in SEC. obedience orders), or the respectively corresponding provisions of the Internal Revenue Code of 1939.” (36) Amendment of section 248.— Section 248(c) (relating to organizational expenditures) is amended by striking out “the date of enactment of this title” and inserting in lieu thereof “August 16, 1954”, (37) Amendment of section 265.— Section 265(2) (relating to tax-exempt interest) is amended by striking out “(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)”, (38) Amendment of section 269.— Section 269 (relating to 26 USC 269. acquisitions made to evade or avoid income tax) is amended by striking out subsection (c) (relating to presumption in the ease of disproportionate purchase price). (39) Amendment of section 275.— Section 275(a)(1)(C) 26 USC 275. relating to nondeductible taxes) is amended by striking out (“, and corresponding provisions of prior revenue laws”. (40) Amendments of section 281.— (A) Section 281(d)(1)(A) (relating to definition of terminal 26 USC 281. railroad corporation) is amended by inserting after “Interstate Commerce Act” the following: “(49 U.S.C. 1 and following) (B) Section 281 (relating to terminal railroad corporations and their shareholders) is amended by striking out subsection (e) (relating to taxable years ending before October 23, 1962) and by redesignating subsection (f) as subsection (e). (41) Amendment of section 301.— Section 301 (relating to distributions 26 USC 301. of property) is amended by striking out subsection (e) (relating to certain distributions by personal service corporations). (42) Amendments of section 311.— (A) Section 311(d)(1) (relating to appreciated property 26 USC 311. used to redeem stock) is amended by striking out “then again shall be recognized” and inserting in lieu thereof “then a gain shall be recognized”. (B) (i) Section 311(d)(2) (relating to exceptions and limitations) is amended by striking out subparagraph (C) (relating to certain distributions before December 1, 1974) and by redesignating subparagraphs (D), (E), (F), and (G) as subparagraphs (C), (D). (E), and (F), respectively. (ii) The amendments made by clause (i) shall apply only 26 USC 311 note. with respect to distributions after November 30, 1974. (C) Section 311(d)(2)(C), as redesignated by subparagraph (B) of this paragraph, is amended by striking out “26 Stat. 209;” and “38 Stat. 730;”. (43) Amendments of section 312.— (A) Section 312(d)(1) (relating to certain distributions 26 USC 312. of stock and securities) is amended by striking out “this Code” each place it appears and inserting in lieu thereof “this title”. (B) Section 312 (relating to earnings and profits) is amended by striking out subsection (h) (relating to personal service corporations) and by redesignating subsections (i) and (j) as subsections (h) and (i), respectively. (C) Subsection (i) of section 312 (relating to distribution of proceeds of certain loans), as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(i) Distribution of Proceeds of Loan Insured by the United States.— If a corporation distributes property with respect to its stock and if, at the time of distribution— “(1) there, is outstanding a loan to such corporation which was made, guaranteed, or insured by the United States (or by any agency or instrumentality thereof), and “(2) the amount of such loan so outstanding exceeds the adjusted basis of the property constituting security for such loan, then the earnings and profits of the corporation shall be increased by the amount of such excess, and (immediately after the distribution) shall be decreased by the amount of such excess. For purposes of paragraph (2), the adjusted basis of the property at the time of distribution shall be determined without regard to any adjustment under section 1016(a)(2) (relating to adjustment for depreciation, etc.). For purposes of this subsection, a commitment to make, guarantee, or insure a loan shall be treated as the making, guaranteeing, or insuring of a loan.” (D) Section 312(j)(3) (relating to foreign investment companies), as redesignated by subsection (b)(32)(B)(i), is amended to read as follows: “(3) Partial liquidations and redemptions.— If a foreign investment company (as defined in section 1246) distributes amounts in partial liquidation or in a redemption to which section 302(a) or 303 applies, the part of such distribution which is properly chargeable to earnings and profits shall be an amount which is not in excess of the ratable share of the earnings and profits of the company accumulated after February 28, 1913, attributable to the stock so redeemed.” (44) Amendment of section 333.— Section 333(a)(1) (relating to election as to recognition of gain in certain liquidations) is amended by striking out “on or after June 22, 1954”. (45) Amendment of section 334.— Section 334(b)(2)(A) (relating to liquidation of subsidiary) is amended to read as follows: “(A) the distribution is pursuant to a plan of liquidation adopted not more than 2 years after the date of the transaction described in subparagraph (B) (or, in the case of a series of transactions, the date of the last such transaction); and”. (46) Amendments of section 337.— (A) Section 337(a) (relating to nonrecognition of gain or loss on certain liquidations) is amended to read as follows: “(a) General Rule.— If, within the 12month period beginning on the date on which a corporation adopts a plan of complete liquidation, all of the assets of the corporation are distributed in complete liquidation, less assets retained to meet claims, then no gain or loss shall be recognized to such corporation from the sale or exchange by it of property within such 12month period.” (B) The first sentence, of section 337(d) (relating to certain minority stockholders) is amended by striking out “on or after January 1, 1958”. (47) Repeal of section 342.— Section 342 (relating to the liquidation of certain foreign personal holding companies) is repealed. (48) Amendments of section 351.— (A) Section 351(a) (relating to transfer to corporation controlled by transferor) is amended by striking out “(including, in the case of transfers made on or before June 30, 1967, an investment company)”. (B) Section 351(d) (relating to application of June 30, 1967, date) is amended to read as follows: “(d) Exception.— This section shall not apply to a transfer of property to an investment company.” (C) The amendments made by this paragraph shall take effect with respect to transfers of property occurring after the date of the enactment of this Act. (49) Repeal of section 363.— Section 363 (a cross reference to 26 USC 363. other sections) is repealed. (50) Amendments of section 371.— Section 371 (a)(1) (relating 26 USC 371. to certain reorganization exchanges by corporations) is amended— (A) by striking out “49 Stat. 922;” and (B) by striking out “(52 Stat. 883–905; 11 U.S.C., chapter 10) or the corresponding provisions of prior law” and inserting in lieu thereof “(11 U.S.C. 501 and following)”. (51) Amendment of section 372.— Section 372(a) (relating 26 USC 372. to basis in connection with bankruptcy proceedings) is amended by striking out “54 Stat. 709;”. (52) Repeal of section 373.— Section 373 (relating to nonrecognition 26 USC 373. of loss in certain railroad reorganizations) is repealed. (53) Amendment of section 374 .— Section 374(a)(1) (relating 26 USC 374. to non recognition of gain or loss in certain railroad reorganizations) is amended by striking out “49 Stat. 922;”. (54) Amendment of section 381.— Section 381 (c) (relating to 26 USC 381. items carried over in certain corporate acquisitions) is amended by striking out paragraph (20). (55) Repeal of sections 391 through 395.— Subchapter C of 26 USC 391–395. chapter 1 (relating to corporate distributions and adjustments) is amended by striking out part VII (relating to effective dates of subchapter C). (56) Amendments of section 401.— (A) Paragraphs (12) and (13) of section 401(a) (relating 26 USC 401. to requirements for qualification) are each amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (B) Paragraph (15) of section 401(a) is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu 29 USC 1001 note. thereof “September 2, 1974,”. (C) Paragraph (19) of section 401(a) is amended by striking out “enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (D) The last sentence of section 401(a) is amended to read as follows: “Paragraphs (11), (12), (13), (14), (15), (19), and (20) shall apply only in the case of a plan to which section 411 (relating to minimum vesting standards) applies without regard to subsection (e)(2) of such section.” (57) Amendments of section 402.— (A) Section 402(a)(4) (relating to distributions made to 26 USC 402. nonresident alien individuals) is amended by striking out “basic salary” each place it appears therein and inserting in lieu thereof “basic pay”, and by amending the last sentence in such paragraph to read as follows: “In the case of distributions under the civil service retirement laws, the term ‘basic pay’ shall have the meaning provided in section 8331(3) of title 5, United States Code.” (B) Section 402 (relating to taxability of beneficiary of employees’ trusts) is amended by striking out subsection (d) (relating to certain trust agreements made before October 21, 1942), (C) (i) So much of the third sentence of section 402(e)(4) 26 USC 402. (A) (relating to definition of lump sum distributions) as precedes “a distribution of an annuity contract” is amended to read as follows: “Except for purposes of subsection (a)(2) and section 403(a)(2),”. (ii) The amendment made by clause (i) shall apply with respect to distributions or payments made after December 31, 1973, in taxable years beginning after such date. (58) Amendment of section 403.— The last two sentences of section 403(a)(4) (relating to taxation of employee annuities) are amended to read as follows: “For purposes of this title, a transfer described in subparagraph (B)(1) shall be treated as a rollover contribution described in section 408(d)(3). Subparagraph (B)(ii) does not apply in the case of a transfer to an employees’ trust, or annuity plan if any part of a payment described in subparagraph (A) is attributable to an annuity plan under which the employee was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan.” (59) Amendment of section 404.— Section 404 (relating to deduction for contributions to pension plans, etc.) is amended by striking out subsection (d) (relating to carryover of pre–1954 unused deductions). (60) Amendment of section 409.— Section 409(b)(3)(C) (relating to tax-free rollovers of individual retirement bonds) is amended by striking out “section 403(d)(3).” and inserting in lieu thereof “section 408 (d)(3).” (61) Amendments of section 410.— (A) Subparagraphs (C) and (D) of section 410(a)(5) (relating to breaks in service) are each amended by striking out “purposes of subsection (a)(1)” and inserting in lieu thereof “purposes of paragraph (1)”. (B) Paragraph (1)(C) of section 410(c) (relating to application of minimum participation standards) is amended by striking out “the date of the enactment of the Employee 29 USC 1001 note. Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974,”. (C) Paragraph (2) of section 410(c) is amended by striking out “the day before the date of the enactment of this section” and inserting in lieu thereof “September 1, 1974”. (62) Amendments of section 411.— (A) Subsection (a) of section 411 (relating to minimum vesting standards) is amended by striking out “subsection (a)(8)” and inserting in lieu thereof “paragraph (8)”. (B) Subsection (a)(3)(D)(iii) of section 411 is amended— (i) by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and “the date of the enactment of such Act” and inserting in lieu thereof in both such places “September 2, 1974”, and (ii) by striking out “the date of the enactment of the Act” and inserting in lieu thereof “September 2, 1974,”. (C) The heading for subparagraph (C) of section 411 (a)(7) is amended to read as follows: “(C) Repayment of subparagraph (b) distributions.—” (D) Subsection (b)(1)(D)(i) and (e)(1)(C) of section 411 are each amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. 29 USC 1001 note. (E) Subsection (e)(2) of section 411 is amended by striking out “the date before the date of the enactment of the Employee Retirement Income Security Act of 1974” and 26 USC 411. inserting in lieu thereof “September 1, 1974”. (63) Amendments of section 412.— (A) Subsection (h) of section 412 (relating to minimum 26 USC 412. funding standards) is amended by striking out “the day before the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 1, 1974”. (B) Subsection (h)(5) of section 412 is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (64) Amendments of section 414.— (A) The heading for section 414(f) (relating to multi-employer 26 USC 414. plans) is amended to read as follows: ‘(f) Multiemployer Plan.—” (B) Section 414(1) (relating to mergers and consolidations of plans or transfers of plan assets) is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (65) Amendments of section 415.— (A) Section 415(b)(2)(A) (relating to adjustments for 26 USC 415. certain forms of benefits) is amended by striking out “and 409(b)(3)(C)” and inserting in lieu thereof “and 409(b)(3)(C))”. (B) Section 415(b)(2)(B) is amended by striking out “(as defined in section 401(a)(11)(II)(iii))” and inserting in lieu thereof “(as defined in section 401 (a)(11)(G)(iii))”. (66) Amendments of section 453.— (A) Section 453(c)(3) (relating to adjustment in tax for 26 USC 453. amounts previously taxed) is amended by striking out “corresponding provisions of the Internal Revenue Code, of 1939” and inserting in lieu thereof “corresponding provisions of the Internal Revenue Code of 1954”. (B) Section 453(d)(4)(B) (relating to liquidations to which section 337 applies) is amended by striking out “or section 617(d)(1)” and inserting in lieu thereof “, 617(d)” (67) Amendment of section 455.— Section 455(c)(3)(B) 26 USC 455. (relating to prepaid subscription income) is amended by striking out “for his first taxable year (i) which begins after December 31, 1957, and (ii) in which he receives prepaid subscription income in the trade or business” and inserting in lieu thereof “for his first taxable year in which he receives prepaid subscription income in the trade or business”. (68) Amendment of section 458.— Section 456(c)(3)(B) 26 USC 456. (relating to election without consent with respect to treatment of prepaid dues) is amended by striking out “for its first taxable year (i) which begins after December 31, 1960, and (ii)” and inserting in lieu thereof “for its first taxable year”. (69) Amendments of section 461.— (A) Section 461(c) (relating to accrual of real property taxes) is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (B) Section 461(c)(2) (relating to elections without consent), as redesignated by subparagraph (A), is amended by striking out “his first taxable year which begins after December 31, 1953, and ends after the date of enactment of this title in which the taxpayer” and inserting in lieu thereof “his first taxable year in which he”. (70) Amendments of section 481.— (A) Section 481(b) (relating to limitation on tax where substantial adjustments are required by a change in accounting method) is amended by striking out paragraphs (4), (5), and (6) (relating to pre–1954 adjustments). (B) Section 481(b)(1) and (2) are each amended by striking out “, other than the amount of such adjustments to which paragraph (4) or (5) applies,” each place it appears. (71) Amendments of section 508.— (A) Subsections (a) and (b) of section 508 (relating to special rules relating to 501(c)(3) organizations) are each amended by striking out the hist sentence therein. (B) Section 508(e)(2) (relating to special rules for existing private foundations) is amended by striking out subparagraph (A) (relating to taxable years beginning before 1972), by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively, and by striking out “(B)” in subparagraph (B)(as so redesignated) and inserting in lieu thereof “(A)”. (C) Section 508(d)(2)(A) (relating to disallowance of deductions for certain charitable gifts or bequests) is amended by striking out “(e)(2)(B) and (C)” and inserting in lieu thereof “(e)(2)”. (72) Amendments of section 514.— (A) Section 514(c)(1) (relating to definition of acquisition indebtedness) is amended by striking out the comma at the end of subparagraph (C) and all that follows, and inserting in lieu thereof a period. (B) Section 514 (relating to unrelated debt-financed income) is amended by striking out subsection (f) (relating to definition of business lease), by striking out subsection (g) (relating to definition of business lease indebtedness), and by redesignating subsection (h) as subsection (f). (C) Section 514(b)(3)(C)(iii) (relating to definition of debt-financed property) is amended to read as follows: “(iii) shall not apply to property subject to a lease which is a business lease (as defined in this section immediately before the enactment of the Tax Reform Act of 1976).” (D) Section 514(f) (relating to personal property leased with real property), as redesignated by subparagraph (B) of this paragraph, is amended by striking out “and the term ‘premises’ include” and inserting in lieu thereof “includes”. (73) Amendments of section 534.— (A) Section 534(b) (relating to mailing notices of deficiency) is amended by striking out the last sentence, (B) Subsection (e) of section 534 (relating to effective date of section) is repealed. (74) Amendment of section 533.— Section 535(b)(1) (relating 26 USC 535. to adjustments in computing accumulated taxable income) is amended by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)”. (75) Amendments of section 537.— (A) Section 537(b)(2) (relating to definition of excess 26 USC 537. business holdings redemption needs) is amended by striking out “, with respect to taxable years of the corporation ending after May 26, 1969,”. (B) Section 537(b)(4) (relating to inferences as to prior years) is amended by striking out “or (2)”. (76) Amendments of section 542.— (A) Section 542(a)(2) (relating to definition of personal 26 USC 542. holding company) is amended by striking out the last sentence. (B) Section 542(b)(2) (relating to ineligible affiliated group) is amended by striking out “, other than an affiliated group of railroad corporations the common parent of which would be eligible to file a consolidated return under section 141 of the Internal Revenue Code of 1939 prior to its amendment by the Revenue Act of 1942,”. (C) Section 542(c)(2) (relating to financial institutions) is amended by striking out “without regard to subparagraphs (D) and (E) thereof”, (D) Section 542(c)(8) (relating to small business investment companies) is amended by inserting after “Small Business Investment Act of 1958” the following: “(15 U.S.C. 661 and following)”. (77) Amendments of section 545.— (A) Section 545(b)(1) (relating to deduction of taxes in 26 USC 545. computing undistributed personal holding company income) is amended— (i) in the first sentence, by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)”; and (ii) by striking out the last two sentences (relating to deduction of taxes). (B) Section 545(b) (relating to adjustments in computing undistributed personal holding company income) is amended by striking out paragraph (7) (relating to payment of indebtedness incurred before 1934). (C) Section 545(c)(2)(A) (relating to corporations to which special adjustment applies) is amended by striking out “the date of enactment of this subsection” and inserting in lieu thereof “February 26, 1964”. (78) Amendment of section 547.— Section 547 (relating to the 26 USC 547. deduction of deficiency dividends) is amended by striking out subsection (h) (relating to the effective date). ‘ (79) Amendment of section 551.— Section 551(c) (relating to 26 USC 551. foreign personal holding company income tax returns), as redesignated by subsection (b)(1)(F) of this section, is amended by striking out “taxable income, foreign personal holding com-pany,” and inserting in lieu thereof “taxable income, foreign personal holding company income,”. (80) Amendment of section 554.— The first sentence of section 556(b)(1) (relating to deduction of taxes in computing undistributed foreign personal holding company income) is amended by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 1, 1940)”. (81) Amendment of section 584.— Section 564 (relating to dividend carryovers) is amended by striking out subsection (c) (relating to carryovers from pre–1954 years). (82) Repeal of section 583.— Section 583 (relating to deduction of dividends paid on certain preferred stock by banks or trust companies) is repealed. (83) Repeal of section 592.— Section 592 (relating to the deduction by mutual savings banks for repayment of certain loans) is repealed. (84) Amendments of section 593.— (A) Section 593(b)(2) (relating to additions to bad debt reserves for mutual savings banks, etc.) is amended by striking out, in the table in subparagraph (A), the following: “1969 60 percent 1970 57 percent 1971 54 percent 1972 51 percent 1973 49 percent 1974 47 percent 1975 45 percent” (B) Section 593(c) (relating to reserves for mutual savings banks) is amended by striking out paragraphs (2), (3), (4), and (5), by redesignating paragraph (6) as paragraph (3), and by inserting immediately after paragraph (1) the following: “(2) Certain pre-1963 reserves.— Notwithstanding the second sentence of paragraph (1), any amount allocated pursuant to paragraph (5)(as in effect immediately before the enactment of the Tax Reform Act of 1976) during a taxable year beginning before January 1, 1977, to the reserve for losses on qualifying real property loans out of the surplus, undivided profits, and bad debt reserves (determined as of December 31, 1962) attributable to the period before the first taxable year beginning after December 31, 1951, shall not be treated as a reserve for bad debts for any purpose other than determining the amount referred to in subsection (b)(1)(B), and for such purpose such amount shall be treated as remaining in such reserve.” (C) Section 593 is amended by striking out subsection (d) (relating to taxable years beginning in 1962 and ending in 1963), and by redesignating subsections (e) and (f) as subsections (d) and (e),respectively. (D) Section 593(b)(2)(E)(1) is amended by striking out “subsection (f)” and inserting in lien thereof “subsection (e)”- (85) Repeal of section 601.— Subchapter H of chapter 1 relating to 26 USC 601. banking institutions) is amended by striking out part III (relating to special deduction for bank affiliates). (86) Amendments of section 613a.— (A) Section 613A(b)(1)(C) (relating to exemption for 26 USC 613A. certain domestic gas wells) is amended by striking out “within the meaning of section 613(b)(1)(A)”. (B) Section 613A(c)(6)(i) (relating to limitations on percentage depletion in case of oil and gas wells) is amended by striking out “determined with” and inserting in lieu thereof “determined without”. (87) Amendments of section 614.— (A) (i) Section 614(c) (relating to aggregation of mineral 26 USC 614. interests in mines) is amended by striking out paragraph (4) (relating to special rule as to exploration deductions prior to aggregation). (ii) The amendment made by clause (i) shall apply with 26 USC 614 note. respect to elections to form aggregations of operating mineral interests made under section 614(c)(1) of the Internal Revenue Code of 1954 for taxable years beginning after December 31, 1976. (B) The third sentence of section 614(c)(2) (relating to election to treat a single interest as more than one property) is amended to read as follows: “A separate property so formed may, under regulations prescribed by the Secretary, be included as a part of an aggregation in accordance with paragraphs (1) and (3).” (C) Section 614(c)(3) (relating to manner and scope of election) is amended to read as follows: “(3) Manner and scope of election.— The elections provided by paragraphs (1) and (2) shall be made, in accordance with regulations prescribed by the Secretary, not later than the time prescribed for filing the return (including extensions thereof) for the first taxable year— “(A) in which, in the ease of an election under paragraph (1), any expenditure for development or operation in respect of the separate operating mineral interest is made by the taxpayer after the acquisition of such interest, or “(B) in which, in the case of an election under paragraph (2), expenditures for development or operation of more than one mine in respect of a property are made by the taxpayer after the acquisition of the property. An election made under paragraph (1) or (2) for a taxable year shall be binding upon the taxpayer for such year and all subsequent taxable years, except that the Secretary may consent to a different treatment of any interest with respect to which an election has been made.” (88) Repeal or section 615.— Section 615 (relating to deduction 26 USC 615. of pre–1970 exploration expenses) is repealed. (89) Amendment of section 617.— Section 617(a)(2)(B) 26 USC 617. (relating to time and scope of election to deduct certain mining exploration expenditures) is amended by striking out. “may not be revoked after the last day of the third month following the month in which the final regulations issued under the authority of this subsection are published in the Federal Register“, unless” and inserting in lieu thereof “may not be revoked unless”. (90) Repeal of section 632.— Section 632 (relating to tax in 26 USC 632. case of sale of oil and gas properties) is repealed. (91) Amendment of section 691.— Section 691(c)(1)(B) 26 USC 691. (relating to deduction for estate tax) is amended by striking out the last sentence. (92) Amendment of section 692.— The heading of section 692 (relating to income taxes of members of Armed Forces who die in a combat zone) is amended by striking out “ON” the first time it appeals in the section heading and inserting in lieu thereof “OF”. (93) Amendment of section 751.— Section 751(c) (relating to unrealized receivables) is amended by striking out “1254(a), or 1250(a),” and inserting in lieu thereof “1245(a), 1250(a),”. (94) Repeal of section 771.— Part IV of subchapter K of chapter 1 (relating to effective date of subchapter K) is repealed. (95) Amendments of section 802.— (A) Section 802(a)(1) (relating to tax imposed on life insurance companies) is amended by striking out “beginning after December 31, 1957,”. (B) Section 802(a)(2) (relating to alternative tax in case of capital gains) is amended by striking out “beginning after December 31, 1961,”. (C) Section 802(a) is amended by striking out paragraph (3) (relating to special rules for 1959 and 1960). (96) Amendments of section 804.— (A) Section 804(a) is amended by sticking out paragraph (6) (relating to certain exceptions). (B) Section 804(b)(2) (relating to short-term capital gains) is amended by striking out “In the case of a taxable year beginning after December 31, 1958, the” and inserting in lieu thereof “The”. (97) Amendments of section 805.— (A) Section 805(b)(3)(B) (relating to average earnings rate) is amended to read as follows: “(B) Special rule.— For purposes of subparagraph (A), the current earnings rate for tiny taxable year of any company which, for such year, is an insurance company (but not a life insurance company) shall be determined as if this part applied to such company for such year.” (B) Section 805(b)(4)(B) (relating to basis of assets) is amended by striking out “(determined without regard to fair market value on December 31, 1958)”. (C) Section 805(d) (relating to pension plan reserves) is amended to read as follows: “(d) Pension Plan Reserves.— For purposes of this part, the term ‘pension plan reserves’ means that portion of the life insurance reserves which is allocable to contracts— “(1) purchased under contracts entered into with trusts which (as of the time the contracts were entered into) were deemed to be (A), trusts described in section 401(a) and exempt from tax under section 501(a), or (B) trusts exempt from tax under section 185 of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws; “(2) purchased under contracts entered into under plans which (as of the time the, contracts were entered into) were deemed to be plans described in section 403(a), or plans meeting the requirements of paragraphs (3), (4), (5), and (6) of section 165(a) of the Internal Revenue Code of 1939; “(3) provided for employees of the life insurance company under a plan which, for the taxable year, meets the requirements of paragraphs (3), (4), (5), (6), (7), (8), (11), (12), (13), (14), (15), (16), (19), and (20) of section 401(a); “(4) purchased to provide retirement annuities for its employees by an organization which (as of the time the contracts were purchased) was an organization described in section 501(c)(3) which was exempt from tax under section 501(a) or was an organization exempt from tax under section 101(6) of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws, or purchased to provide retirement annuities for employees described in section 403(b)(1)(A)(ii) by an employer which is a State, a political subdivision of a state, or an agency or instrumentality of any one or more of the foregoing; or “(5) purchased under contracts entered into with trusts which (at the time the contracts were entered into) were individual retirement accounts described in section 408(a) or under contracts entered into with individual retirement annuities described in section 408(b).” (98) Amendments of section 809.— (A) Section 809(b) (relating to definition of gain and loss 26 USC 809. from operations) is amended by striking out paragraph (4). (B) (i) Section 809(d) (relating to life insurance company deductions) is amended by striking out paragraph (11) relating to mutualization distributions before 1963), and by redesignating paragraph (12) as paragraph (11). (ii) Section 809(e) is amended by striking out “subsection (d)(12)” and inserting in lieu thereof “subsection (d)(11)”, (C) Section 809 (relating to computation of gain and loss from operations) is amended by striking out subsection (g) (relating to deduction for certain mutualization distributions before 1963). (99) Amendment of section 812.— Section 812(b)(1) (relating 26 USC 812. to years to which operating losses of an insurance company may be carried), other than the last sentence thereof, as added by section 806(d)(1)(A) of this Act, is amended to read as follows: “(1) Years to which loss may be carried.— The loss from operations for any taxable year (hereinafter in this section referred to as the ‘loss year’) shall be— “(A) an operations loss carryback to each of the 3 taxable years preceding the loss year, “(B) an operations loss carryover to each of the 5 taxable years following the loss year, and “(C) subject to subsection (e), if the life insurance company is a new company for the loss year, an operations loss carryover to each of the 3 taxable years following the 5 taxable years described in subparagraph (B).” (100) Amendments of section 817.— Section 817 (relating to 26 USC 817. rules applicable to certain gains and losses) is amended by striking out subsection (c) (relating to treatment of pre–1959 capital losses) and subsection (e) (relating to certain 1958 reinsurance transactions). (101) Amendment of section 818.— Section 818 (relating to 26 USC 818. life insurance accounting provisions) is amended by striking out subsection (e) (relating to certain rules applicable to taxable years 1957, 1958, and 1959). and by redesignating subsections (f) and (g) as subsections (e) and (f), respectively. (102) Amendments of section 819.— (A) The first sentence of section 819(a)(2)(A) (relating 26 USC 819. to definition of minimum figure for foreign life insurance companies) is amended to read as follows: “The minimum figure is the amount determined by multiplying the tax-payer’s total insurance liabilities on United States business by a percentage for the taxable year to be determined and proclaimed by the Secretary.” (B) The second sentence of section 819(a)(2)(A) is amended by striking out “under clause (ii)” and inserting in lieu thereof “under the preceding sentence”. (C) Clause (i) of section 819(b)(2)(B) (relating to distributions pursuant to certain mutualizations) is amended to read as follows: “(i) the minimum figure for 1958 determined under subsection (a)(2)(A) computed by using a percentage of 9 percent in lieu of the percentage determined and proclaimed by the Secretary, or”. (103) Amendments of section 820.— (A) Section 820(c) (relating to optional treatment of certain reinsured policies) is amended by striking out paragraph (6) (relating to reimbursement for 1957 income taxes), and by redesignating paragraph (7) as paragraph (6). (B) The last sentence of section 820(c) is amended by striking out “(5). and (6) and the rules prescribed under paragraph (7)” and inserting in lieu thereof “and (5) and the rules prescribed under paragraph (6)”. (104) Amendments of section 821.— (A) Section 821(a) (relating to imposition of tax on certain mutual insurance companies) is amended by striking out “beginning after December 31, 1963,”. (B) Section 821(c)(1) (relating to alternative tax for certain small insurance companies) is amended by striking out “In the ease of taxable years beginning after December 31, 1963. there is” and inserting in lieu thereof “There is”. (C) Section 821 (relating to tax on certain mutual insurance companies) is amended by striking out subsection (e) (relating to 1962 transitional rules) and by redesignating subsection (f) as subsection (e). (105) Amendments of section 822.— (A) Section 822(c)(5) (relating to deduction of interest) is amended by striking out “(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)”. (B) The last sentence of section 822(d)(2) (relating to amortization of premium and accrual of discount) is amended by striking out “For taxable years beginning after December 31, 1962. no accrual” and inserting in lieu thereof “No accrual”. (106) Amendments of section 825.— Section 825(g) (relating to unused loss deduction of certain insurance companies) is amended by striking out paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (107) Amendment of section 831.— Section 831(a) (relating to tax on certain insurance companies) is amended by striking out “or the taxable income” and inserting in lieu thereof “on the taxable income.” (108) Amendments of section 832.— Paragraphs (1) and (6) of section 832(b)(definitions relating to insurance company taxable income) are each amended by striking out “Convention” and inserting in lieu thereof “Association”. (109) Amendments of section 851.— (A) Section 851(a)(1) (relating 26 USC 851. to definition of regulated investment company) is amended by striking out “54 Stat. 789;”. (B) Section 851(b)(1) (relating to regulated investment companies) is amended by stinking out “which began after December 31, 1941”, (110) Amendments of section 852.— (A) Subparagraph (C) of section 852(b)(3) (relating to 26 USC 852. method of taxation of regulated investment companies and their shareholders) is amended by striking out the third sentence. (B) (i) Section 852(b)(3)(D)(iii) is amended by striking out “by 75 percent of so much of such amounts as equals the amount subject to tax in accordance with section 1201 (a)(1)(A) and by 70 percent (72 percent in the case of a Post, p, 1786. taxable year beginning after December 31, 1969, and before January 1, 1971) of so much of such amounts as equals the amount subject to tax in accordance with section 1201(a)(1)(B) or (2)” and inserting in lieu thereof “by 70 percent of so much of such amounts as equals the amount subject to tax in accordance with section 1201(a)”. (ii) The amendment made by clause (i) shall not be considered 26 USC 852 note. to affect the amount of any increase in the basis of stock under the provisions of section 852(b)(3)(D)(iii) of the Internal Revenue Code of 1954 which is based upon amounts subject to tax under section 1201 of such Code in taxable years beginning before January 1, 1975. (C) Section 852(d) is amended by inserting after “Investment Company Act of 1940” the following: “(15 U.S.C. 80a–l and following)”. (111) Amendments of section 856.— (A) Section 856(c)(1) (relating to real estate investment 26 USC 856. trusts) is amended by striking out “which began after December 31, 1960”. (B) Section 856(c)(6)(D) (relating to definition of other terms) is amended by inserting after “Investment Company Act of 1940, as amended” the following: “(15 U.S.C. 80a–1 and following)”. (112) Amendment of section 857.— Section 857(b)(3)(C) 26 USC 857. (relating to the taxation of capital gains in the case of real estate investment trusts) is amended by striking out the last sentence. (113) Amendments of section 864.— (A) Subsection (a) of section 864 (definitions relating to 26 USC 864. determinations of sources of income) is amended to read as follows: “(a) Produced.— For purposes of this part, the term ‘produced’ “Produced.” includes created, fabricated, manufactured, extracted, processed, cured, or aged.” (B) Clauses (i) and (iii) of section 864(c)(4)(B) and subparagraph (C) of section 864(c)(5) (relating to effectively connected income) are each amended by striking out “sale” each place it appears and inserting in lieu thereof “sale or exchange”. (C) Section 864(c)(4)(B)(iii) (relating to effectively connected income) is amended by striking out “sold” and inserting in lieu thereof “sold or exchanged”. (114) Amendment of section 905.— Section 905(b) (relating to proof of foreign tax credits) is amended by striking out the last sentence (relating to the treatment of certain royalty payments). (115) Amendment of section 911.— Section 911(c) (relating to earned income from sources without the United States) is amended by striking out paragraph (7) (relating to taxable years ending in 1963, 1964, or 1965). (116) Amendment of section 921.— Section 921 (relating to definition of Western Hemisphere Trade Corporation) is amended by striking out the last sentence, (relating to taxable years before 1954). (117) Amendments of section 931.— Section 931 (relating to income from sources within possession) is amended by striking out subsection (h) (relating to certain persons taken as prisoners of war while working in a possession), and by redesignating subsection (i) as subsection (h). (118) Amendment of section 934.— Section 934(b) (relating to gross income received by a corporation from the Virgin Islands) is amended by striking out the last sentence. (119) Amendment of section 951.— Section 951 (a)(1) (relating to treatment, of subpart F income) is amended by striking out “beginning after December 31, 1962”. (120) Repeal of section 972.— Section 972 (relating to consolidation of export trade corporations) is repealed. (121) Amendment of section 1001.— Section 1001(c) (relating to recognition of gain or loss) is amended to read as follows: “(c) Recognition of Gain or Loss.— Except as otherwise provided in this subtitle, the entire amount of the gain or loss, determined under this section, on the sale or exchange of property shall be recognized.” (122) Amendments of section 1015.— (A) Subparagraph (A) of section 1015(d)(1) (relating to increased ‘basis for gift tax paid) is amended by striking out “the date of the enactment of the Technical Amendments Act of 1958” and inserting in lieu thereof “September 2, 1958”. (B) Subparagraph (B) of section 1015(d)(1) is amended by striking out “the date of the enactment of the Technical Amendments Act of 1958” and inserting in lieu thereof “September 2, 1958,”. (123) Amendment of section 1016.— Section 1016(a) (relating to adjustments to basis) is amended by striking out paragraph (19). (124) Amendment of section 1018.— Section 1018 (relating to adjustment of capital structure before September 22, 1938) is amended by striking out “54 Stat. 709;”. (125) Repeal of section 1020.— Section 1020 (relating to election in respect of depreciation allowed before 1952) is repealed. (126) Repeal of section 1022.— (A) Section 1022 (relating to the basis of certain foreign personal holding company stock) is repealed. (B) The repeal made by subparagraph (A) shall apply with respect to stock or securities acquired from a decedent dying after the date of the enactment of this Act. (127) Amendment of section 1024.— Section 1024 (containing cross references) is amended by striking out paragraph (4). (128) Amendments of section 1033.— (A) Section 1033(a) (relating to involuntary conversions) 26 USC 1033. is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (B) Section 1033(a)(2) (relating to conversion into money), as redesignated by subparagraph (A) of this paragraph and as amended by this Act, is amended— (i) by striking out “where disposition occurred after 1950” in the paragraph heading; (ii) by striking out “(g)” each place it appears and inserting in lieu thereof “(h)”; (iii) by striking out “and the disposition of the converted property (as defined in paragraph (2)) occurred after December 31, 1950,” in the text; and (iv) by adding at the end thereof the following new subparagraph: “(E) Definitions.— For purposes of this paragraph— “(i) Control.— The term ‘control’ means the ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of the corporation. “(ii) Disposition of the converted property.— The term ‘disposition of the converted property’ means the destruction, theft, seizure, requisition, or condemnation of the converted property, or the sale or exchange of such property under threat or imminence of requisition or condemnation.” (C) Section 1033 (relating to involuntary conversions) is amended by striking out subsection (b) (relating to certain conversions occurring before 1954) and by redesignating subsections (c), (d), (e), (f), (g), and (h), as subsections (b), (c), (d), (e), (f), and (g), respectively. (D) The first sentence of section 1033(b) (relating to basis of a property acquired through involuntary conversions), as redesignated by subparagraph (G) of this paragraph, is amended by striking out “or (2)” and inserting in lieu thereof “or section 112(f)(2) of the Internal Revenue Code of 1939”. (E) Section 1033(f)(2) (relating to condemnation of real property), as redesignated by subparagraph (C) of this paragraph, is amended to read as follows: “(2) Limitation.— Paragraph (1) shall not apply to the purchase of stock in the acquisition of control of a corporation described in subsection (a)(2)(A).” (F) Section 1033(g)(4) (relating to condemnation of real property), as amended by section 2140(a) of this Act, is amended by striking out “(a)(3)(B)(i)” and inserting in lieu thereof“(a)(2)(B)(i)”. (129) Amendments of section 1034.— (A) Section 1034(a) (relating to gain on sale of residence) 26 USC 1034. is amended by striking out “after December 31, 1953,”. (B) Section 1034(b)(defining adjusted sales price) is amended by striking out paragraph (3) (relating to effective date of subsection (b)). (C) Section 1034(d) (relating to certain limitations) is amended by striking out “or section 112 (n) of the Internal Revenue Code of 1939”. (D) Section 1034(i) (relating to involuntary conversions) is amended to read as follows: “(ii) Special Rule for Condemnation.— In the case of the seizure, requisition, or condemnation of a residence, or the sale or exchange of a residence under threat or imminence thereof, the provisions of this section, in lieu of section 1033 (relating to involuntary conversions), shall be applicable if the taxpayer so elects. If such election is made, such seizure, requisition, or condemnation shall be treated as the sale of the residence. Such election shall he made at such time and in such manner as the Secretary shall prescribe by regulations.” (E) Section 1034(j) (relating to statute of limitations) is amended by striking out “after December 31, 1950,”. (130) Amendment of section 1037.— Section 1037(b)(1) (relating to certain exchanges of United States obligations) is amended by striking out “section 1232(a)(2)(A)” and inserting in lieu thereof “section 1232 (a)(2) (B)”. (131) Amendment of section 1051.— Section 1051 (relating to property acquired before 1929 during affiliation) is amended by striking out the last two sentences. (132) Amendments of section 1081.— (A) Subsection (e) of section 1081 (relating to distributions required by the SEC) is amended to read as follows: “(c) Distribution of Stock or Securities Only.— If there is distributed, in obedience to an order of the Securities and Exchange Commission, to a shareholder in a corporation which is a registered holding company or a majority-owned subsidiary company, stock or securities (other than stock or securities which are nonexempt property), without the surrender by such shareholder of stock or securities in such corporation, no gain to the distributee from the receipt of the stock or securities so distributed shall be recognized.” (B) Section 1081(f) (relating to conditions for application of section) is amended by striking out “Except in the case of a distribution described in subsection (c)(2), the provisions” and inserting in lien thereof “The provisions”, and by striking out “49 Stat. 820;”. (C) Section 1081(g) (relating to applicability of other provisions) is amended by striking out “If a distribution described in subsection (c)(2). or an” and inserting in lieu thereof “If an”, and by striking out the comma after “Commission”. (133) Amendments of section 1083.— (A) Section 1083(a) is amended by striking out “49 Stat. 820;”. (B) Section 1083(b) is amended by striking out “49 Stat. 804;”. (C) Section 1083(e)(4) is amended by striking out “49 Stat. 820;”. (134) Repeal of section 1111.— Part IX of subchapter O of chapter 1 (relating to distributions pursuant to orders enforcing the antitrust laws) is repealed. (135) Amendments of section 1201.— (A) Section 1201(a) (relating to the alternative tax on capital gain) is amended to read as follows: “(a) Corporations.— If for any taxable year a corporation has a net capital gain, then, in lien of the tax imposed by sections 11. 511, 821 (a) or (c) and 831(a), there is hereby imposed a tax (if such tax is less than the tax imposed by such sections) which shall consist of the sum of— “(1) a tax computed on the taxable income reduced by the amount of the net capital gain, at the rates and in the manner as if this subsection had not been enacted, plus “(2) a tax of 30 percent of the net capital gain.” (B) Section 1201(c) (relating to computation of alternative 26 USC 1201. tax) is amended to read as follows: “(c) Computation of Tax Where Capital Gain Exceeds $50,000.— The tax computed for purposes of subsection (b)(3) shall be the amount by which a tax determined under section 1 or 511 on an amount equal to the taxable income (but not less than 50 percent of the net capital gain) for the taxable year exceeds a tax determined under section 1 or 511 on an amount, equal to the sum of (A) the amount subject to tax under subsection (b)(1) plus (B) an amount equal to 50 percent of the sum referred to in subsection (b)(2)(A).” (C) (i) Section 1201 is amended by striking out subsection (d)(defining subsection (d) gain) and by redesignating subsection (e) as subsection (d). (ii) Section 1201(b)(2)(A) (relating to alternative tax on noncorporate taxpayers) is amended by striking out “the amount of the subsection (d) gain” and inserting in lieu thereof “the sum of the long-term capital gains for the taxable year, but not to exceed $50,000 ($25,000 in the case of a married individual filing a separate return)”. (iii) Section 1201(b)(3) is amended by striking out “the amount of the subsection (d) gain” and inserting in lieu thereof “the sum referred to in subparagraph (A)”. (136) Amendments of section 1222.— (A) Paragraph (9) of section 1222 (relating to definition 26 USC 1222. of terms applicable to capital gains and losses) is amended to read as follows: “(9) Capital gain net income.— The term ‘capital gain net income’ means the excess of the gains from sales or exchanges of capital assets over the losses from such sales or exchanges.” (B) Paragraph (11) of section 1222 (relating to definition of terms applicable to capital gains and losses) is amended to read as follows: “(11) Net capital gain.— The term ‘net capital gain’ means “Net capita] gain.” the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year.” (137) Amendment of section 1233.— Section 1283((3) (relating 26 USC 1233. to certain options to sell) is amended by striking out “the date of enactment of this title” and inserting in lieu thereof “August 16, 1954”. (138) Amendment of section 1237.— Section 1237 (relating 26 USC 1237. to real property subdivided for sale) is amended by striking out subsection (d) (relating to effective date). (139) Repeal of section 1240.— Section 1240 (relating to taxability 26 USC 1240. to employee of certain termination payments) is repealed. (140) Amendment of section 1245.— Section 1245(b)(7)(B) 26 USC 1245. (relating to transfers to tax-exempt organization where property will be used in unrelated business) is amended by striking out “such organization acquiring such property,”. (141) Amendment of section 1246.— Section 1246(f) (relating 26 USC 1246. to gain on foreign investment company stock) is amended by striking out “beginning after December 31, 1962”. (142) Amendment of section 1311.— Paragraphs (2)(A), (2)(B), and (3) of section 1311(b) (relating to mitigation of effect of limitations) are each amended by striking out “Tax Court of the United States” and inserting in lieu thereof “Tax Court”. (143) Repeal of section 1315.— Section 1315 (relating to effective date of part II of subchapter Q of chapter 1) is repealed. (144) Repeal of section 1321.— Part III of subchapter Q of chapter 1 (relating to involuntary liquidation of LIFO inventories) is repealed. (145) Repeal of sections 1331 through 1337.— (A) Part IV of subchapter Q of chapter 1 (relating to war loss recoveries) is repealed. (B) The repeal by subparagraph (A) shall apply with respect to war loss recoveries in taxable years beginning after December 31, 1976. (146) Amendment of section 1341.— Section 1341(b)(2) (relating to claim of right) is amended by striking out the last sentence. (147) Repeal of section 1342.— Section 1342 (relating to computation of tax on certain amounts recovered as a result of a patent infringement suit) is repealed. (148) Repeal of section 134A.— Section 1346 (relating to recovery of unconstitutional Federal taxes) is repealed. (149) Amendments of section 1372.— (A) Section 1372(b)(1) (relating to effect of election under subchapter S) is amended by striking out “(other than the tax imposed by section 1378)” and inserting in lieu thereof “(other than as provided by section 58(d)(2) and by section 1378)”. (B) Section 1372(c) (relating to subchapter S elections by small business corporations) is amended to read as follows: “(c) Where and How Made.— An election under subsection (a) may be made by a small business corporation for any taxable year at any time during the first month of such taxable year, or at any time Regulations. during the month preceding such first month. Such election shall be made in such manner as the Secretary shall prescribe by regulations.” (C) Section 1372 is amended by striking out subsection (g) (relating to certain elections for years beginning before 1961). (150) Amendments of section 1374.— (A) Section 1374(b) (relating to net operating losses of subchapter S corporations) is amended by adding at the end thereof the following new sentence: “The deduction allowed by this subsection shall, for purposes of this chapter, be considered as a deduction attributable to a trade or business carried on by the shareholder.” (B) Subsection (d) of section 1374 (relating to treatment of net operating losses of subchapter S corporations) is repealed. (151) Amendments of section 1375.— (A) The heading of subsection (b) of section 1375 is amended by striking out “Received Credit Not Allowed” and inserting in lieu thereof “Not Treated as Such for Certain Purposes”. (B) Section 1375 (f) (relating to elections as to certain distributions) is amended by striking out paragraph (3). (152) Amendment of section 1378.— Section 1378(b) (relating 26 USC 1378. to the taxation of capital gain in the case of electing small business corporations) is amended by striking out the last sentence. (153) Amendments of section 1388.— (A) Section 1388(c)(2)(B)(i) (relating to patronage 26 USC 1388. dividends) is amended by striking out “the date of the enactment of the Revenue Act of 1962” and inserting in lieu thereof “October 16, 1962”. (B) Section 1388(h)(2)(B)(i) (relating to perunit retain certificates) is amended by striking out “the date of the enactment of Ibis subsection” and inserting in lieu thereof “November 13, 1966”. (154) Amendments of section 1401.— (A) Section 1401(a) (relating to rate of tax on self-employment 26 USC 1401. income) is amended to read as follows: “(a) Old-Age, Survivors, and Disability Insurance.— In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax equal to 7.0 percent of the amount of the self-employment income for such taxable year.” (B) Section 1401(b) (relating to rate of tax on self-employment income for hospital insurance) is amended by striking out paragraphs (1) and (2) and by redesignating paragraphs (3), (4), (5), and (6), as paragraphs (1), (2), (3) and (4), respectively. (155) Amendments of section 1402.— (A) Paragraph (1) of section 1402(b) (relating to definition 26 USC 1402. of self-employment income) is amended to read as follows: “(1) that part of the net earnings from self-employment which is in excess of (i) an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) 42 USC 430. which is effective for the calendar year in which such taxable year begins, minus (ii) the amount of the wages paid to such individual during such taxable years; or”. (B) Section 1402 amended by striking out subsection (g) 26 USC 1402. (relating to treatment of self-employment income for years prior to 1962). and by redesignating subsections (h) and (i) as subsections (g) and (h). respectively. (C) Section 1402(g)(2) (relating to self-employment income, of members of certain religious faiths), as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(2) Time for filing applications.— For purposes of this subsection, an application must be filed on or before the time prescribed for filing the return (including any extension thereof) for the first, taxable year for which the individual has self-employment income (determined without regard to this subsection or subsection (c)(6)), except that an application filed after such date but on or before the last day of the third calendar month following the calendar month in which the taxpayer is first notified in writing by the Secretary that a timely application for an exemption from the tax imposed by this chapter has not been filed by him shall be deemed to be filed timely.” (156) Repeal of section 1465.— Section 1465 (relating to definition 26 USC 1465. of withholding agent) is repealed. (157) Amendments of section 1481.— (A) Section 1481(a)(1)(A) (relating to mitigation of 26 USC 1481. effect of renegotiation of Government contracts) is amended by striking out “within the meaning of the Federal renegotiation act applicable to such transaction” and inserting in lieu thereof “within the meaning of the Renegotiation Act of 1951, as amended (50 U.S.C. App, 1211 and following)”. (B) Section 1481(a)(1) (relating to renegotiation) is amended by striking out subparagraph (D). (C) Subparagraphs (B) and (C) of section 1481(a)(1) are each amended by striking out “applicable Federal renegotiation act” and inserting in lieu thereof “Renegotiation Act of 1951, as amended”. (158) Amendment of section 1551.— Section 1551(a) (relating to disallowance of surtax exemption) is amended by striking out “determined under subjection (d)” and inserting in lieu thereof “determined under subsection (c)”. (159) Amendment of section 1552.— The first sentence of section 1552(a) (relating to earnings and profits of an affiliated group) is amended by striking out “beginning after December 31, 1953, and ending after the date of enactment of this title,”. (b) Conforming and Clerical Amendments.— (1) Amendments conforming to repeal of sections 35 and 242.— (A) Section 36, as amended by this Act, is amended by striking out “sections 32 and 35” and inserting in lieu thereof “section 32”. (B) Section 41(b)(2) is amended by striking out “section 35 (relating to partially tax-exempt interest)”. (C) Section 46(a)(3) is amended by striking out subparagraph (B), by inserting “and” at the end of subparagraph (A), and by redesignating subparagraph (C) as subparagraph (B). (D) Section 50A(a)(3) is amended by striking out subparagraph (B) and redesignating subparagraphs (C), (D), and (E), as subparagraphs (B), (C), and (D), respectively. (E) (i) The heading of paragraph (1) of section 171(a) is amended to read “(1) Taxable bonds.—”. (ii) The heading of paragraph (2) of section 171(a) is amended to read “(2) Tax-exempt bonds.—”, (iii) Section 171(a) is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3). (iv) Section 171(b)(1)(B)(n) is amended by striking out “subsection (c)(1)(B)” and inserting in lieu thereof “subsection (a)(1)”. (v) So much of section 171(c) as precedes paragraph (2) is amended to read as follows: “(c) Election as to Taxable Bonds.— “(1) Eligibility to elect; bonds with respect to which election permitted.— In the case of bonds the interest on which is not excludable from gross income, this section shall apply only if the taxpayer has so elected.”, (F) (i) Section 551 is amended by striking out subsection (c), and by redesignating subsections (d), (e), (f), and (g), as subsections (c), (d), (e), and (f), respectively. (ii) Section 1016(a)(13) is amended by striking out “section 551(f)” and inserting in lieu thereof “section 551(e)”. (G) Section 584(c)(2) is amended to read as follows: “(2) Dividends received.— The proportionate share of each participant in the amount of dividends received by the common trust fund and to which section 116 applies shall be considered for purposes of such section as having been received by such participant.” (H) (i) Section 642(a) is amended by striking out paragraph 26 USC 642. (1), and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (ii) Section 41(d) is amended by striking out “section 26 USC 41. 642(a)(3)” and inserting in lieu thereof “section 642(a)(2)”. (iii) Section 901(g)(3), as amended by this Act, is 26 USC 901. amended by striking out “section 642(a)(2)” and inserting in lieu thereof “section 642(a)(1)”. (I) (i) Section 702(a) is amended by striking out paragraph 26 USC 702. (7) and by redesignating paragraphs (8) and (9) as paragraphs (7) and (8), respectively. (ii) Section 702(b) is amended by striking out “paragraphs (1) through (8)” and inserting in lieu thereof “paragraphs (1) through (7)”. (iii) Section 1402(a) is amended by striking out “702(a) 26 USC 1402. (9)” each place it appears and inserting in lieu thereof “702 (a)(8)”. (J) (i) Section 804(a) is amended by striking out paragraph 26 USC 804. (3), and by redesignating paragraphs (4) and (5) as paragraphs (3) and (4),respectively. (ii) Section 243(b)(3)(C)(iii), as redesignated by paragraph 26 USC 243. (21)(A) of this subsection, is amended by striking out “sections 804(a)(4)” and inserting in lieu thereof “sections 804(a)(3)”. (iii) Section 804(a)(2) is amended by striking out “paragraph (5)” and inserting in lieu thereof “paragraph (4)”, and by striking out “paragraph (4)” and inserting in lieu thereof “paragraph (3)”. (iv) Section 809(d)(10) is amended by striking out “section 26 USC 809. 804(a)(4)”, and inserting in lieu thereof “section 804(a)(3)”. (v) Section 1561(a)(3) is amended by striking out “sections 26 USC 1561. 804(a)(4)” and inserting in lieu thereof “sections 804 (a)(3)”. (vi) Section 1564(a)(1)(C) is amended by striking out 26 USC 1564. “sections 804(a)(4)” inserting in lieu thereof “sections 804 (a)(3)”. (K) Section 804(a)(2)(A) is amended by striking out clause, (ii). by inserting “and” at the end of clause (i), and by redesignating clause (iii) as clause (ii). (L) (i) Section 809(d)(8)(A) is amended by striking out clause (ii), by inserting “and” at the end of clause (i), and by redesignating clause (iii) as clause (ii). (ii) Section 809(d)(8)(B) is amended by striking out “subparagraph (A)(iii)” and inserting in lieu thereof “subparagraph (A)(ii)”. (M) Sections 804(a)(1),804(a)(2), 809(a)(1),809(b)(1)(A) and 809(b)(2)(A) are each amended by striking out “, partially tax-exempt interest,”. (N) Section 809(e) is amended by striking out paragraph (6), and by redesignating paragraph (7) as paragraph (6). (O) Section 815(b)(2)(A)(iii) is amended by striking out 26 USC 815. “the deduction for partially tax-exempt interest provided 26 USC 242. by section 242 (as modified by section 804(a)(3)),” and by striking out the comma after “809(d)(8)(B))”. (P) Section 822(c)(2) is amended by striking out “partially tax-exempt interest and”. (Q) Section 822(c)(6)(A) is amended by striking out “or to the deduction provided in section 242 for partially tax-exempt interest”. (R) Section 822(c)(7) is amended by striking out “partially tax-exempt interest and to”. (S) Section 822(d)(2) is amended by striking out “, the deduction provided in subsection (c)(1), and the deduction allowed by section 242 (relating to partially tax-exempt interest)” and inserting in lieu thereof “and the deduction provided in subsection (c)(1)”. (T) Section 832(c)(5)(A) is amended by striking out “or to the deductions provided in section 242 for partially tax-exempt interest”. (U) Section 832(c)(12) is amended by striking out “partially tax-exempt interest and to”. (V) Sections 852(b)(1) and 857(b)(1) are each amended by striking out the last sentence. (W) Section 1244(c)(1)(E) is amended by striking out “sections 172,242,243” and inserting in lieu thereof “sections 172, 243”. (X) Section 1402 (a)(2) is amended by striking out “(other than interest described in section 35)”. (Y) Section 1503(b)(3) is amended by striking out subparagraph (C). (Z) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 35. (AA) The table of sections for part VIII of subchapter B of chapter 1 is amended by striking out the item relating to section 242. (2) Amendment conforming to repeal of section 51.— The table of parts for subchapter A of chapter 1 is amended by striking out the item relating to part V. (3) Amendments conforming to auditions of sections 84 and 65.— (A) Paragraphs (1)(C), (5HA), (6)(D), and (12) of section 341(e) are each amended by striking out “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b)” each place it appears and inserting in lieu thereof “ordinary income”. (B) Section 483(f)(3) is amended by striking out “no part of any gain on such” and inserting in lieu thereof “all of the gain, if any, on such” and by striking out “gain from the sale or exchange of a capital asset or property described in section 1231” and inserting in lieu thereof “ordinary income”. (C) Section 707(b)(2) is amended by striking out “as gain from the sale or exchange of property other than a capital asset” and inserting in lieu thereof “as ordinary income”. (D) Paragraphs (1) and (2) of section 735(a) are each amended by striking out “gain or loss from the sale or exchange of property other than a capital asset” and inserting in lieu thereof “as ordinary income or as ordinary loss, as the case may be”. (E) Section 1236 (b) is amended by striking out “loss from 26 USC 1236. the sale or exchange of property which is not a capital asset” and inserting in lieu thereof “ordinary loss”. (F) Sections 1242 and 1243 are each amended by striking 26 USC 1242, 1243. out “a loss from the sale or exchange of property which is not a capital asset” each place it appears and inserting in lieu thereof “an ordinary loss”. (G) Section 1244 is amended by striking out “a loss from 26 USC 1244. the sale or exchange of an asset which is not a capital asset” each place it appears and inserting in lieu thereof “an ordinary loss”. (H) Section 1248(g)(3)(B), as redesignated by this Act, 26 USC 1248. is amended by striking out “gain from the sale of an asset which is not a capital asset” and inserting “ordinary income”. (I) The following provisions are each amended by striking out “gain from the sale or exchange of property which is not a capital asset” each place it appears and inserting in lieu thereof “ordinary income”: sections 341(a). 871(a)(1)(C)(i) and (ii), 881(a)(3)(A) and (B), 996(d)(1) and (2), 1037(b)(1)(A), 1232(a)(2)(A) and (B), 1232(c), 1246(a), and 1385(c)(2)(C). (J) The following provisions are each amended by striking out “gain from the sale of property which is not a capital asset” and inserting in lieu thereof “ordinary income”: sections 306(a)(1)(A),306(a)(1)(B), and 306(f). (K) The following provisions are each amended by striking out “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231” each place it appears and inserting in lieu thereof “ordinary income”: sections 80(c)(1), 163(d)(3) and (5), 613(a), 617 (d)(1). 995(b)(1)(C). 1238, 1245(a)(1), 1249(a), 1250 (f) and (g), 1251 (b)(3)(B), (c)(1), and (c)(2), and 1252(a)(1). (4) Clerical amendments conforming to additions of sections 64 and 65.— (A) The table of sections for part I of subchapter B of chapter 1 is amended by adding at the end thereof the following new items: “Sec. 64. Ordinary income defined. “Sec. 65. Ordinary loss defined.” (B) The heading for part I of subchapter B of chapter 1 is amended by striking out “AND TAXABLE INCOME” and inserting in lieu thereof “TAXABLE INCOME, ETC.” ETC.” (C) The table of parts for subchapter B of chapter 1 is amended by striking out “and taxable income.” in the item relating to part. I and inserting in lieu thereof “taxable income, etc.” (5) Amendment conforming to repeat, of section 70.— The table of sections for part II of subchapter B of chapter 1 is amended by striking out the item relating to section 76. (6) Amendments conforming to amendment of section 103.— (A) Section 6049(b)(2)(A) is amended by striking out 26 USC 6049. “section 103(a)(1) or (3)” and inserting in lieu thereof “section 103(a)”. (B) Section 852(a)(1)(B), as added by this Act, is amended by striking out “section 103(a)(1)” and inserting in lieu thereof “section 103 (a)”. (7) Amendments conforming to amendment of section 143.— (A) (i) Part V of subchapter B of chapter 1 is amended by striking out section 153 (relating to determination of marital status) and by redesignating section 154 as section 153. (ii) The table of sections for part V of subchapter B of chapter 1 is amended by striking out the items relating to sections 153 and 154 and inserting in lieu thereof the following: “Sec. 153. Cross references.”. (B) Section 152(a)(9) is amended by striking out “section 153” and inserting in lieu thereof “section 143”. (C) Section 153, as redesignated by subparagraph (A) of this paragraph, is amended by adding at the end thereof the following new paragraph: “(5) For determination of marital status, see section 143.” (8) Amendments conforming to amendment of section 151.— (A) The following provisions are each amended by striking out “educational institution (as defined in section 151 Q(4))” each place it appears and inserting in lieu thereof educational organization described in section 170(b)(1)(A)(ii)”: sections 117(a)(1)(A), 117(b)(1), 117(b)(2), 152(d), 170(g)(1)(B)(as redesignated by subsection (a)(28) 26 USC 117, 152, 170, 403. (A)(i) of this section!, and 403(b)(1)(A)(ii). (B) Section 103(c)(3)(A), as redesignated by subsection (a)(17) of this section, is amended by striking out “educational institution (within the meaning of section 151(e)(4))” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”, (C) Section 163(b)(1) is amended by striking out “educational institution (as defined in section 151(e)(4)) and which is provided for a student of such institution” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii) and which is provided for a student of such organization”. (D) (i) Subparagraphs (A), (B), and (C) of section 415 (c)(4) are each amended by striking out “educational institution” each place it appears and inserting in lieu thereof “educational organization”. (ii) Subparagraph (D)(ii) of section 415(c)(4) is amended to read as follows: “(ii) For purposes of this paragraph the term ‘educational organization’ means an educational organization described in section 170(b)(1)(A)(ii).” (iii) Section 415(c)(4) is amended by striking out “educational institutions” from the paragraph heading and inserting in lieu thereof “educational organizations”. (E) Section 508(c)(2)(A) is amended to read as follows: “(A) educational organizations described in section 170 (b)(1)(A)(u),and”. (F) Section 512(b)(15)(B), as redesignated by section 1951(b)(8)(A) of this Act, is amended by striking out “edu-cational institution (as defined in section 151(e)(4))” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”. (G) Section 1303(d) is amended by striking out “educational 26 USC 1303. institution (as defined in section 151(e)(4))” each place it appears and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”. (H) Sections 4941(d)(2)(G)(ii) and 4945(g)(1) each 26 USC 4941, 4945. are amended by striking out “educational institution described in section 151(e)(4)” and inserting in lieu thereof “educational organization described in section 170(b)(1)(AHii)”. (9) Amendments conforming to the amendments of section 152.— Section 2(b)(3)(B) is amended by striking out clause (ii), 26 USC 2. by adding “or” at the end of clause (i), and by redesignating clause (ii) as clause (ii). (10) Amendment conforming to the amendment of section 112.— (A) Section 374(e)(2) is amended by striking out “section Ante, p. 296. 172(j)” and inserting in lieu thereof “172(g)”. (B) Section 904(f)(2)(B)(i) and 904(f)(4)(B)(i), as Ante, p. 1624. amended by this Act, are each amended by striking out “section 172(k)(1)” and inserting in lieu thereof “section 172(h)”. (11) Amendments conforming to repeal of section 187.— (A) Section 48(a)(8) (relating to section 38 property) is 26 USC 48. amended by striking out “187,”. (B) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 187. (C) Section 1082(a)(2)(B) (relating to basis for determining gain 26 USC 1082. or loss) is amemled by striking out “187,”. (D) Section 1245(a)(2) (relating to gain from dispositions 26 USC 1245. of certain depreciable property) is amended by striking out “187,” each place it appears. (12) Amendments conforming to the repeal of section 342.— (A) Section 551(f), as redesignated by paragraph (1)(F) 26 USC 551. of this subsection, is amended by striking out paragraph (3). (B) The table of subparts for part II of subchapter C of chapter 1 is amended by striking out the item relating to subpart C and inserting in lieu thereof: “Subpart C. Collapsible corporations,” (C) The table of sections for subpart C of part II of subchapter C of chapter 1 is amended by striking out the item relating to section 342. (D) The heading of subpart C of part II of subchapter C of chapter 1 is amended to read as follows: “Subpart C— Collapsible Corporations”. (13) Amendments conforming to the repeal of section 303.— The table of sections for subpart C of part III of subchapter C of chapter 1 is amended by striking out the item relating to section 363. (14) Amendments conforming to the repeal of section 373.— (A) Section 372(b)(1) is amended by striking out “373 26 USC 372. (b) or”. (B) Section 374(b) is amended to read as follows: “(b) Basis.— “(1) Railroad corporations.— If the property of a railroad corporation, as defined in section 77(m) of the Bankruptcy Act (11 U.S.C. 205 (m)), was acquired after December 31, 1938, in pursuance of an order of the court having jurisdiction of such corporation— “(A) in a receivership proceeding, or “(B) in a proceeding under section 77 of the Bankruptcy Act, and the acquiring corporation is a railroad corporation (as defined in section 77(m) of the Bankruptcy Act) organized or made use of to effectuate a plan of reorganization approved by the court, in such proceeding, the basis shall be the same as it would be in the hands of the railroad corporation whose property was so acquired, increased in the amount of gain recognized under subsection (a)(2) to the transferor on such transfer. “(2) Property acquired by street, suburban, or interurban electric railway corporation.— If the property of any street, suburban, or interurban electric railway corporation engaged as a common carrier in the transportation of persons or property in interstate commerce was acquired after December 31, 1934, in pursuance of an order of the court having jurisdiction of such corporation in a proceeding under section 77 of the Bankruptcy Act (11 U.S.C. 501 and following), and the acquiring corporation is a street, suburban, or interurban electric railway engaged as a common carrier in the transportation of persons or property in interstate commerce, organized or made use of to effectuate a plan of reorganization approved by the court in such proceeding, then, notwithstanding the provisions of section 270 of the Bankruptcy Act (11 U.S.C. (570), the basis shall be the same as it would be in the hands of the corporation whose property was so acquired.” (C) Section 374(c)(8) is amended by striking out “subsection (b)” and inserting in lieu thereof “subsection (b)(1)”. . .. (D) Section 1232(b)(2) is amended by striking out “section 371, 373, or 374” and inserting in lieu thereof “section 371 or 374”. (E) The table of sections for part IV of subchapter C of chapter 1 is amended by striking out the item relating to section 373. (15) Amendment conforming to repeal of sections 391 through 395.— The table of parts for subchapter C of chapter 1 is amended by striking out the item relating to part VII. (16) Amendment conforming to the amendments of section 481.— Section 381 (c) is amended by striking out paragraph (21). (17) Amendment conforming to the amendments of section 545.— Section 381(c)(15) is amended by striking out “subsections (b)(7) and (c)” and inserting in lieu thereof “subsection (c)”. (18) Amendment conforming to the repeal of section 583.— The table of sections for part I of subchapter H of chapter 1 is amended by striking out the item relating to section 583. (19) Amendment conforming to the repeal of section 592.— The table of sections for part II of subchapter H of chapter 1 is amended by striking out the item relating to section 592. (20) Amendments conforming to the repeal of section 601.— (A) Section 535(b) is amended by striking out paragraph 26 USC 535. (8). (B) (i) Section 545(b) is amended by striking out paragraph 26 USC 545. (6), and by redesignating paragraph (8) as paragraph (6). (ii) Section 545(b)(2) is amended by striking out “paragraph (8)” and inserting in lieu thereof “paragraph (6)”. (iii) Section 545(c)(5) is amended by striking out “subsection (b)(8)” and inserting in lieu thereof “subsection (b)(6)”. (C) The table of parts for subchapter H of chapter 1 is amended by striking out the item relating to part III. (21) Amendments conforming to the repeal of section 615.— (A) (i) Section 243(b)(3)(C) is amended— 26 USC 243. (I) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following; “(ii) $400,000 limitation for certain exploration expenditures under section 617(h)(1),”, and (II) by redesignating clauses (iv) and (v) as clauses (iii) and (iv), respectively. (ii) Section 1564(h)(2)(C) is amended by striking out 26 USC 1564. “section 243(b)(3)(C)(v)” and inserting in lieu thereof “243(b)(3)(C)(iv)”. (B) Section 381(c)(10) is amended to read us follows: 26 USC 381. “(10) Treatment of certain mining develops cent and exploration expenses of distributor or transfer or corporation.— The acquiring corporation shall be entitled to deduct, as if it were the distributor or transferor corporation, expenses deferred under section 616 (relating to certain development expenditures) if the distributor or transferor corporation has so elected. For the purpose of applying the limitation provided in section 617(h), if, for any taxable year, the distributor or transferor corporation was allowed a deduction under section 617(a), the acquiring corporation shall be deemed to have been allowed such deduction.” (C) Section 617(h)(1) is amended by striking out “and 26 USC 617. section 615(a) and the amounts which are or have been treated as deferred expenses under section 615(b)” and inserting in lieu thereof “and subsection (a) of section 615 (as in effect before the enactment of the Tax Reform Act of 1976)”. (D) Section 617(h)(3) is amended to read as follows: “(3) Application of paragraph (2)(b).— Paragraph (2) (B) shall apply with respect to nil amounts deducted before the latest such transfer from the individual or corporation to the taxpayer. Paragraph (2)(B) shall apply only if— “(A) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make paragraph (7), (8), (11), (15), (17), (20), or (22) of section 113(a) of the Internal Revenue Code of 1939 apply to such transfer; or “(B) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make section 334(b), 362 (a) and (b), 372(a), 374(b)(1), 1051, or 1082 apply to such transfer.” (E) Section 617 is amended by adding at the end thereof the following new subsection: “(i) Certain Pre-1970 Exploration Expenditures.— If— “(1) the taxpayer receives mineral property in a transaction as a result of which the basis of such property in the hands of the transferee is determined by reference to the basis in the hands of the transferor, “(2) an election made by the transferor under subsection (e) of section 615(e)(as in effect before the enactment of the Tax Reform Act of 1976) applied with respect to expenditures which were made by him and which were properly chargeable to such property, and “(3) the taxpayer has made or makes an election under subsection (a), then in the application of this section with respect to the transferee, the amounts allowed as deductions under such section 615 to the transferor, which (but for the transferor’s election) would be reflected in the adjusted basis of such property in the hands of the transferee, shall be treated as expenditures allowed as deductions under subsection (a) to the transferor.” (F) Section 703 (b) is amended by striking out “under section 615 (relating to pre–1970 exploration expenditures),”. (G) Section 1016 (a) is amended by striking out paragraph (I?)-. (H) The table of sections for part. I of subchapter I of chapter 1 is amended by striking out the item relating to section 615. (22) Amendments conforming to the repeal of section 632.— (A) The table of sections for part III of subchapter I of chapter 1 is amended by striking out the item relating to section 632. (B) Section 5(b) is amended by striking out paragraph (1). (23) Amendment conforming to the repeal of section 771.— The table of parts for’ subchapter K of chapter 1 is amended by striking out the item relating to part IV. (24) Amendment conforming to the amendment of section 802.— Section 815(c)(3)(B) is amended by striking out “(determined without regard to section 802(a)(3))”. (25) Amendment conforming to the amendment of section 812.— Section 844(b)(2) is amended by striking out “section 812(b)(1)(A)(iii)” and inserting in lieu thereof “section 812 (b)(1)(C)”. (26) Amendments conforming to the amendments of section 804.— (A) Paragraphs (5) and (6) of section 861(a) (relating to items treated as income from within United States) are each amended by striking out in the heading “sale” and inserting in lieu thereof “sale or exchange”, and by striking out “sale” in the text and inserting in lieu thereof “sale or exchange”. (B) section 861(e)(1) (relating to income from certain aircraft and vessels) is amended by striking out “sale or other disposition” and inserting in lieu thereof “sale, exchange, or other disposition”. (C) Paragraphs (5) and (6) of section 862(a) (relating to items treated as income from without the United States) 26 USC 863. and paragraphs (2) and (3) of section 863(b) (relating to sources of income) are each amended by striking out “sale” and inserting in lieu thereof “sale or exchange”. (D) Paragraph (2) of section 863(b) (relating to sources 26 USC 863. of income) is amended by striking out “sold” each place it appears and inserting in lieu thereof “sold or exchanged”. (27) Amendments conforming to the repeal of section 972.— (A) Section 970(b)(1) (relating to inclusion of certain 26 USC 970. previously excluded amounts of sub part F income) is amended by striking out “application of section 972” and inserting in lieu thereof “treatment (under section 972 as in effect before the date of the enactment of the Tax Reform Act of 1976) of two or more controlled foreign corporations which are export trade corporations as a single controlled foreign corporation ”. (B) The table of sections for subpart G of part III of subchapter N of chapter 1 is amended by striking out the item relating to section 972. (28) Amendments conforming to the amendment of section 1001.— (A) Subsection (c) of section 331 is amended to read as 26 USC 331. follows: “(c) Cross Reference.— “For general rule for determination of the amount of gain or loss recognized, see section 1001.” (B) (i) Section 1002 (relating to recognition of gain or 26 USC 1002. loss) is repealed. (ii) The table of sections for part I of subchapter 0 of chapter 1 is amended by striking out the item relating to section 1002. (29) Amendments conforming to the repeal of section 1920.— (A) The third sentence of subsection (a) of section 1016 is 26 USC 1016. amended by striking out “under section 1020” and inserting in lieu thereof “under section 1020 (as in effect before the date of the enactment of the Tax Reform Act of 1976)”, Ante, p. 1520; (B) The table of sections for part II of subchapter O of chapter 1 is amended by striking out the item relating to section 1020. (30) Amendments conforming to the repeal of section 1022.— (A) Section 1016(a) is amended— 26 USC 1016. (i) by striking out paragraph (21), and (ii) by redesignating paragraphs (20) and (22) as paragraphs (19) and (20), respectively. (B) The amendment made by subparagraph (A)(i) shall 26 USC 1016 note. apply with respect to stock or securities acquired from a decedent dying after the date of the enactment of this Act. (C) Tho table of sections for part II of subchapter O of chapter 1 is amended by striking out the item relating to section 1022, ~ (31) Amendments conforming to amendments of section 1033.— (A) Section 1250(d)(4)(B) is amended by striking out 26 USC 1250. “1033(a)(3)(A)” and inserting in lieu thereof “1033(a)(2)(A)” (B) Section 1250(d)(4)(C) and (D) are each amended by striking out “1033(a)(3)” and inserting in lieu thereof “1033(a)(2)”. (C) Section 6212(c)(2)(B) is amended by striking out “1033(a)(3)(C) and (D)” and inserting in lieu thereof “1033 (aj (2)(C) and (D)”. (D) Section 6504(4) is amended by Striking out “1033(a)(3)(C) and (D)” and inserting in lieu thereof “1033(a)(2)(C) and (D)”. (E) Sections 1071(b) and 1250(d)(4)(D) are each amended by striking out “1033(c)” and inserting in lieu thereof “1033(b)”. (32) Amendments conforming to the repeal of section 1111.— (A) Section 301 is amended by striking out subsection (f), and by redesignating subsection (g) as subsection (e). (B) (i) Section 312 is amended by striking out subsection (k), and by redesignating subsections (1) and (m) as subsections (j) and (k), respectively, (ii) Section 1246(g) is amended by striking out “312(1)” and inserting in lieu thereof “312 (j)”. (iii) Sections 964(a) and 1248(c)(1) are each amended by striking out “312 (m)(3)” and inserting in lieu thereof “312 (k)” (iv) Subsection (d) of section 1377, as added by this Act, is amended by striking out “312(m)” and inserting in lieu thereof “312(k)”. (C) Section 535(b) is amended by striking out paragraphs (9) and (10). (D) Section 543(a)(1) is amended by inserting “and” at the end of subparagraph (A), and by striking out subparagraphs (B) and (C) and inserting in lieu thereof the following: “(B) interest on amounts set aside in a reserve fund under section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C. 1161 or 1177).” (E) Section 545(b) is amended by striking out paragraphs (10) and (11). (F) Section 553(a)(1) is amended to read as follows: “(1) Dividends, etc.— Dividends, interest, royalties, and annuities.” (G) Section 556(b) is amended by striking out paragraphs (7) and (8). (H) Section 561(b) is amended to read as follows: “(b) Special Rules Applicable.— In determining the deduction for dividends paid, the rules provided in section 562 (relating to rules applicable in determining dividends eligible for dividends paid deduction) and section 563 (relating to dividends paid after the close of the taxable year) shall be applicable.” (I) The table of parts for subchapter O of chapter 1 is amended by striking out the item relating to part IX. (33) Amendments conforming to amendment of section 1222.— (A) Section 57(a)(9)(A) is amended by striking out “the amount by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “the net capital gain”. (B) So much of the first sentence of section 57(a)(9)(B) as precedes “by a fraction” is amended to read as follows: “In the case of a corporation having a net capital gain for the taxable year, an amount equal to the product obtained by multiplying the net capital gain”. (C) Section 527(b)(2) is amended by striking out “net 26 USC 527. section 1201 gain” and inserting in lieu thereof “net capital gain”. (D) Sections 535(b)(6) and 545(b)(5) are each amended— 26 USC 535, 545. (1) by striking out from the paragraph heading “Long-term” and inserting in lieu thereof “Net”, (2) by striking out from the text “the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year” each place it appears and inserting in lieu thereof’ “the net capital gain for the taxable year”, and (3) by striking out from the text “such excess” each place it appears and inserting in lieu thereof “such net capital gain”. (E) Section 802(a)(2) is amended— 26 USC 802. (i) by striking out “the net long-term capital gain of any life insurance company exceeds the net short-term capital loss” and inserting in lieu thereof “any life insurance company has a net capital gain”, and (ii) by striking out “such excess” each place it appears and inserting in lieu thereof “such net capital gain”. (F) Section 804(a)(2) is amended by 26 USC 804. striking out “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (G) Sections 809(b)(1)(B) and 809(b)(2)(B) are each 26 USC 809. amended by striking out “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (H) Section 815(b)(2)(A)(ii) is amended by striking out 26 USC 815. “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (I) Section 852(b)(2)(A) is amended by striking out 26 USC 852. “the excess, if any, of the net long-term capital gain over the net short-term capital loss” and inserting in lieu thereof “the amount of the net capital gain, if any”. (J) (i) Section 852(b)(3)(A) is amended to read as follows: “(A) Imposition of tax.— There is hereby imposed for each taxable year in the case of every regulated investment company a tax, determined as provided in section 1201 (a), on the excess, if any, of the net capital gain over the deduction for dividends paid (as defined in section 561) determined with reference to capital gain dividends only.” (ii) The second sentence of section 852(b)(3)(C) is amended by striking out “excess of the net long-term capital gain over the net short-term capital loss” each place it appears and inserting in lien thereof “net capital gain”. (K) The second sentence of section 857(b)(3)(C) is 26 USC 857. amended by striking out “excess of the net long-term capital gain over the net short-term capital loss” each place it appears and inserting in lieu thereof “net capital gain”. (L) Section 1201(b) is amended by striking out “net section 26 USC 1201. 1201 gain” each place it appears and inserting in lieu thereof “net capital gain”. (M) The first sentence of section 1202 is amended to read as follows: “If for any taxable year, a taxpayer other than a corporation has a net capital gain, 50 percent of the amount of the net capital gain shall be a deduction from gross income.” (N) Sections 381(e)(3)(B), 381(c)(3)(C), 852(d), 4940 (c)(1), and 4940(c)(4) are each amended by striking out “net capital gain” and inserting in lieu thereof “capital gain net income”. (O) Section 1212(a)(1) is amended by striking out “net capital gain” each place it appears and inserting in lieu thereof “capital gain net income”, and by striking out “net capital gains” and inserting in lieu thereof “capital gain net income”. (P) Section 1247(a)(1)(B) is amended by striking out “the excess (determined as if such corporation were a domestic corporation) of the net long-term capital gain over the net short-term capital loss” and inserting in lieu thereof “the amount (determined as if such corporation were a domestic corporation) of the net capital gain”. (Q) (i) Section 1375(a)(1) is amended by striking out “the excess of the corporation’s net long-term capital gain over its short-term capital loss” and inserting in lieu thereof “the corporation’s net capital gain”. (ii) The second sentence of section 1375(a)(1) is amended by striking out “such excess” and inserting in lieu thereof “such net capital gain”. (iii) Section 1375(a)(3) is amended by striking out “the excess of an electing small business corporation’s net long-term capita] gain over its net short-term capital loss” and inserting in lieu thereof “an electing small business corporation’s net capital gain”. (R) The following provisions are each amended by striking out “the excess of the net long-term capital gain over the net short-term capital loss,” and inserting in lieu thereof “the net capital gain”: Sections 1247(a)(2)(A)(i), 1247(a)(2) 26 USC 1247, 1378. (C), 1247(d)(1) and (2). 1378(a)(1), 1378(b)(1), and 1378 (c)(8). (34) Amendment conforming to the repeal of section 1240.— The table of sections of part IV of subchapter P of chapter 1 is amended by striking out the item relating to section 1240. (35) Amendment conforming to the repeal of section 1315.— The table of sections for part II of subchapter Q of chapter 1 is amended by striking out the item relating to section 1315. (36) Amendments conforming to the repeal of section 1321.— (A) Section 472 is amended by striking out subsection (f). (B) Section 6422, as amended by this Act, is amended by striking out paragraph (2), and by redesignating paragraphs (3) through (13) as paragraphs (2) through (12), respectively. (C) Section 6504 is amended by striking out paragraph (1). (D) Section 6515 is amended by striking out paragraph (1). (E) The table of parts for subchapter Q of chapter 1 is amended by striking out the item relating to part III. (37) Amendments conforming to the repeal of sections 1331 through 1337.— (A) The third sentence of section 901(a) is amended by 26 USC 901. striking out “under section 1333 (relating to war loss recoveries) or”. _ . (B) Section 936(a)(2), as added by this Act, is 26 USC 936. amended— (i) by inserting “or” at the end of subparagraph (C), and (ii) by striking out subparagraph (D). (C) Section 6212(c),(2) is amended by striking out subparagraph 26 USC 6212. (D). (D) Section 6515 is amended by striking out paragraph 26 USC 6515. (6). (E) Section 6515, as amended by this Act, is amended by striking out paragraph (2), and by redesignating paragraphs (3), (4), (5), (6), (7), and (8) as paragraphs (1), (2), (3), (4). (5),and (6) respectively. (F) The table of parts tor subchapter Q of chapter 1 is amended by striking out the item relating to part IV. (38) Amendment conforming to the repeal of section 1342.— The table of sections for part V of subchapter Q of chapter 1 is amended by striking out the item relating to section 1342. (39) Amendments conforming to the repeal of section 1340.— (A) The table of sections for part VI of subchapter Q of chapter 1 is amended by striking out the item relating to section 1346. (B) Section 6504 is amended by striking out paragraph Post, p. 1829. (7). (40) Amendment conforming to amendment of section 1372.— Section 58(d)(2) is amended by striking out “, notwithstanding 26 USC 58. the provisions of section 1371(b)(1),” (41) Amendment conforming to the repeal of section 1465.— The table of sections for subchapter C of chapter 3 is amended by striking out the item relating to section 1465. (c) Amendments to Provisions Referring to Territories.— (1) Section 37(f) is amended by striking out “a Territory,”. Ante, p. 1559. 26 USC 105, 273, 454. 26 USC 117. (2) Sections 105(e)(2), 273, and 454(b)(2) are each amended by striking out a Territory.”. (3) Section 117(b)(2)(A)(iv) is amended by striking out “a territory,”. (4) Section 162(a) is amended by striking out “territory”. 26 USC 162. 26 USC 581. (5) Section 581 is amended by striking out “, of any State, or of any Territory” and inserting m lieu thereof “or of any State”, and by striking out “, Territorial,”. (6) Section 801(b)(3) is amended by striking out “or 26 USC 801. Territorial”. (7) Section 861(a)(1) is amended by striking out “, any Territory, 26 USC 861. any political subdivision of a Territory.”. (8) Paragraphs (6) and (7) of section 1014(b) are each 26 USC 1014. amended by striking out “Territory.”. (9) Section 1221 (5) is amended by striking out “or Territory,”. 26 USC 1221. 26 USC 2 note. (d) Effective Date.— Except as otherwise expressly provided in this section, the amendments made by this section shall apply with respect to taxable years beginning after December 31, 1976. The amendments made by subsections (a)(29) and (b)(10) shall apply with respect to taxable years ending after the date of the enactment of this Act. SEC. 1902. AMENDMENTS OF SUBTITLE B; ESTATE AND GIFT TAXES. (a) In General.— (1) Amendments of section 2012.— (A) Section 2012(b) (relating to credit for gift tax) is amended— (i) by Striking out “(b) in applying,” and inserting in lieu thereof “(b) Valuation Reductions.—In applying,”, and (ii) by striking out in paragraphs (2) and (3) “ deduction)—then” and inserting in lieu thereof “deduction), then”. (B) Section 2012(c) (relating to gift by spouse or third party) is amended by striking out “(c) Where the decedent” and inserting in lieu thereof “(c) Where Gift Considered Made One-Half by Spouse.—Where the decedent”. (C) Section 2012(d)(1) (relating to computation of amount of gift tax) is amended by striking out “(d)(1) For purposes of” and inserting in lieu thereof the following: “(d) Computation of Amount of Gift Tax Paid.— “(1) Amount of tax.— For purposes of”. (D) Section 2012(d)(2) (relating to credit for gift tax) is amended by striking out “(2) For purposes” and inserting in lieu thereof: “(2) Amount of gift.—For purposes”., (2) Amendments of section 2013.— Section 2013(d)(3) is amended by striking out “, or the corresponding provision of prior law,”. (3) Amendment of section 2038.— Section 2038 (relating to revocable transfers) is amended by striking out subsection (c) (relating to effect of disability in certain cases). (4) Amendments of section 2055.— (A) Section 2055(b) (relating to powers of appointment) is amended to read as follows: “(b) Powers of Appointment.— Property includible in the decedent’s gross estate under section 2041 (relating to powers of appointment) received by a donee described in this section shall, for purposes of this section, be considered a bequest of such decedent.” (B) Section 2055(f) (relating to cross references) is amended to read as follows: (f) Cross References.— “(1) For option as to time for valuation for purpose of deduction under this section, see section 2032. “(2) For exemption of gifts and bequests to or for the benefit of Library of Congress, see section 5 of the Act of March 3, 1925, as amended (2 U.S.C. 161). “(3) For treatment of gifts and bequests for the benefit of the Office of Naval Records and History as gifts or bequests to or for the use of the United States, see section 7222 of title 10, United States Code. “(4) For treatment of gifts and bequests to or for the benefit of National Park Foundation as gifts or bequests to or for the use of the United States, see section 8 of the Act of December 18, 1967 (16 U.S.C. 191). “(5) For treatment of gifts, devises, or bequests accepted by the Secretary of State under the Foreign Service Act of 1946 as gifts, devices, or bequests to or for the use of the United States, see section 1021(e) of that Act (22 U.S.C. 869(e)) . “(6) For treatment of gifts or bequests of money accepted by the Attorney General for credit to ‘Commissary Funds, Federal Prisons/ as gifts or bequests to or for the use of the United States, see section 2 of the Act of May 15, 1952, as amended by the Act of July 9, 1952 (31 U.S.C. 725s–4). “(7) For payment of tax on gifts and bequests of United States obligations to the United States, see section 24 of the Second Liberty Bond Act (31 U.S.C. 757e), “(8) For treatment of gifts and bequests for benefit of the Naval Academy as gifts or bequests to or for the use of the United States, see section 6973 of title 10, United States Code. _ “(9) For treatment of gifts and bequests for benefit of the Naval Academy Museum as gifts or bequests to or for the use of the United States, see section 6974 of title 10, United States Code. “(10) For exemption of gifts and bequests received by National Archives Trust Fund Board, see section 2308 of title 44, United States Code.” (5) Amendments of section 2100.— (A) Section 2106(a)(2)(F) (relating to cross references 26 USC 2106. concerning the charitable deduction for estate tax purposes) is amended to read as follows: “(F) Cross References.— “(1) For option as to time for valuation for purposes of deduction under this section, see section 2032. “(2) For exemption of certain bequests for the benefit of the United States and for rules of construction for certain bequests, see section 2C55(O.” (B) Section 2106 (relating to taxable estate of nonresidents) is amended by striking out subsection (c) (relating to treatment of United States bonds). (6) Amendment of sections 2107 and 2108.— Section 2107(a) (relating 26 USC 2107, 2108. to estate tax on expatriates) and section 2108(a) (relating to application of pre–1967 estate tax provisions) are each amended by striking out “the date, of enactment of this section” and inserting in lieu thereof “November 13, 1966”. (7) Amendment relating to section 2201.— (A) Section 6(b)(1) of the Act of January 2, 1975 (Public Law 93–597; 88 Stat. 1950) is amended by striking out 26 USC 2201. “Section 2210” and inserting in lieu thereof “Section 2201”. (B) The amendment made by subsection (A) is effective 26 USC 2201 note. 26 USC 2202. July 1, 1973. (8) Repeal of section 2202.— Section 2202 (relating to missionaries in foreign service) is repealed. (9) Amendment of section 2204.— The last sentence of section 2204(b) (relating to the discharge from personal liability of a fiduciary other than the executor) is amended by striking out “has not been” and inserting in lieu thereof 26 USC 2204. “has been”. (10) Amendment of section 2501.— Section 2501(a)(1) (relating 26 USC 2501. to imposition of gift tax) is amended to read as follows: “(1) General rule.— A tax, computed as provided in section 2502, is hereby imposed for each calendar quarter on the transfer of property by gift during such calendar quarter by any individual, resident or nonresident.” (11) Amendment of section 2522.— Subsection (d) of section 26 USC 2522. 2522 (relating to cross references) is amended to read as follows: “(d) Cross Reference.— “For exemption of certain gifts to or for the benefit of the United States and for rules of construction with respect to certain gifts, see section 2055(f).” (12) Amendments to sections referring to territories.— (A) The following provisions are each amended by striking out “Territory,”: sections 2055(a)(1), 2056(c)(2)(B), 26 USC 2055, 2056, 2106. and 2106(a)(2)(A)(i). (B) The following provisions are each amended by striking out “or Territory”: sections 2011(a), 2011(e), and 2053 (C) Section 2016 is amended by striking out “Territory or”. (D) Sections 2522(a)(1) and 2522(b)(1) are. each amended by striking out “Territory,”. (E) Section 2523(f)(1) is amended by striking out “Territory, or”. (b) Conforming and Clerical Amendments.— (1) Amendment conforming to repeal of section 2202.— The table of sections for subchapter C of chapter 11 is amended by striking out the item relating to section 2202. (2) Amendments conforming to amendment of section 2055.— (A) Section 6503, as amended by this Act, is amended by striking out subsection (e), and by redesignating subsections (f), (g) (h), and (i) as subsections (e), (f), (g), and (h), respectively. (B) Section 6167(h)(2) is amended by striking out “section 6503(f)” and inserting in lieu thereof “section 6503(e)”. (c) Effective Dates.— (1) Estate tax amendments.— The amendments made by paragraphs (1) through (10), and paragraphs (14)(A), (B),and (C), of subsection (a), and by subsection (b) shall apply in the case of estates of decedents dying after the date of the enactment of this Act, and the amendment made by paragraph (11) of subsection (a) shall apply in the case of estates of decedents dying after December 31, 1970. (2) Gift tax amendments.— The amendments made by paragraphs (12), (13), and (14)(D) and (E) of subsection (a) shall apply with respect to gifts made after December 31, 1976. SEC. 1903. AMENDMENTS OF SUBTITLE C; EMPLOYMENT TAXES. (a) In General.— (1) Amendments of sections 3101 and 3111.— (A) Section 3101(a) (relating to rate of tax on employees for old-age, survivors, and disability insurance) and section 26 USC 3111. 3111(a) (relating to rate of tax on employers for such insurance) are each amended by striking out paragraphs (1), (2), (3), and (4), and by redesignating paragraphs (5) and (6) as paragraphs (1) and (2), respectively. (B) Section 3101(b) (relating to rate of tax on employees for hospital insurance) and section 3111(b) (relating to rate of tax on employers for such insurance) are each amended by striking out paragraphs (1) and (2), and by redesignating paragraphs (3), (4), (5), and (6) as paragraphs (1), (2), (3), and (4), respectively. (2) Repeal of section 3113.— Section 3113 (relating to application of social security tax on District of Columbia credit unions) is repealed. (3) Amendments of section 3121.— (A) Section 3121(b) (relating to employment) is amended— (i) by striking out “performed after 1936 and prior to 1955 which was employment for purposes of subchapter A of chapter 9 of the Internal Revenue Code of 1939 under the law applicable to the period in which such service was performed, and any service, of whatever nature, performed after 1954” and inserting in lieu thereof “, of whatever nature, performed”, and (ii) by striking out “, in the case of service performed after 1954,”. (B) Section 3121(b)(1) is amended by striking out “65 26 USC 3121. Stat. 119;”. (C) Section 3121(b)(6)(B)(v) is amended by striking out “Secretary of the Treasury” and inserting in lieu thereof “Secretary of Transportation”. (D) Section 3121(g)(3) (relating to agricultural labor) is amended by striking out “46 Stat. 1550, § 3;”. (E) Section 3121(k)(1) (relating to exemption of certain organizations) is amended by striking out subparagraphs (F) and (H) and by redesignating subparagraph (G) as subparagraph (F). (F) Section 3121 (1)(2) (relating to employees of foreign subsidiaries) is amended by striking out “, but in no case prior to January 1, 1955”. (G) Section 3121 (m)(1) (relating to service in the uniformed services) is amended by striking out “after December 1956”. (4) Amendments of section 3122.— The last sentence of section 3122 (relating to Federal service) is amended by striking out 26 USC 3122. “Secretary” each place it appears and inserting in lieu thereof “Secretary of Transportation”. (5) Amendment of section 3123.— Section 3125(c) (relating 26 USC 3125. to returns in the case of Governmental employees in the District of Columbia) is amended by striking out “Commissioners of the District of Columbia or such agents as they may designate” and by inserting in lieu thereof “Mayor of the District of Columbia of such agents as he may designate”. (6) Amendment of section 3201.— Section 3201 (relating to 26 USC 3201. rate of tax on railroad employees) is amended— (A) by striking out “oi the Internal Revenue Code of 1954” each place it appears; (B) by striking out “of such Code”; (C) by striking out “after September 30, 1973, as is” and inserting in lieu thereof “as is”; and (D) by striking out “any month after September 30, 1973” and inserting in lieu thereof “any month”. (7) Amendments of section 3202.— (A) The second sentence of section 3202(a) (relating to 26 USC 3202. reduction of tax by railroad employer) is amended— (i) by striking out “after September 30, 1973,” each place it appears; (ii) by striking out “after September 30, 1973 and the aggregate” and inserting in lieu thereof “and the aggregate” (iii) by striking out “of the Internal Revenue Code of 1954” each place it appears; and (iv) by inserting a comma immediately after “for any month” each place it appears. (B) Section 3202(b) (relating to indemnification of employer) is amended by striking out “made”. (8) Amendments of section 3211.— Section 3211(a) (relating 26 USC 3211. to rate of tax on railroad employee representatives) is amended— (A) by striking out “3111(a), 3111(b)” and inserting in lieu thereof “3111(a), and 3111(b)”; (B) by striking out “of the Internal Revenue Code of 1954” each place it appears; (C) by striking out “rendered by him after September 30, 1973,” and inserting in lieu thereof “rendered by him”; and (D) by striking out “after September 30, 1973”. (9) Amendments of section 3221.— (A) The first sentence of section 3221(a) (relating to rate of tax on railroad employers) is amended— (i) by striking out “after September 30, 1973,” each place it appears; (ii) by striking out “after September 30, 1973: except that” and inserting in lieu thereof “, except that”; (iii) by striking out “after September 30, 1973 of the aggregate” and inserting in lieu thereof “of the aggregate”; (iv) by striking out “of the Internal Revenue Code of 1954” each place it appears; and (v) by inserting a comma before “the tax imposed”. (B) Section 3221(b) (relating to rate of tax on railroad employers) is amended to read as follows: “(b) The rate of tax imposed by subsection (a) shall be increased by the rate of tax imposed with respect to wages by section 3111(a) plus the rate imposed by section 3111(b).” (C) Section 3221(c) (relating to additional railroad retirement tax) is amended— (i) by striking out “(1) at the rate of 2 cents for the period beginning November 1, 1966, and ending March 31, 1970, and (2) commencing April 1, 1970,” and (ii) by striking out “commencing with the quarter beginning April 1, 1970”. (10) Amendments of section 3231.— (A) Section 3231(a)(defining employer) is amended by striking out “44 Stat. 577;”. (B) Section 3231(b)(defining employee) is amended by striking out. “50 Stat. 312;”. (C) Section 3231(e)(defining employee representative) is amended by striking out “44 Stat. 577;”. (D) Section 3231(d)(7)(defining service) is amended by striking out “50 Stat, 308;”. (11) Amendments of section 3301.— Section 3301 (relating to Federal unemployment tax rate) is amended— (A) by striking out “the calendar year 1970 and each calendar year thereafter” and inserting in lieu thereof “each calendar year”, and (B) by striking out the last sentence. (12) Amendments of section 3302.— (A) Section 3302(a) (relating to credits against tax) is amended by striking out “(10month period in the case of October 31, 1972)”. (B) Section 3302(b) (relating to additional credit) is amended— (i) by striking out “(10month period in the case of October 31, 1972)”, and (ii) by striking out “12 or 10month period, as the case may be,” and inserting in lieu thereof “12month period”. (C) (i) Section 3302(c) (relating to limitation on credits 26 USC 3302. against unemployment tax) is amended by striking out paragraph (2) and the unnumbered paragraph immediately following such paragraph (2) (relating to advances made to a State unemployment account before September 13, 1960), and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3),respectively. (ii) Section 3302(c)(2) (relating to advances made to a State unemployment account after September 12, 1960), as redesignated by clause (i) of this subparagraph, is amended by striking out “on or after the date of the enactment of the Employment Security Act of 1960”, and by striking out “paragraphs (1) and (2)” and inserting in lieu thereof “paragraph (1)”. (iii) Section 3302(c)(3) (relating to reductions with respect to certain agreements under the Trade Act of 1974),as redesignated by clause (i) of this subparagraph, is amended by striking out “paragraphs (1), (2), and (3)” and inserting in lieu thereof “paragraphs (1) and (2)”. (iv) Section 3302 (d)(3) (relating to effect of repayment of advances) is amended by striking out “or (3)”. (v) Section 3302(d)(4), (5), and (6) (relating to special rules) are each amended by striking out “subsection (c)(3)” each place it appears and inserting in lieu thereof “subsection (c)(2)”. (vi) Section 3302(d)(7) (relating to determination and certification of percentages) is amended by striking out “subsection (c)(3)(B) or (C)” and inserting in lieu thereof “subsection (c)(2)(B) or (C)”. (D) Section 3302(d) (relating to special rules for credits against the unemployment tax) is amended by striking out paragraph (8)(a cross reference). (13) Amendments to section 3303.— Section 3303 (b) (relating 26 USC 3303. to certification with respect to additional credit allowance) is amended— (A) by striking out “(10month period in the case of October 31, 1972) ” each place it appears, (B) by striking out “12 or 10month period, as the case may be,” each place it appears in paragraphs (1) and (2), and inserting in lieu thereof “12month period”, and (C) by striking out “12 or 10month period, as the case may be,” in paragraph (3) and inserting in lieu thereof “12month period,”. (14) Amendments to section 3304.— (A) Section 3304(a)(3) (relating to requirements) is 26 USC 3304. amended by striking out “49 Stat, 640; 52 Stat. 1104, 1105;”. (B) Section 3304(c) (relating to certification) is amended by striking out “(10month period in the case of October 31, 1972)”. (15) Amendments of section 3305.— (A) Section 3305(g) (relating to vessels operated by 26 USC 3305. general agents of the United States) is amended by striking out “on or after July 1, 1953,”. (B) Section 3305 (h) (relating to certain contributions to States) is amended by striking out “on or after July 1, 1953, and”. (C) Section 3305(j) (relating to denial of credits in certain cases) is amended by striking out “after December 31, 1971,”. (16) Amendments of section 3300.— (A) Section 3306(c)(9) (relating to the exclusion of service performed by certain employees and employee representatives from the definition of employment) is amended by striking out “52 Stat. 1094, 1095;”. (B) Section 3306(c)(18) (relating to the exclusion of certain service performed by nonresident aliens from the definition of employment) is amended by inserting after the “Immigration and Nationality Act, as amended” the following: “(8U.S.C. 1101(a)(15)(F) or (J))”. (C) Section 3306(f) (relating to the definition of an unemployment fund) is amended by striking out “49 Stat. 640; 52 Stat. 1104, 1105;”. . (D) Section 3306(n) (relating to vessels operated by general agents of the United States) is amended by striking out “on or after July 1, 1953,”. (17) Amendment of section 3402.— Section 3402(1)(3)(B) (relating to marital status) is amended by striking out “section 2(b)” and inserting in lieu thereof “section 2 (a)”. (b) Amendment Conforming to the Repeal of Section 3113.— The table of sections for subchapter B of chapter 21 is amended by striking out the item relating to section 3113. (c) Amendments to Profusions Referring to Territories.— Sections 3401(c) and 3404 are each amended by striking out “Territory,” each place it appears. (d) Effective Dates.— The amendments made by this section shall apply with respect to wages paid after December 31, 1976, except that the amendments made to chapter 22 of the Internal Revenue Code of 26 USC 3201. 1954 shall apply with respect to compensation paid for services rendered after December 31, 1976. SEC. 1904. AMENDMENTS OF SUBTITLE D; MISCELLANEOUS EXCISE TAXES. (a) In General.— (1) Amendments of chapter 31.— (A) So much of chapter 31 (relating to retailers excise taxes) as precedes section 4041 is amended to read as follows: “Sec. 4041. Imposition of tax.” (B) Section 4041(g) (relating to exemptions from fuel taxes) is amended to read as follows: “(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’ “Nonprofit educational organization.” means an educational organization described in section 170(h)(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.” (C) Section 4041 (relating to tax on fuels) is amended by 26 USC 4041. adding at the end thereof the following new subsection: “(i) 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.” (D) Chapter 31 is amended by striking out section 4042 (a cross reference) and subchapter F (special provisions 26 USC 4042, 4054–4058. applicable to retailers taxes). (2) Amendments of section 421a.— (A) Section 4216 (relating to definition of price) is 26 USC 4216. amended by redesignating subsections (e), (f), and (g) as subsections (d), (e).and (f), respectively. (B) Paragraphs (3), (4). and (5) of section 4216(b) (relating to constructive sales price) are each amended by striking out “subsections (a) and (f)” each place it appears and inserting in lieu thereof “subsections (a) and (e)”. (3) Amendment of section 4217.— Section 4217(d) (relating 26 USC 4217. to lease treated as sale) is amended by striking out paragraph (4) (relating to certain 1958 transitional rules). (4) Repeal of section 4223.— Section 4223 (relating to floor-stock 26 USC 4226. taxes imposed before 1967) is repealed. (5) Amendment of section 4227.— Section 4227 (relating to 26 USC 4227. cross references) is amended to read as follows: “SEC. 4227. CROSS REFERENCE. “For credit for taxes on tires and inner tubes, see section 6416(c).” (6) Amendment of section 4263.— Section 4253 (relating to 26 USC 4253. exemptions from the tax on communications services) is amended by adding at the end thereof the following new subsections: “(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) Exemption foe 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 “Nonprofit educational organization.” 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.” (7) Amendments of section 4201.— (A) Subsections (a) and (b) of section 4261 (relating to tax on transportation of persons by air) are each amended by striking out “which begins after June 30, 1970,”. (B) Section 4261(c) is amended by striking out “and begins after June 30, 1970”. (8) Amendment of section 4271.— Section 4271 (a) (relating to tax on transportation of property by air) is amended by striking out “which begins after June 30, 1970,”. (9) Repeal of section 4292.— Section 4292 (relating to State and local governmental exemption from the tax on communications services) is repealed. (10) Repeal of section 4284.— Section 4294 (relating to exemption of nonprofit educational organizations from the tax on communications services) is repealed. (11) Repeal of section 4295.— Section 4295 (across reference) is repealed. (12) Amendment of of after 34.— Chapter 34 (relating to documentary stamp taxes) is amended to read as follows: “CHAPTER 34— POLICIES ISSUED BY FOREIGN INSURERS “Sec. 4371. Imposition of tax. “Sec. 4372. Definitions. “Sec. 4373. Exemptions. “Sec. 4374. Liability for tax. “SEC. 4371. IMPOSITION OF TAX. “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, unless the insurer is subject to tax under section 819; 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). “SEC. 4372. DEFINITIONS. “(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 Ante, p. 1812. (other than li fe) 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, losses, or liabilities within the United States. “(e) Policy of Life, Sickness, or Accident Insurance, or Annuity Contract.— For purposes 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 purposes of section 4371(3), the term ‘policy of reinsurance’ means any policy or other instrument by whatever name called whereby a contract or 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. “SEC. 4373. EXEMPTIONS. “The tax imposed by section 4371 shall not apply to— “(1) Domestic agent.— Any policy, indemnity bond, or annuity contract signed or countersigned by an officer or agent of the insurer in a State, or in the District of Columbia, within which such insurer is authorized to do business; or “(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. “SEC. 4374. LIABILITY FOR TAX. “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,” (13) Amendment of section 4493.— (A) Section 4493(b)(1) (relating to certain persons engaged in foreign air commerce) is amended by striking out “beginning on or after July 1, 1970”. (B) Section 4493(b)(2) is amended by striking out the last sentence. (14) Amendment of chapter 37.— So much of chapter 37 as precedes section 4501 (relating to tax on sugar) is amended to read as follows: “CHAPTER 37— SUGAR “Sec. 4501. Imposition of tax. “Sec. 4502. Definitions, “Sec. 4503. Exemptions for sugar manufactured for home consumption.” (15) Repeal of sections 4591 through 4597.— Chapter 38 (relating to import taxes on oleomargarine) is repealed. (16) Repeal of sections 4801 through 4806.— Subchapter B of chapter 39 (relating to tax on white phosphorus matches) is repealed. (17) Repeal of sections 4811 through 4826.— Subchapter C of chapter 39 (relating to tax on unadulterated butter) is repealed. (18) Repeal of sections 4881 through 4886.— Subchapter E of chapter 39 (relating to tax on circulation other than of national banks) is repealed. (19) Amendment of section 4901.— Section 4901 (relating to payment of occupational taxes) is amended by striking out subsection (c). (20) Amendment of section 4905.— Section 4905(a) (relating to liability for occupational taxes in case of death or change of location) is amended by striking out “wife” and inserting in lieu thereof “spouse”. (21) Repeal of section 4911 through 4931.— (A) Chapter 41 (relating to interest equalization tax) is repealed. (B) The repeal made by subparagraph (A) shall apply with respect to acquisitions of stock and debt obligations made after June 30, 1974. (22) Amendments of section 4973.— (A) So much of section 4973(a) (relating to tax on excess contributions) as follows “of any individual,” in paragraph (3) thereof is amended to read as follows: “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, annuities, or bonds (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, annuity, or bond (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) Section 4973(c) is amended by striking out “subsection 26 USC 4973. (a)(3)” and inserting in lieu thereof “subsection (a)(2)”. (b) Conforming and Clerical Amendments.— (1) Amendments conforming to amendment of chapter 31.— (A) Section 6416(a)(1) is amended by striking out 26 USC 6416. “(retailers taxes)” and inserting in lieu thereof “(special fuels)”, (B) Section 6416 (e) is amended by striking out “subchapter E of”. (2) Amendment conforming to amendment of section 4216.— Section 6416(b)(1) is amended by striking out “section 4216(f)(2) and (3)” and inserting in lieu thereof “section 4216 (e)(2) and (3)” (3) Amendment conforming to the repeal of section 4226.— The table of sections for subchapter G of chapter 32 is amended by striking out the item relating to section 4226. (4) Amendment conforming to the repeal of sections 4292, 4294, and 4295.— The table of sections for subchaptet E of chapter 33 is amended by striking out the items relating to sections 4292, 4294, and 4295. (5) Amendments conforming to the amendment of chapter 34.— (A) Section 7270 is amended by striking out “the affixing 26 USC 7270. of stamps on insurance policies, etc.” and inserting in lieu thereof “liability for tax on policies issued by foreign insurers”. (B) Section 6808 is amended by striking out paragraph 26 USC 6808. (4). (6) Amendments conforming to the amendment of chapter 37.— (A) Section 7240 is amended by striking out “subchapter 26 USC 7240. A of”. (B) Section 7655(a) is amended— 26 USC 7655. (i) by striking out “Subchapter A of chapter 37” in paragraph (5) and inserting in lieu thereof “Chapter 37”, and (ii) by redesignating paragraph (5) as paragraph (3). (7) Amendments conforming to repeal of sections 4591 through 4597.— (A) Section 6808 is amended by striking out paragraph 26 USC 6808. (7). (B) (i) Section 7234 (relating to violations of laws concerning 26 USC 7234. oleomargarine or adulterated butter operations) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7234. (C) (i) Section 7265 (relating to other offenses concerning 26 USC 7265. oleomargarine or adulterated butter operations) is repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7265. (D) Section 7611(a), as redesignated by this Act, is Ante, p. 1699. amended by striking out paragraph (1). (E) The table of chapters for subtitle D is amended by striking out the item relating to chapter 38, (8) Amendments conforming to repeal of sections 4801 through 4806.— (A) Section 4905(b) is amended to rend as follows: “(b) Registration.— “For registration in case of wagering, see section 1412.” (B) Section 6808 is amended by striking out paragraph (12). (C) Section 7012 is amended by striking out subsection (D) (i) Section 7239 (relating to violations of laws concerning white phosphorus matches) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7239. (E) (i) Sections 7267 and 7274 (relating to offenses and penalties concerning white phosphorus matches) are each repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the items relating to sections 7267 and 7274. (F) Section 7272(b) is amended by striking out “4804” (G) Section 7303 is amended by striking out paragraph (6) (H) (i) Part II of subchapter C of chapter 75 (relating to provisions common to forfeitures) is amended by striking out section 7328 (relating to confiscation of white phosphorus 26 USC 7328, 7329. matches), and by redesignating section 7329 (relating to cross references) as section 7328. (ii) The table of sections for part II of subchapter C of chapter 75 is amended by striking out the last two items and inserting in lieu thereof the following: “Sec. 7328. Cross references.” (9) Amendments conforming to repeat, of sections 4811 through 4826.— (A) Section 6808 (relating to cross references) is amended by striking out paragraph (10). (B) (i) Section 7235 (relating to violations of laws concerning adulterated butter and process or renovated butter) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7235. (C) (i) Section 7264 (relating to offenses concerning renovated or adulterated butter) is repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7264. (D) Section 7303 is amended by striking out paragraphs (3), (4), and (5), and by redesignating paragrapns (7) and (8) as paragraphs (2) and (3), respectively. (E) Section 7611(a), as redesignated by this Act, is amended by striking out paragraph (2) , and by redesignating paragraphs (5) and (6) as paragraphs (1) and (2), respectively. (10) Amendments conforming to the repeal of sections 4911 through 4931.— (A) (i) (I) Section 263, as amended by this Act, is amended 26 USC 263. by striking out subsections (a)(3) and (d) (relating to the allowance of deductions for payment of interest equalization tax), and by redesignating subsections (e), (f), and (g) as subsections (d), (c),and (f), respectively. (II) Section 263(d), as redesignated by clause (i)(I) of this subparagraph, is amended by striking out “subsection (f)” and inserting in lieu thereof “subsection (e)”, (ii) Section 6011 (relating to requirement of return, statement, or 26 USC 6011. list) is amended by striking out subsection (d) (relating to interest equalization tax returns, etc.), and by redesignating subsections (e) and (f) as subsections (c) and (d), respectively. (iii) (I) Section 6076 (relating to time for filing interest 26 USC 6076. equalization tax returns) is repealed. (II) The table of sections for part V of subchapter A of chapter 61 is amended by sticking out the item relating to section 6076. (iv) Section 6611 (relating to interest on overpayments) 26 USC 6611. is amended by striking out subsection (h) (relating to over-payments of interest equalization tax) and by redesignating subsection (i) as subsection (h). (v) Section 6651 (relating to failure to file tax return 26 USC 6651. or to pay tax) is amended by striking out subsection (e) (relating to certain interest equalization tax returns). (vi) (I) Section 6680 (relating to failure to file interest 26 USC 6680. equalization tax returns) is repealed. (II) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6680. (vii) The amendments made by this subparagraph shall 26 USC 263 note. apply with respect to acquisitions of stock or debt obligations made after June 30, 1974, except that the repeal of paragraph (2) of section 6011(d) under clause (ii) shall apply with respect to loans and commitments made after such date. (B) Section 861(a)(1)(G) (relating to income from 26 USC 861. sources within the United States) is amended— (i) by striking out “section 4912(c)” and inserting in lieu thereof “subsection (c) of section 4912 (as in effect before July 1, 1974)”; and (ii) by striking out “section 4912(c)(2)” and inserting in lieu thereof “subsection (c)(2) of such section”. (C) The second sentence of section 1232(b)(2) (relating 26 USC 1232. to the definition of the issue price of bonds and other evidences of indebtedness) is amended by striking out “section 4911” anrl inserting in lieu thereof “section 4911, as in effect before July 1, 1974”. (D) (i) Section 6681 (relating to false equalization tax 26 USC 6681. certificates) is repealed. (ii) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6681. (iii) The amendments made by this subparagraph shall 26 USC 6681 note. apply with respect to actions occurring after June 30, 1974. (E) (i) Section. 6689 (relating to failure by certain foreign 26 USC 6689. issuers and obligors to comply with United States investment equalization tax requirements) is repealed. (ii) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6689. (iii) The amendments made by this subparagraph shall apply with respect to stock or debt obligations issued after June 30, 1974. (F) (i) Section 7241 (relating to penalty for fraudulent equalization tax certificates) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7241. (iii) The amendments made by this subparagraph shall apply with respect to statements and certificates executed after June 30, 1974. (G) The table of chapters for subtitle D is amended by striking out the item relating to chapter 41. (c) Amendment to Provision Referring to Territories.— Section 4482 (c)(1) is amended by striking out “, a Territory of the United States,”. (d) Effective Date.— Except as otherwise provided in this section, the amendments made by this section 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. SEC. 1905. AMENDMENTS OF SUBTITLE E; ALCOHOL, TOBACCO, AND CERTAIN OTHER EXCISE TAXES. (a) In General.— (1) Amendment of section 5005.— Section 5005(c)(2) (relating to transfers in bond of distilled spirits) is amended by striking out the last two sentences and inserting in lieu thereof the following: “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.” (2) Amendments of section 5008.— (A) Section 5008(b)(1) (relating to abatement, remission, refund, and allowance for loss of destruction of distilled spirits) is amended by inserting immediately after “the tax imposed by this chapter” the following: “or by section 7652”. (B) Section 5008(b)(2) is amended by striking out “the taxes imposed under section 5001(a)(1)” and all that follows and inserting in lieu thereof the following: “the taxes imposed under section 5001(a)(1), under subpart B of this part, or under section 7652 on the spirits so destroyed, to the proprietor of the distilled spirits plant who withdrew the distilled spirits on payment or determination of tax.” (C) Subsections (c)(1) and (d)(1) of section 5008 are each amended by inserting immediately after “under section 5001(a)(1)” the following: “or under section 7652”. (D) Section 5008(d)(1) is amended by striking out “, on or after July 1, 1959,”. (3) Amendment of section 5009.— Section 5009(b)(3) is amended by striking out “46 Stat. 694;”. (4) Amendment of section 5025.— Section 5025 (j) (relating to stabilization of distilled spirits) is amended by striking out “the bottling of distilled spirits,” and inserting in lieu thereof “the bottling of distilled spirits, or preparatory to exportation,”. (5) Amendment of section 5054.— Section 5054 (relating to determination and collection of tax on beer) is amended by striking out subsection (c) (relating to stamps or other devices as evidence of payment of tax) and by redesignating subsection (d) as subsection (c). (6) Amendments of section 5061.— (A) Section 5061(a) (relating to collections of alcohol 26 USC 5061. taxes) is amended by striking out the last sentence. (B) Section 5061(b) (relating to methods of collection) is amended to read as follows: “(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, rectified distilled spirits and wines, and beer under— “(1) section 5001(a)(5), (6),or (7), “(2) section 5006(c) or (d), “(3) section 5026(a)(2), “(4) section 5041 (d), “(5) section5043(a)(3), “(6) section5054(a)(3) or (4),or “(7) section5505(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) Section 5061(c) (relating to applicability of other provisions of law) is amended to read as follows: “(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.” (7) Amendment of section 5113.— Section 5113(f)(1) (relating 26 USC 5113. to retail dealers in liquors) is amended by striking out “wines or beer” and inserting in lieu thereof “distilled spirits, wines, or beer”. (8) Amendments of section 5117.— Section 5117 (relating 26 USC 5117. to prohibited purchases by dealers) is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the fol lowing new subsection: “(b) Limited Retail Dealers.— A limited retail dealer may lawfully purchase distilled spirits for resale from a retail dealer in liquors.” (9) Amendment of section 5121.— Section 5121(c) (relating 26 USC 5121. to limited retail dealers) is amended to read as follows: “(c) Limited Retail Dealers.— 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.” (10) Amendment of section 3122.— Section 5122(c) (relating 26 USC 5122. to definition of limited retail dealer) is amended by striking out “beer or wine” each place it appears and inserting in lieu thereof “distilled spirits, wine, or beer”. (11) Amendment of section 5131.— Section 5131(a) (relating 26 USC 5131. to eligibility for drawback) is amended by striking 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,”. (12) Amendment of section 5142.— Section 5142(c) (relating to payment of occupational taxes) is amended to read as follows: “(c) How Paid.— “(1) Payment by return.— The special taxes imposed by this part shall he 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.” (13) Amendments of section 5171.— Section 5171(b) (relating to permits for operation of business as distillers, etc.) is amended— (A) in paragraph (1), by striking out “49 Stat. 978;”, and (B) by striking out paragraph (3) (relating to continuance of business after June 30, 1959, pending application for permit). (14) Amendment of section 5174.— Section 5174(a)(2)(A) (relating to withdrawal bonds for distilled spirits) is amended by striking out “such spirits” and inserting in lieu thereof “distilled spirits from bond”. (15) Amendment of section 5232.— Section 5232(a) (relating to transfer of imported distilled spirits) is amended by striking out “and the importer” and inserting in lieu thereof “and the importer, or the person bringing such distilled spirits into the United States,”. (16) Amendment of section 5233.— Section 5233(b)(4) (relating to bottling requirements) is amended by striking out “49 Stat. 977;”. (17) Amendment of section 5234.— The first sentence of section 5234(a)(2) (relating to the mingling of distilled spirits) is amended by striking out “8 years” and inserting in lieu thereof “20 years”. (18) Amendment of section 5314.— Section 5314(a)(2) (relating to application of certain provisions to Puerto Rico) is amended by striking out “section 5001(a)(4)” and inserting in lieu thereof “section 5001(a)(10)”. _ (19) Repeal of section 5315.— Section 5315 (relating to the status of certain distilled spirits on July 1, 1959) is repealed. (20) Amendments of section 5368.— (A) The heading of section 5368 is amended to read as follows: “SEC. 5368. GAUGING AND MARKING.” (B) Section 5368(b) (relating to removal of wines) is amended to read as follows: “(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.” (21) Amendment of section 5392.— Section 5392(f)(defining own production) is amended by striking out “49 Stat. 990;”. (22) Amendments of section 5601.— Section 5601(b) (relating to presumptions in the case of criminal penalties) is amended to read as follows: “(b) Presumption.— 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 rectifier 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).” (23) Amendments of section 5685.— (A) Section 5685(a) (relating to penalty for possession 26 USC 5685. of devices for emitting gas, smoke, etc.) is amended by striking out “section 5848” and inserting in lieu thereof “section 5845”. (B) Section 5685(c) (relating to forfeiture of firearms, devices, etc.) is amended by striking out “section 5862” and inserting in lieu thereof “section 5872”. (C) Section 5685(d) (relating to the definition of machine gun) is amended to read as follows: “(d) Definition of Machine Gun.— As used in this section, the term ‘machine gun’ means a machine gun as defined in section 5845(b).” (24) Amendment of section 5701.— Section 5701(e) (relating 26 USC 5701. to imported tobacco products, etc.) is amended by striking out “such articles” and inserting in lieu thereof “such articles, unless such import duties are imposed in lieu of internal revenue tax”. (25) Amendments of section 5703.— (A) Section 5703(a)(2) (relating to transfer of liability 26 USC 5703. for tobacco taxes) is amended by adding at the end thereof the following new sentence: “All provisions of this chapter applicable to tobacco products and cigarette, papers and tubes in bond shall be applicable to such articles returned to bond upon withdrawal from the market or returned to bond after previous removal for a tax-exempt purpose.” (B) The second sentence of section 5703(b) (relating to method of payment of tobacco taxes) is amended by striking out “, except that the taxes shall continue to be paid by stamp until the Secretary or his delegate provides, by regulations, for the payment, of the taxes on the basis of a return”. (C) Section 5703 is amended by striking out subsection (c) (relating to stamps to evidence tobacco taxes) and by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (26) Amendments of section 3704.— Subsections (c) and (d) of section 5704 (relating to exemptions from tobacco taxes) are 26 USC 5704. each amended by inserting after “to a manufacturer of tobacco products or cigarette papers and tubes” the following: “or to the proprietor of an export warehouse”. (27) Amendment of section 5712.— Section 5712 (relating to 26 USC 5712. application for permit) is amended by striking out the last sentence. (28) Amendments of section 572a.— (A) The heading of section 5723 is amended by striking 26 USC 5723. out “NOTICES, AND STAMPS” and inserting in lieu thereof “AND NOTICES”. (B) Section 5723(b) (relating to marks, and so forth, on packages) is amended to rend as follows: “(b) Marks, Labels, and Notices.— Every package of tobacco products Regulation. or cigarette papers or tubes shall, before removal, bear the marks, labels, and notices, if any, that the Secretary by regulation prescribes.” (b) Conforming and Clerical Amendments.— (1) Amendments conforming to amendment of section 5054.— (A) Section 5676 (relating to beer stamp penalties) is repealed. (B) The table of sections for part III of subchapter J of chapter 51 is amended by striking out the item relating to section 5676. (2) Amendments conforming to amendments of section 5081.— (A) Section 5007(b)(1) is amended by striking out the second sentence. (B) Section 5026(b) is amended by striking out “Except as provided in subsection (a)(2), the taxes” and inserting in lieu thereof “The taxes”. (C) Section 5043(b) is amended by striking out “Except as provided in subsection (a)(3), the taxes” and inserting in lieu thereof “The taxes”. (D) Section 5662 is amended by striking out “stamp,” each place it appears. (E) (i) Section 5689 (relating to penalty and forfeiture for tampering with a stamp machine) is repealed. (ii) The table of sections for part IV of subchapter J of chapter 51 is amended by striking out the item relating to section 5689. (iii) Section 5061 is amended by striking out subsection (d). (3) Amendments conforming to amendment of section 5142.— (A) (i) Section 5104 (relating to method of payment of tax on stills) is repealed. (ii) The table of sections for subpart C of part II of subchapter A of chapter 51 is amended by striking out the item relating to section 5104. (B) Section 5111(a) is amended by striking out the second sentence. (C) Section 5121(a) is amended by striking out the second sentence. (D) (i) Section 5144 (relating to supply of stamps) is repealed. (ii) The table of sections for subpart G of part II of subchapter A of chapter 51 is amended by striking out the item relating to section 5144. (E) Section 5148(3) is amended by striking out “penalties” and inserting in lieu thereof “penalties, authority for assessments,”. (4) Amendment conforming to the repeal of section 5315.— The table of sections for part III of subchapter E of chapter 51 is amended by striking out the item relating to section 5315. (5) Amendment conforming to the amendment of section 5358.— The item relating to section 5368 in the table of sections for part II of subchapter E of chapter 51 is amended to read as follows: “Sec. 5368. Gauging and marking.” (6) Amendments conforming to the amendment of section 5001.— (A) Section 5105 (b)(2) is amended by striking out “, 5601 26 USC 5105. (b)(1),”. (B) Section 5177(b)(2) is amended by striking out “5601 26 USC 5177. (b)(2),” and inserting in lieu thereof “5601 (b),”. (C) Section 5179(b)(1) is amended by striking out “, 5601 26 USC 5179. (b)(1)”. (D) Section 5222(d) is amended by striking out “5601(b) 26 USC 5222. (3), 5601(b)(4)”. (E) Section 5505(i) is amended by striking out “5601(b) 26 USC 5505. (1),”. (7) Amendments conforming to the amendment of section 5723.— (A) Paragraphs (2) and (3) of section 5751(a) are each 26 USC 5751. amended by striking out “notices, and stamps” and inserting in lieu thereof “and notices”. (B) (i) Section 5752 is amended to read as follows: “SEC. 5752. RESTRICTIONS RELATING TO MARKS, LABELS, NOTICES, AND PACKAGES. “No person shall, with intent to defraud the United States, destroy, obliterate, or detach any mark, label, or notice prescribed or authorized, by this chapter or regulations thereunder, to appear on, or be affixed to, any package of tobacco products or cigarette papers or tubes, before such package is emptied.” (ii) Section 5762(a) is amended by striking out paragraphs 26 USC 5762. (8), (7), (8), (9), (10), and (11) and inserting in lieu thereof the following: “(6) Destroying, obliterating, or detaching marks, labels, or notices before packages are emptied.— Violates any provision of section 5752;”. (iii) The item relating to section 5752 in the table of sections for subchapter E of chapter 52 is amended to read as follows: “Sec. 5752. Restrictions relating to marks, labels, notices, and packages.” (C) (i) Section 5763(a)(2) is amended by striking out 26 USC 5763. “notices, and stamps” and inserting in lieu thereof “and notices”. (ii) Section 5763(b) is amended by striking out “internal revenue stamps,”. (D) The item relating to section 5723 in the table of sections for subchapter C of chapter 52 is amended to read as follows: “Sec. 5723. Packages, marks, labels, and notices.” (c) Amendments to Provisions Referring to Territories.— (1) Section 5114(b) is amended by striking out “or Territory” 26 USC 5114. each place it appears and by striking out “Territories,”. (2) Section 5214(a)(2) is amended by striking out “or Territory 26 USC 5214. ” each place it appears. (3) Section 5272(b) is amended by striking out “and 26 USC 5272. Territories”. (4) Section 5362(c)(9) is amended by striking out “and 26 USC 5362. Territories”. (5) Section 5551(b)(2) is amended by striking out “Territory, 26 USC 5551. or”. (6) Section 5685(a) is amended by striking out “Territory 26 USC 5685. or”. (d) Effective Date.— The amendments made by this section 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. SEC. 1906. AMENDMENTS OF SUBTITLE F; PROCEDURE AND ADMINISTRATION. (a) In General.— (1) Amendments of section 6013.— (A) Section 6013(b)(2)(C) (relating to petition to the Tax Court) is amended by striking out “of the United States”. (B) The heading of section 6013(d) is amended to read as follows: “(d) Special Rules.—”. (C) Section 6013(d)(1) (relating to joint return after death of one spouse) is amended by striking out “and” at the end of subparagraph (A) and inserting in lieu thereof “or”, and by striking out “and” at the end of the subparagraph (B). (2) Amendment of section 6015.— Section 6015 (relating to declaration of estimated tax by individuals) is amended by striking out subsection (j) (relating to an effective date provision). (3) Amendment of section 6037.— Section 6037 (relating to returns of subchapter S corporations) is amended by striking out “section 1371(a)(2)” and inserting in lieu thereof “section 1371 (b)” (4) Amendment of section 6046.— Section 6046(e) (relating to information as to organization of foreign corporation) is amended to read as follows: “(e) Limitation.— No information shall be required to be furnished under this section with respect to any foreign corporation unless such information was required to be furnished under regulations which have been in effect for at least 90 days before the date on which the United States citizen, resident, or person becomes liable to file a return required under subsection (a).” (5) Amendment of section 6051.— Section 6051(a) (relating to information required to be furnished to employees) is amended by striking out “and” where it appears at the end of paragraph (6). (6) Amendments of section 6065.— Section 6065 (relating to verification of returns) is amended by striking out subsection (b) (relating to verification by oath), and by striking out in subsection (a) the following: “(a) Penalties of Perjury.—”. (7) Repeat, of section 6105.— Section 6105 (relating to compilation of data for certain excess profits tax cases) is repealed. (8) Amendment of section 6111.— Section 6111 (relating to cross references), as redesignated by this Act, is amended to read as follows: “SEC. 6111. CROSS REFERENCE. “For inspection of records, returns, etc., concerning gasoline or lubricating oils, see section 4102.” (9) Amendment of section 6152.— Section 6152(a)(1) (relating to installment payments by corporations) is amended to read as follows: “(1) Corporations.— A corporation subject to the taxes imposed 26 USC 1. by chapter 1 may elect to pay the unpaid amount of such taxes in two equal installments.” (10) Amendments of section bib4.— (A) Section 6154(c)(1)(B) (relating to definition of estimated 26 USC 6154. tax) is amended— (i) by adding “and” after the comma at the end of clause (i), and (ii) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following: “(ii) in the case of a taxable year beginning before January 1, 1977, the amount of the corporation’s temporary estimated tax exemption for such year.” (B) Section 6154(c)(2)(A)(ii) (relating to temporary estimated tax payments) is amended by striking out “clauses (ii) and (iii)” and inserting in lieu thereof “clause (ii)”. (C) Section 6154(c)(2)(B) (relating to estimated tax) is amended by striking out the following: “1968, 1969, 1970, 1971, and 1972 100 percent   1973 80 percent   1974 60 percent”. (D) Section 6154(c) (relating to estimated tax) is amended by striking out paragraph (3) (relating to transitional exemption for taxable years beginning before 1972). (11) Amendments of section 6157.— (A) Section 6157 (relating to payment of Federal unemployment 26 USC 6157. tax) is amended by striking out subsection (c) (relating to special rides for 1970 and 1971), and by redesignating subsection (d) as subsection (c). (B) Section 6157(a) is amended by striking out “subsections (c) and (d)” and inserting in lieu thereof “subsection (c)” (12) Repeal of section 6162.— Section 6162 (relating to payment 26 USC 6162. of tax on gain on liquidation of certain personal holding companies) is repealed. (13) Amendment of section 6205.— Section 6205 (a)(4) (relating 26 USC 6205. to District of Columbia as employer) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (14) Amendment of section 6207.— Section 6207 (relating to 26 USC 6207. cross references) is amended by striking out paragraph (7). (15) Amendment of section 6213.— Section 6213(a) (relating Ante, p. 1698. to time for filing petition with the Tax Court) is amended by striking out “States of the Union and the District of Columbia” and inserting in lieu thereof “United States”. (16) Amendment of section 6215.— Section 6215(b)(5)(a 26 USC 6215. cross reference) is amended by striking out “60 Stat. 48;”. (17) Amendment of section 6302.— Section 6302(b) (relating 26 USC 6302. to collection of certain excise taxes) is amended by striking out “sections 4501 (a) or 4511 of chapter 37, or section 4701 or 4721 of chapter 39” and inserting in lien thereof “section 4501(a) of chapter 37”. (18) Repeal of section 6304.— Section 6304 (relating to a cross 26 USC 6304. reference) is repealed. (19) Amendment of section 6313.— Section 6313 (relating to 26 USC 6313. fractional parts of a cent) is amended by striking out “not payable by stamp”. (20) Amendments of section 6326.— (A) Paragraph (2) of section 6326 (cross references) is amended by striking out “52 Stat. 851;”. (B) Paragraph (3) of section 6326 is amended by striking out “52 Stat. 867” (C) Paragraph (4) of section 6326 is amended by striking out “52 Stat. 867–877;”. (D) Paragraph (5) of section 6326 is amended by striking out “52 Stat. 938;”. (21) Amendment of section 6365.— Section 6365 (b) (relating to definition of governor) is amended by striking out “Commissioner of the District of Columbia” and inserting in lieu thereof “Mayor of the District of Columbia”. (22) Amendment of section 6412.— Section 6412(a) (relating to floor stock refunds) is amended by redesignating paragraphs (2) and (4) as paragraphs (1) and (2), respectively. (23) Amendments of section 6413.— (A) Section 6413(a)(4) (relating to District of Columbia as employer) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (B) (i) Section 6413 (c)(1) (relating to refunds of certain employment taxes) is amended to read as follows: “(1) In General.— If by reason of an employee receiving wages from more than one employer during a calendar year the wages received by him during such year exceed the contribution and benefit base (as determined under section 230 of the Social 42 USC 430. Security Act) which is effective with respect to such year, the employee shall be entitled (subject to the provisions of section 31 (b)) to a credit or refund of any amount of tax, with respect to such wages, imposed by section 3101 or section 3201, or by both such sections, and deducted from the employee’s wages (whether or not paid to the Secretary), which exceeds the tax with respect to the amount of such wages received in such year which is equal “Wages.” to such contribution and benefit base. The term ‘wages’ as used in this paragraph shall, for purposes of this paragraph, include ‘compensation’ as defined in section 3231(e).” (ii) So much of section 6413(c)(2)(A) (relating to Federal employees) as follows “and the term ‘wages’ includes” is amended to read as follows: “for purposes of this subsection the amount, not to exceed an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) for any calendar year with respect to which such contribution and benefit base is effective, determined by each such head or agent as constituting wages paid to an employee.” (iii) The amendments made by clauses (i) and (ii) shall apply with respect to remuneration paid after December 31, 1976. (C) Section 6413(c)(2)(F) (relating to government employees in the District of Columbia) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (D) Section 6418(c)(3) (relating to special refunds) is 26 USC 6413. amended by striking out “after 1967”. (24) Amendments of section 6416.— (A) Section 6416(a)(3) (relating to special rules for 26 USC 6416. refund of overpayment of tax) is amended by redesignating subparagraphs (C) and (D) as subparagraphs (A) and (B), respectively, (B) (i) Section 6416(b)(2) (relating to overpayments of certain excise taxes), as amended by section 2108 of this Act, Post, p. 1904. is amended by striking out subparagraphs (G), (H), (I), and (J), and by redesignating subparagraphs (F), (K), (L), (M), (R), (8), and (T) as subparagraphs (E), (F), (G), (H), (I), (J),and (K),respectively. (ii) The repeals made by clause (i) shall apply with 26 USC 6416 note. respect to the use or resale for use of liquids after December 31, 1976. (25) Repeal of section 6417.— Section 6417 (relating to coconut 26 USC 6417. and palm oil) is repealed. (26) Amendments of section 6420.— (A) Section 6420(b) (relating to time for filing refund 26 USC 6420. claims on gasoline) is amended to read as follows: “(b) Time fob Filing Claims; Period Covered.— Not more than one claim may be filed under this section by any person with respect to gasoline used during his taxable year, and no claim shall be allowed under this section with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing a claim for credit or refund of overpayment of income tax for such taxable year. For purposes of this subsection, a person’s taxable year shall be his taxable year for purposes of subtitle A.” 26 USC 1. (B) Section 6420(e)(1) (relating to application of other laws) is amended by striking out “apply in in respect” and inserting in lieu thereof “apply in respect’”. (C) (i) Section 6420 is amended by striking out subsection (g) (relating to effective date) and by redesignating subsections (h) and (i) as subsections (g) and (h), respectively. (ii) Section 6420(a) is amended by striking out “subsection (h)” and inserting in lieu thereof “subsection (g)”. (D) Section 6420(g) (relating to income tax credit in lieu of gas tax refund), as redesignated by subparagraph (C)(i) of this paragraph, is amended by strikingout “with respect to gasoline used after June 30, 1965,” and “for gasoline used after June 30, 1965”. (27) Amendments of section 6421.— (A) (i) Subsections (a) and (e)(3) of section 6421 (relating 26 USC 6421. to nonhighway use of gasoline) are each amended by striking out “after June 30, 1970,”. (ii) The amendments made by clause (i) shall only 26 USC 6421 note. apply with respect, to gasoline used as a fuel after June 30, 1970. (B) Section 6421(c) (relating to nonhighway use of gasoline) is amended to read as follows: “(c) Time for Filing Claims; Period Covered.— “(1) In general.— Except as provided in paragraph (2), not more than one claim may be filed under subsection (a), and not more than one. claim may be filed under subsection (b), by any person with respect to gasoline used during his taxable year; and no claim shall be allowed under this paragraph with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing a claim for credit or refund of overpayment of income tax for such taxable year. For purposes of this subsection, a person’s taxable year shall be his taxable year for purposes of subtitle A. “(2) Exception.— If $1,000 or more is payable under this section to any person with respect to gasoline used during any of the first three Quarters of his taxable year, a claim may be filed under this section by such person with respect to gasoline used during such quarter. No claim filed under this paragraph shall be allowed unless filed on or before the last day of the first quarter following the quarter for which the claim is filed.” (C) Section 6421(h) (relating to effective dates) is amended by striking out “after June 30, 1956, and”. (D) Section 6421 (i) (relating to income tax credit in lieu of refund) is amended— (i) by striking out, in paragraph (1), “with respect to gasoline used after June 30, 1965,”, (ii) by striking out, in paragraph (2), “subsection (c)(3)(B)” and inserting in lieu thereof “subsection (c)(2)”, and (iii) by striking out, in paragraph (3), “for gasoline used after June 30, 1965.” (28) Amendments of Section 6422.— (A) Paragraph (9) of section 6422 (relating to cross references), as redesignated by section 1901(b)(36)(B), is amended by striking out “60 Stat. 48;”. (B) Paragraph (11) of section 6422, as so redesignated, is amended by striking out “47 Stat. 1516;”. (29) Amendments of section 6423.— (A) Section 6423(b) (relating to filing of refund claim in case of alcohol and tobacco taxes) is amended to read as follows: “(b) Filing of claims.— No credit or refund of any amount to which subsection (a) applies shall be allowed or made unless a claim therefor has been filed by the person who paid the a mount claimed, and unless such claim is filed within the time prescribed by law and in accordance with regulations prescribed by the Secretary. Al] evidence relied upon in support of such claim shall be clearly set forth and submitted with the claim.” (B) Section 6123 is amended by striking out subsection (c) (relating to suits barred on April 30, 1958) and by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (C) Section 6423 (c) (relating to application of section), as redesignated by subparagraph (B) of this paragraph, is amended by adding “and” at the end of paragraph (1), by striking out “, and” at the end of paragraph (2) and inserting in lieu thereof a period, and by striking out paragraph (3). (30) Amendments of section 6424.— (A) The last sentence of section 6424(b)(1) (relating to refund claims with respect to lubricating oil) is amended by striking out “, except that a person’s first taxable year beginning after December 31, 1965, shall include the period after December 31, 1965, and before tile beginning of such first taxable year”. (B) Section 6424 (relating to lubricating oil not used in highway motor vehicles) is amended by striking out subsection (f) (relating to effective date of section), and by redesignating subsections (g) and (h) as subsections (f) and (g), respectively. (31) Amendments of section 6427.— (A) Subsections (a), (b), and (c) of section 6427 (relating 26 USC 6427. to fuels not used for taxable purposes) are each amended by striking out “, after June 30, 1970,” (B) The amendments made by subparagraph (A) shall 26 USC 6427 note. apply only with respect to fuel used or resold after June 30, 1970. (32) Amendments of section 6504.— (A) Section 6504 (relating to cross references) is amended 26 USC 6504. by striking out paragraphs (13) and (14) and inserting in lieu thereof: “(13) Assessments to recover excessive amounts paid under section 6420 (relating to gasoline used on farms), 6421 (relating to gasoline used for certain nonhighway purposes or by local transit systems), 6424 (relating to lubricating oil not used in highway motor vehicles), or 6427 (relating to fuels not used for taxable purposes) and assessments of civil penalties under section 6675 for excessive claims under section 6420, 6421, 6424, or 6427, see section 6206.” (B) Section 6504, as amended by this Act, Is further amended by redesignating paragraphs (2), (3), (4), (5), (9), (19), (11), (12), (13), and (15) as paragraphs (1), (2), (3), (4), (5), (6), (7), (8), (9), and (10), respectively. (33) Amendments of section 6511.— (A) Section 6511(d)(2)(A)(ii) (relating to net operating 26 USC 6511. loss carryback) is amended by striking out “September 1, 1959, or” and by striking out “, whichever is the later”. (B) Section 6511(d)(5) is amended by striking out “the later of the following dates: (A)”, and by striking out “, or (B) December 31, 1965”. (34) Amendment of section 6601.— Section 6601(h) (relating 26 USC 6601. to interest on estimated tax payments) is amended by striking out “(or section 59 of the Internal Revenue Code of 1939)”. 53 Stat. 32. 26 USC 6654. (35) Amendment of section 6654.— Section 6654 (relating to payment of estimated income tax) is amended by striking out subsection (h) (relating to applicability of section). (36) Amendment of section 6802.— Section 6802(2) (relating 26 USC 6802. to supply and distribution of stamps) is amended by striking out the semicolon at the end and inserting in lieu thereof a period. (37) Amendment of section 6803.— Section 6803 (relating to 26 USC 6803. accounting and safeguarding is amended to read as follows: “SEC. 6803. ACCOUNTING AND SAFEGUARDING. “(a) Bond.— In cases coining within the provisions of paragraph (2) of section 6802, the Secretary may require a bond, with sufficient sureties, in a sum to be fixed by the Secretary, conditioned for the faithful return, whenever so required, of all quantities or amounts undisposed of and for the payment monthly for all quantities or amounts sold or not remaining on hand. “(b) Regulations.— The Secretary may from time to time make such regulations as he may find necessary to insure the safekeeping or prevent the illegal use of all adhesive stamps referred to in paragraph (2) of section 6802.” (38) Amendment of section 6863.— Section 6863(b)(3) (relating to stay of sale of seized property pending Tax Court decision) is amended by striking out subparagraph (C) (relating to effective date). (39) Amendment of section 7012.— Section 7012 (relating to cross references), as amended by section 1904(b)(8)(C) of this Act, is amended to read as follows: “SEC. 7012. CROSS REFERENCES. “(1) For provisions relating to registration in connection with firearms, see sections 5802, 5841, and 5861. “(2) For special rules with respect to registration by persons engaged in receiving wagers, see section 4412. “(3) For provisions relating to registration in relation to the production or importation of gasoline, see section 4101. “(4) For provisions relating to registration in relation to the manufacture or production of lubricating oils, see section 4101. “(5) For penalty for failure to register, see section 7272. “(6) For other penalties for failure to register with respect to wagering, see section 7262.” (40) Amendment of section 7103.— Section 7103 (relating to cross references regarding bonds) is amended by striking out subsection (d). ‘ (41) Amendments of section 7271.— Section 7271 (relating to penalties for offenses concerning stamps) is amended by striking out paragraph (2), and by redesignating paragraphs’ (3) and (4) as paragraphs (2) and (3), respectively. (42) Amendment of section 7272.— Section 7272(b) (relating to cross references) is amended by striking out “4722, 4753,”. (43) Amendments of section 7326.— Section 7326 (relating to disposal of forfeited property) is amended— (A) by striking out “section 5862(b)” and inserting in lieu thereof “section 5872(b)”, and (B) by redesignating subsection (c) as subsection (b). (44) Amendments of section 7422.— Section 7422(c) (relating to suits against collection officers) is amended by striking out “instituted after June 15, 1942,”, and by striking out “where the petition to the Tax Court was filed after such date”. (45) Amendments of section 7428.— (A) Paragraph (1) of section 7428 (cross references), as redesignated by this Act, is amended by striking out “52 Stat, 851;”. (B) Paragraph (2) of such section 7428 is amended by striking out “52 Stat. 867;”. (C) Paragraph (3) of such section 7428 is amended by Striking out “52 Stat. 876–877;”. (D) Paragraph (4) of such section 7428 is amended by striking out “52 Stat. 938;”. (46) Amendments of section 7448.— (A) Subsection (a)(6) of section 7448 (relating to annuities to widows and dependent children of Tax Court judges) is amended— (i) by striking out “The term ‘widow’ means a surviving wife of,” and inserting in lieu thereof “The term ‘surviving spouse’ means a surviving spouse of”; and (ii) by striking out “the mother of issue” and inserting in lieu thereof “a parent of issue”. (B) Section 7448(h) is amended— (i) by striking out “surviving widow or widower” and inserting in lieu thereof “surviving spouse”; (ii) by striking out “such widow” each place it appears and inserting in lieu thereof “such surviving spouse”; (iii) by striking out “a widow” each place it appeal’s and inserting in lieu thereof “a surviving spouse”; (iv) by striking out “widow’s” each place it appears and inserting in lieu thereof “surviving spouse’s”; and (v) by striking out “surviving her” and inserting hi lieu thereof “surviving such spouse”. (C) Sections 7448 (h) and (o) are each amended by striking 26 USC 7448. out “she” and inserting in lieu thereof “such spouse”. (D) Section 7448 (o) is amended by striking out “her” and inserting in lieu thereof “such spouse’s”. (E) Sections 7448 (d), (j), (m), (n), (o), and (q) are each amended by striking out “widow” each place it appears and inserting in lieu thereof “surviving spouse”. (F) The section heading for section 7448 is amended by striking out “WIDOWS” and inserting in lieu thereof “SURVIVING SPOUSES”. (47) Amendments of section 7471.— (A) Subsection (a) of section 7471 (relating to Tax Court 26 USC 7471. employees) is amended by striking out “is authorized in accordance with the civil service laws to appoint, and in accordance with the Classification Act of 1949 (63 Stat. 954; 5 U.S.C. chapter 21), as amended, to fix the compensation of,” and inserting in lieu thereof “is authorized to appoint, in accordance with the provisions of title 5, United States Code, governing appointment in the competitive service, and 5 USC 101 et seq. 5 USC 5101, 5331. to fix the basic pay of, in accordance with chapter 51 and subchapter III of chapter 53 of such title,”. (B) Subsection (b) of section 7471 is amended by striking out “as provided in the Travel Expense Act of 1949 (63 Stat. 166; 5 U.S.C. chapter 16).” and inserting in lieu thereof “as provided in chapter 57 of title 5, United States Code.” 5 USC 5701. 26 USC 7476. (48) Amendment of section 7476.— Section 7476(a) (relating to declaratory judgments) is amended by striking out so much thereof as follows paragraph (2)(B) and inserting in lieu thereof the following: “upon the filing of an appropriate pleading, the Tax Court may make a declaration with respect to such initial qualification or continuing qualification. Any such declaration shall have the force and effect of a decision of the Tax Court, and shall be reviewable, as such.” (49) Amendment of section 7502.— Section 7502(b) (relating 26 USC 7502. to timely mailing treated as timely filing and paying) is amended by striking out “United State Post Office” and inserting in lieu thereof “United States Postal Service”. (50) Amendments of section 7507.— Paragraphs (2) and (3) of section 7507(c) (relating to insolvent hanks) are each amended 26 USC 7507. by striking out “after May 28, 1938,”. (51) Amendments of section 7508.— (A) The heading of section 7508 (relating to time for 26 USC 7508. performing certain acts) is amended by striking out “BY REASON OF WAR” and inserting in lieu thereof “BY REASON OF SERVICE IN COMBAT ZONE”. (B) Section 7508(a) (relating to time to be disregarded) is amended by striking out “States of the Union and the District of Columbia” each place it appears and inserting in lieu thereof “United States”. (52) Amendments of section 7509.— Section 7509 (relating to expenditures incurred by the Post Office Department) is amended— (A) in the section heading, by striking out “POST OFFICE DEPARTMENT” and inserting in lieu thereof “UNITED STATES POSTAL SERVICE”; (B) by striking out “Post Office Department” each place it appears and inserting in lieu thereof “United States Postal Service”; (C) by striking out “such Department” and inserting in lieu thereof “such Service”; and (D) by striking out “, together with the receipts required to be deposited under section 6803(a),”, (53) Amendment or section Tear.— Section 7621 (b) (relating to boundaries of internal revenue districts) is amended to read as follows: “(b) Boundaries.— For the purpose mentioned in subsection (a), the President may subdivide any State or the District of Columbia, or may unite into one district two or more States.” (54) Repeal of section 7G4t.— Subchapter C of chapter 78 (relating to supervision of operations of certain manufacturers) is repealed. (55) Amendments of section 7052.— Section 7652(b)(3) (relating to disposition of internal revenue collections) is amended— (A) by striking out subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (B) by striking out “approved emergency relief purposes and essential public projects as provided in subparagraph (B)” and inserting in lieu thereof “emergency relief purposes and essential public projects, with the prior approval of the President or his designated representative”, and (C) by striking out “, including payments under subparagraph (B),”. (56) Amendment of section 7653.— Section 7653(d)(a cross reference) is amended by striking out “c. 512, 64 Stat. 392, section 30;”. (57) Amendments of section 7701.— (A) Section 7701(a)(11) (relating to definitions of Secretary) is amended to read as follows: “(11) Secretary of the treasury and secretary.— “(A) Secretary of the treasury.— The term ‘Secretary of the Treasury’ means the Secretary of the Treasury, personally, and shall not include any delegate of his. “(B) Secretary.— The term ‘Secretary’ means the Secretary or the Treasury or his delegate.”. (B) Section 7701(a)(12)(A) (relating to definition of Secretary or his delegate) is amended to read as follows: “(A) In general.— The term ‘or his delegate’— “(i) when used with reference to the Secretary of the Treasury, means any officer, employee, or agency of the Treasury Department duly authorized by the Secretary of the Treasury directly, or indirectly by one or more redelegations of authority, to perform the function mentioned or described in the context; and “(ii) when used with reference to any other official of the United States, shall be similarly construed.” (58) Amendment of section 7803.— Section 7803 (relating 26 USC 7803. to other personnel) is amended by redesignating subsection (d) as subsection (c). (59) Amendment of section 7809.— Section 7809(a) (relating 26 USC 7809. to deposit of collections) is amended by striking out “4735, 4762,”. (b) Conforming and Clerical Amendments.— (1) Amendment conforming to the repeal of section 6105.— The table of sections for subchapter B of chapter 61 is amended by striking out the item relating to section 6105. (2) Amendment conforming to amendment of section 6111.— The item relating to section 6111 in the table of sections for subchapter B of chapter 61 is amended to read as follows: “Sec. 6111. Cross reference.” (3) Amendments conforming to amendments of section 6154.— (A) Paragraph (1)(B) of section 6655(e) is amended: 26 USC 6655. (i) by adding “and” at the end of clause (i), and (ii) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following: “(ii) in the case of a taxable year beginning before January 1, 1977, the amount of the corporation’s temporary estimated tax exemption for such year.” (B) Paragraph (2)(B) of section 6655(e) is amended by striking out “clauses (ii) and (iii)” and inserting in lieu thereof “clause (ii)”. (C) (i) Section 6655(e) is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3). (ii) Section 243(b)(3)(C)(iv), as redesignated by section Ante, p. 1797. 1901 (b)(20)(A) of this Act, is amended by striking out “sections 6154(c)(2) and (3)” and inserting in lieu thereof “section 6154(c)(2)”, and by striking out. “sections 6655(e)(2) and (3)” and inserting in lieu thereof “section 6655(e)(2)”. (4) Amendment conforming to the re feat, of section 6162.— The table of sections for subchapter B of chapter 62 is amended by striking out the item relating to section 6162. (5) Amendment conforming to the repeal of section 6304.— The table of sections for subchapter A of chapter 64 is amended by striking out the item relating to section 6304. (6) Amendments conforming to the amendment of section 6416.— (A) Subparagraph (A) of section 6420(c)(3) is amended 26 USC 6420. to read as follows: “(A) by the owner, tenant, or operator of a farm, in connection with cultivating the soil, or in connection with raising or harvesting any agricultural or horticultural commodity, including the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and fur-bearing animals and wildlife, on a farm of which he is the owner, tenant, or operator; except that, if such use is by any person other than the owner, tenant, or operator of such farm, then for purposes of this subparagraph, in applying subsection (a) to this subparagraph, the owner, tenant, or operator of the farm on which gasoline or a liquid taxable under section 26 USC 4041. 4041 issued shall be treated as the user and the ultimate purchaser of such gasoline or liquid;”. (B) The amendments made by subparagraph (A) shall apply with respect to the use of liquids after December 31, 1970. (7) Amendment conforming to the repeal of section 6417.— The table of sections for subchapter B of chapter 65 is amended Ante, p. 1827. by striking out the item relating to section 6417. (8) Amendment conforming to amendment of section 6420.— Section 39(a)(1) is amended by striking out “section 6420(h)” and inserting in lieu thereof “section 6420(g)”. (9) Amendment conforming to amendment of section 6424.— Section 39(a)(3) is amended by striking out “section 6424(g)” Ante, p, 1829. and inserting in lieu thereof “section 6424(f)”. (10) Amendment conforming to amendment of section 7448.— The item relating to section 7448 in the table of sections for part I of subchapter C of chapter 76 is amended to read as follows: “Sec. 7448. Annuities of surviving spouses and dependent children.”. (11) Amendment conforming to amendment of section 7508.— The item relating to section 7508 in the table of sections for chapter 77 is amended to read as follows: “Sec. 7508. Time for performing certain acts postponed by reason of service in combat gone.”. (12) Amendment conforming to amendment of section 7500.— The item relating to section 7509 in the table of sections for chapter 77 is amended to read as follows: “Sec. 7509. Expenditures incurred by the United States Postal Service,”. (13) Amendment conforming to repeal of section 7641.— The table of subchapters for chapter 78 is amended by striking Ante, p. 1832. 26 USC 1 el seq. out the item relating to subchapter C. (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”. (B) The following provisions are each amended by striking 26 USC 4293, 4483, 5551, 7801, 7802, 9006, 9007. 26 USC 3121, 3303, 3304, 3305, 3306, 9005, 9007, 9010, 9012. 26 USC 31. 26 USC 3304. out “Secretary” each place it appears and inserting in lieu thereof “Secretary of the Treasury”: sections 4293, 4483 (b), 5551, 7801(b). 7802(a), 9006(a), 9006(b), and 9007(d). (C) The following provisions are each amended by striking out “to the Secretary” each place it appears and inserting in lieu thereof “to the Secretary of the Treasury”: sections 3121 (b)(12)(B). 3303(b), 3304(a)(3). 3304(c), 3305(j), 3306(c)(12)(B), 9005(a), 9007(b), 9010(b), and 9012(e)(3). (D) Section 31(b)(1) is amended by striking out “(or his delegate)”. (E) The last sentence of section 3304(c) is amended by striking out “the Secretary shall” and inserting in lieu thereof “the Secretary of Labor shall”. (F) Section 3310(d)(2) is amended by striking out “the 26 USC 3310. Secretary’s action” each place it appears and inserting in lieu thereof “the Secretary of Labor’s action”. (G) Section 3221(a) and 3221(c) are each amended by 26 USC 3221. striking out “of the Treasury” each place it appears. (H) Section 3310(e) is amended by striking out “of 26 USC 3310. the Secretary” and inserting in lieu thereof “of the Secretary of Labor”. (I) Section 4412(c) is amended by striking out “he or his 26 USC 4412. delegate” and inserting in lieu thereof “the Secretary”. (J) Section 5845(f) is amended by striking out “of the 26 USC 5845. Treasury or his delegate”. (K) Section 6402(b) is amended by striking out “(or his 26 USC 6402. delegate)”. (L) Section 7458 is amended by striking out “nor his 26 USC 7458. delegate”. (M) Section 7514 is amended by striking out “functions of 26 USC 7514. the Secretary” and inserting in lieu thereof “functions of the Secretary of the Treasury”. (c) Amendments to Sections Referring to Territories.— (1) Section 6871(a) is amended by striking out “or Territory”. 26 USC 6871. 26 USC 7622. 26 USC 7701. (2) Section 7622(b) is amended by striking out “, Territory,”. (3) Section 7701(a)(4) is amended by striking out “or Territory”. (d) Effective Date.— (1) General rule.— Except as otherwise expressly provided in this section, the amendments made by this section 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. (2) Amendments relating to income tax.— The amendments made by this section, when relating to a tax imposed by chapter 26 USC 1, 1401. 1 or chapter 2 of the Internal Revenue Code of 1954, shall take effect with respect to taxable years beginning after December 31, 1976. SEC. 1907. AMENDMENTS OF SUBTITLE G; THE JOINT COMMITTEE ON INTERNAL REVENUE TAXATION. (a) In General.— (1) Amendment of section 8001.— Section 8001 (relating to 26 USC 8001. creation of the Joint Committee) is amended by striking out “Joint Committee on Internal Revenue Taxation” and inserting in lieu thereof “Joint Committee on Taxation”. (2) Amendment of section 8004.— Section 8004 (relating to 26 USC 8004. compensation of staff) is amended by striking out “compensation of a clerk” and inserting in lieu thereof “compensation of the Chief of Staff of the Joint Committee”. (3) Amendment of section 8021.— Section 8021(d) (relating 26 USC 8021. to authority to make expenditures) is amended to read as follows: “(d) To Make Expenditures.— The Joint Committee, or any subcommittee thereof, is authorized to make such expenditures as it deems advisable.”. (4) Amendment of section 8023.— Section 8023(c) (relating 26 USC 8023. to reorganization plans) is amended to read as follows: “(c) Application of Subsections (a) and(b).— Subsections (a) and (b) shall be applied in accordance with their provisions without regard to any reorganization plan becoming effective on, before, or after the date of the enactment of this subsection.”. (5) All references in any other statute, or in any rule, regulation, or order, to the Joint Committee on Internal be venue Taxation shall be considered to be made to the Joint Committee on Taxation. (b) Amendments Conforming to the Amendment of Section 8001.— (1) The heading of subtitle G is amended by striking out “Internal Revenue”, (2) The table of subtitles for the Internal Revenue Code of 1954 is amended by striking out the item relating to subtitle G and inserting in lieu thereof the following: “Subtitle G. The Joint Committee on Taxation.”. (c) Effective Date.— The amendments made by this section 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. SEC. 1908. EFFECTIVE DATE OF CERTAIN DEFINITIONS AND DESIGNATIONS For purposes of any amendment made by any provision of this Act (other than this title)— (1) which contains a term the meaning of which is defined in or modified by any provision of this title, and (2) which has an effective date earlier than the effective date of the provision of this title defining or modifying such term, that definition or modification shall be considered to take effect as of such earlier effective date. Subtitle B— Amendments of Code Provisions With Limited Current Application; Repeals and Savings Provisions SEC. 1951. PROVISIONS OF SUBTITLE A (a) References to Internal Revenue Code.— Except as otherwise expressly provided, whenever in this section a reference is made to a section or other provision, the reference shall be considered to be made 26 USC 1. to a section or other provision of the Internal Revenue Code of 1954. (b) Amendments.— (1) Amendment of section 72.— (A) Repeal.— Section 72 (relatinfi to annuities) is amended by striking out subsection (i) (relating to joint and survivor annuities where first annuitant died in 1951, 1952, or 1953). (B) Savings provision.— Notwithstanding subparagraph (A), if the provisions of section 72(i) applied to amounts received in taxable years beginning before January 1, 1977, under an annuity contract, then amounts received under such contract on or after such date shall be treated as if such provisions were not repealed. (2) Amendments of section 108.— (A) Repeal.— Section 108 (relating to income from discharge of indebtedness) is amended by striking out subsection (b) (relating to certain railroad corporations) and by striking out of subsection (a) the following: “(a) Special Rule of Exclusion.—”. (B) Savings provision.— If any discharge, cancellation, 26 USC 108 note. or modification of indebtedness of a railroad corporation occurs in a taxable year beginning after December 31, 1976, pursuant to an order of a court in a proceeding referred to in section 108(b)(A) or (13) which commenced before January 1, 1960, then, notwithstanding the amendments made by subparagraph (A), the provisions of subsection (b) of section 108 shall be considered as not repealed with respect to such discharge, cancellation, or modification of indebtedness. (3) Amendments of section 164.— (A) Repeal.— Section 164 (relating to taxes) is amended 26 USC 164. by striking out subsection (f) (relating to payments for municipal services in atomic energy communities) and by redesignating subsection (g) as subsection (f). (B) Savings provision.— Notwithstanding subparagraph 26 USC 164 note. (A), any amount paid or accrued in a taxable year beginning after December 31, 1976, to the Atomic Energy Commission or its successors for municipal-type services shall be allowed as a deduction under section 164 if such amount would have been deductible by reason of section 164(f)(as in effect for a taxable year ending on December 31, 1976) and if the amount is paid or accrued with respect to real property in a community (within the meaning of section 21 b. of the Atomic Energy Community Act of 1955 (42 U.S.C. 2304 (b))) in which the Commission on December 31, 1976, was rendering municipal-type services for which it received compensation from the owners of property within such community. (4) Repeal of section 168.— (A) Repeal.— Section 168 (relating to amortization of 26 USC 168. emergency facilities) is repealed. (B) Savings provision.— Notwithstanding the repeal 26 USC 168 note. made by subparagraph (A), if a certificate was issued before January 1, 1960, with respect to an emergency facility which is or has been placed in service before the date of the enactment of this Act, the provisions of section 168 shall not, with respect to such facility, be considered repealed. The benefit of deductions by reason of the preceding sentence shall be allowed to estates and trusts in the same manner as in the case of an individual. The allowable deduction shall be apportioned between the income beneficiaries and the fiduciary in accordance with regulations prescribed under section 642(f). (5) Amendment of section 171.— (A) Repeal.— (i) Section 171(b)(1)(B) (relating to amount of 26 USC 171. bond premium) is amended by striking out clause (iii) (relating to certain bonds acquired before 1958). (ii) Section 171(b)(1)(B)(i) is amended by striking out “clause (ii) or (iii) applies,” and inserting in lieu thereof “clause (ii) applies, or”, and by inserting “and” at the end thereof. (iii) Section 171 (b)(1)(B)(ii) is amended by striking out “. or” and inserting “, and” in lieu thereof. (iv) The second sentence in section 171 (b)(2) is amended by striking out “or (iii)”. (B) Savings provision.— Notwithstanding the amendments made by subparagraph (A), in the case of a bond the interest on which is not excludable from gross income— (i) which was issued after January 22, 1951, with a call date not more than 3 years after the date of such issue, and (ii) which was acquired by the taxpayer after January 22, 1954, and before January 1, 1958, the bond premium for a taxable year beginning after December 31, 1975, shall not be determined under section 171(b)(1)(B)(i) but shall be determined with reference to the amount payable on maturity, and if the bond is called before its maturity, the bond premium for the year in which the bond is called shall be determined in accordance with the provisions of section 171 (b)(2). (6) Amendment of section 333.— (A) Repeal.— Section 333 (relating to election as to recognition of gain in certain liquidations) is amended by striking out subsection (g) (relating to the liquidation of certain personal holding companies). (B) Savings provision.— Nothwithstanding subparagraph (A), if any corporation meets all the requirements of section 333(g)(2)(B), as in effect before its repeal by this Act, the liquidation of such corporation shall be treated as if paragraphs (2), (3), and (4) of section 333(g) had not been repealed. (C) Phase-in of 12month holding period requirement.— For purposes of subparagraph (B), the period for holding of stock specified in section 333(g)(2)(A)(u), as in effect before such repeal, shall— (i) in the case of taxable years beginning in 1977, be considered to be “9 months”; and (ii) in the case of taxable years beginning after December 31, 1977, be considered to be “1 year”. (7) Amendment of section 453.— (A) Repeal.— Section 453(b)(2) (relating to limitation on use of installment sales method) is amended to read as follows: “(2) Limitation.— Paragraph (1) shall apply only if in the taxable year of the sale or other disposition— “(A) there are no payments, or “(B) the payments (exclusive of evidences of indebtedness or the purchaser) do not exceed 30 percent of the selling price.”. (B) Savings provision.— Notwithstanding subparagraph (A), in the case of installment payments received during taxable years beginning after December 31, 1976, on account of a sale or other disposition made during a taxable year beginning before January 1, 1954, subsection (b)(1) of section 453 (relating to sales of realty and casual sales of personalty) shall apply only if the income was (by reason of section 53 Stat. 24. 44(b) of the Internal Revenue Code of 1939) returnable on the basis and in the manner prescribed in section 44(a) of such Code. (8) Amendments of section 512.— (A) Repeal.— Section 512(b) (relating to unrelated business 26 USC 512. taxable income) is amended by striking out paragraphs (13) and (14) and by redesignating paragraphs (15), (16), and (17) as paragraphs (13), (14), and (15), respectively. (B) Savings provision.— Notwithstanding subparagraph 26 USC 512 note. (A), income received in a taxable year beginning after December 31, 1975, shall be excluded from gross income in determining unrelated business taxable income, if such income would have been excluded by paragraph (13) or (14) of section 512(b) if received in a taxable year beginning before such date. Any deductions directly connected with income excluded under the preceding sentence in determining unrelated business taxable income shall also be excluded for such purpose. (9) Amendment of section 545.— (A) Repeal.— Section 545(b) (relating to adjustments in 26 USC 545. computing undistributed personal holding company income) is amended by striking out paragraph (9) (relating to deductions on account of certain liens in favor of the United States). (B) Savings provision.— Notwithstanding subparagraph 26 USC 545 note. (A), if any amount was deducted under paragraph (9) of section 545(b) in a taxable year beginning before January 1, 1977, on account of a lien which is satisfied or released in a taxable year beginning on or after such date, the amount so deducted shall be included in income, for purposes of section 545, as provided in the second sentence of such paragraph. Shareholders of any corporation which has amounts included in its income by reason of the preceding sentence may elect to compute the income tax on dividends attributable to amounts so included as provided in the third sentence of such paragraph. (10) Amendments of section 691.— (A) Repeal.— Section 691 (relating to income in respect 26 USC 691. of decedents) is amended by striking out subsection (e) (relating to certain installment obligations transmitted at death) and by redesignating subsection (f) as subsection (e). (B) Savings provision.— Notwithstanding subparagraph 26 USC 691 note. (A), any election made under section 691(e) to have subsection (a)(4) of such section apply in the case of an installment obligation shall continue to be effective with respect to taxable years beginning after December 31, 1976. Section 691(c) shall not apply in respect of any amount included in gross income by reason of the preceding sentence. The liability under bond filed under section 44(d) of the Internal Revenue Code of 1939 (or corresponding provisions of prior law) in 53 Stat. 24. respect of which such an election applies is hereby released with respect to taxable years to which such election applies. (11) Amendments of section 817.— (A) Repeal.— Section 817 is amended by striking out 26 USC 817. subsection (d) (relating to certain gains occurring before 1959). (B) Savings provision.— Notwithstanding subparagraph 26 USC 817 note. (A), any gain in a taxable year beginning after December 31, 1976, from any sale or other disposition of property prior to January 1, 1959, would be excluded or not taken into account for purposes of part 1 of subchapter L of chapter Ante, p. 1839. 1 if subsection (d) of section 817 of such Code were still in effect for such taxable year, such gain shall be excluded for purposes of such part. (12) Repeal of section 1347.— (A) Repeal.— Section 1347 (relating to certain claims filed against the United States before January 1, 1958) is repealed. (B) Savings provision.— Notwithstanding subparagraph (A), if amounts received in a taxable year beginning after December 31, 1976, would have been subject to the provisions of section 1347 if received in a taxable year beginning before such date, the tax imposed by section 1 attributable to such receipt shall be computed as if section 1347 had not been repealed. (13) Repeal of section 1471.— (A) Repeal.— Subchapter A of chapter 4 (relating to recovery of excessive profits on certain Government contracts) is repealed. (B) Savings provision.— If the amount of profit required to be paid into the Treasury under section 2382 or 7300 of title 10, United States Code, is not voluntarily paid, the Secretary of the Treasury or his delegate shall collect the same under the methods employed to collect taxes under subtitle A. All provisions of law (including penalties) applicable with respect to such taxes and not inconsistent with section 2382 or 7300 of title 10 of such Code, shall apply with respect to the assessment, collection, or payment of excess profits to the Treasury as provided in the preceding sentence, and to refunds by the Treasury of overpayments of excess profits into the Treasury. (14) Amendment of section 1481.— (A) Repeal.— Section 1481 (relating to mitigation of effect of renegotiation of Government contracts) is amended by striking out subsection (d) (relating to renegotiation for years prior to 1954). (B) Savings provision.— If, during a taxable year beginning after December 31, 1976, a recovery of excessive profits through renegotiation which relates to profits of a taxable 53 Stat. 1. year subject to the Internal Revenue Code of 1939, the adjustments in respect to such renegotiation shall be made under section 3806 of such Code. (c) Conforming and Clerical Amendments.— (1) Amendment conforming to the amendment of section 1017.— Section 1017 is amended by striking out “section 108(a)” each time it appears therein and inserting in lieu thereof “section 108”. (2) Amendments conforming to repeal of section 168.— (A) Section 1238 is amended by striking out “(relating to amortization deduction of emergency facilities)” and inserting in lieu thereof “(as in effect before its repeal by the Tax Ante, p. 1520. 26 USC 642, 1082. Ante, p. 1837. 26 USC 1245, 1250. Reform Act. of 1976)”. (B) Sections 642(f) and 1082(a)(2)(B) are each amended by striking out “168,”. (C) Sections 1245(a)(2) and 1250(b)(3) are each amended by striking out “168,” each place it appears and inserting in lieu thereof “168 (as in effect before its repeal by the Tax Reform Act of 1976),”. (D) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 168. Ante, p. 1837. (3) Amendments conforming to the repeal of section 1347.— (A) Section 5(b) is amended by striking out paragraph 26 USC 5. (5) and by redesignating paragraphs (2), (3), and (4), as paragraphs (1), (2), and (3), respectively. (B) The table of sections for part VI of subchapter Q of chapter 1 is amended by striking out the item relating to section 1347. Ante, p. 1840. (C) The heading of part VI of subchapter Q of chapter 1 is amended to read as follows: “PART VI— MAXIMUM RATE ON PERSONAL SERVICE INCOME.” (D) The table of parts for subchapter Q of chapter 1 is amended by striking out the item relating to part VI and inserting in lieu thereof the following: “Part VI. Maximum rate on personal service income.” (4) Amendment conforming to the repeal of section 1471.— The table of subchapters for chapter 4 is amended by striking out the item relating to subchapter A. (d) Effective Date.— Except as otherwise expressly provided, the 26 USC 72 note. amendments made by this section shall apply with respect to taxable years beginning after December 31, 1976. SEC. 1952. PROVISIONS OF SUBCHAPTER D OF CHAPTER 39; COTTON FUTURES. (a) Short Title.— This section may be cited as the “United States Cotton Futures Act”. (b) Repeal of Tax on Cotton Futures.— Subchapter D of chapter 39 (relating to tax on cotton futures) is repealed. 26 USC 4851. (c) Definitions.— For purposes of this section— (1) Cotton futures contract.— The term “cotton futures contract” means any contract of sale of cotton for future delivery made at, on, or in any exchange, board of trade, or similar institution or place of bus mess which has been designated a “contract market” by the Commodity Futures Trading Commission pursuant to the Commodity Exchange Act and the term “contract of 7 USC 1. sale” as so used shall be held to include sales, agreements of sale, and agreements to sell. (2) Future delivery.— The term “future delivery” shall not include any cash sale of cotton for deferred shipment or delivery. (3) Person.— The term “person” includes an individual, trust, estate, partnership, association, company, or corporation. (4) Secretary.— The term “Secretary” means the Secretary of Agriculture of the United States. (5) Standards.— The term “standards” means the official cotton standards of the United States established by the Secretary pursuant to the United States Cotton Standards Act, as emended. (d) Bona Fide Spot Markets and Commercial Differences.— (1) Definition.— For purposes of this section, the only markets which shall be considered bona fide spot markets shall be those which the Secretary shall, from time to time, after investigation, determine and designate to be such, and which we shall give public notice. (2) Determination.— In determining, pursuant to the provisions of this section, what markets are bona fide spot markets, the Secretary is directed to consider only markets in “which spot cotton is sold in such volume and under such conditions as customarily to reflect accurately the value of middling cotton and the differences between the prices or values of middling cotton and of other grades of cotton for which standards shall have been established by the Secretary; except that if there are not sufficient places, in the markets of which are made bona fide sales of spot cotton of grades for which standards are established by the Secretary, to enable him to designate at least five spot markets in accordance with subsection (f)(3), he shall, from data as to spot sales collected by him, make rules and regulations for determining the actual commercial differences in the value of spot cotton of the grades established by him as reflected by bona fide sales of spot cotton, of the same or different, grades, in the market selected and designated by him, from time to time, for that purpose, and in that event differences in value of cotton of various grades involved in contracts made pursuant to subsection (f)(1) and (2) shall be determined in compliance with such rules and regulations. It shall be the duty of any person engaged in the business of dealing in cotton, when requested by the Secretary or any agent acting under his instructions, to answer correctly to the best of his knowledge, under oath or otherwise, all questions touching his knowledge of the number of bales, the classification, the price or bona fide price offered, and other trims of purchase or sale, of any cotton involved in any transaction participated in by him, or to produce all books, letters, papers, or documents in his possession or under his control relating to such matter. (3) Withholding information.— Any person engaged in the business of dealing in cotton who shall, within a reasonable time prescribed by the Secretary or any agent acting under his instructions, willfully fail or refuse to answer questions or to produce books, letters, papers, or documents, as required under paragraph (2) of this subsection, or who shall willfully give any answer that is false or misleading, shall, upon conviction thereof, be fined not more than $500. (e) Form and Validity of Cotton Futures Contracts.— Each cotton futures contract shall be a basis grade contract, or a tendered grade contract, or a specific grade contract as specified in subsections (f), (g), or (h) and shall be in writing plainly stating, or evidenced by written memorandum showing, the terms of such contract, including the quantity of the cotton involved and the names and addresses of the seller and buyer in such contract, and shall be signed by the party to be charged, or by his agent in his behalf. No cotton futures contracts which does not conform to such requirements shall be enforceable by, or on behalf of, any party to such contract or his privies. (f) Basis Grade Contracts.— (1) Conditions.— Each basis grade cotton futures contract shall comply with each of the following conditions: (A) Conformity with regulations.— Conform to the regulations made pursuant to this section. (B) Specification of grade, price, and dates of sale and settlement.— Specify the basis grade for the cotton involved in the contract, which shall be one of the grades for which standards are established by the Secretary, except grades prohibited from being delivered on a contract made under this subsection by subparagraph (E), the price per pound at which the cotton of such basis grade is contracted to be bought or sold, the date when the purchase or sale was made, and the month or months in which the contract is to be fulfilled or settled; except that middling shall be deemed the basis £ade incorporated into the contract if no other basis grade specified either in the contract or in the memorandum evidencing the same. (C) Provision for delivery of standard grades only.— Provide that the cotton dealt with therein or delivered thereunder shall be of or within the grades for which standards are established by the Secretary except grades prohibited from being delivered on a contract made under this subsection by subparagraph (E) and no other grade or grades. (D) Provision for settlement on basis of actual commercial differences.— Provide that in case cotton of grade other than the basis grade be tendered or delivered in settlement of such contract, the differences above or below the contract price which the receiver shall pay for such grades other than the basis grade shall be the actual commercial differences, determined as hereinafter provided, (E) Prohibition of delivery of inferior cotton.— Provide that cotton that, because of the presence of extraneous matter of any character, or irregularities or defects, is reduced in value below that of low middling, or cotton that is below the grade of low middling, or, if tinged, cotton that is below the grade of strict middling, or, if yellow stained, cotton that is below the grade of good middling, the grades mentioned being of the official cotton standards of the United States, or cotton that is less than seven-eighths of an inch in length of staple, or cotton of perished staple, or of immature staple, or cotton that is “gin cut” or reginned, or cotton that is “repacked” or “false packed” or “mixed packed” or “water packed”, shall not be delivered on, under, or in settlement of such contract. (F) Provisions for tender in full, notice of delivery date, and certificate of grade.— Provide that all tenders of cotton under such contract shall be the full number of bales involved therein, except that such variations of the number of bales may be permitted as is necessary to bring the total weight of the cotton tendered within the provisions of the contract as to weight; that, on the fifth business day prior to delivery, the person making the tender shall give to the person receiving the same written notice of the date of delivery, and that, on or prior to the date so fixed for delivery, and in advance of final settlement of the contract, the person making the tender shall furnish to the person receiving the same a written notice or certificate stating the grade of each individual bale to be delivered and, by means of marks or numbers, identifying each bale with its grade. (G) Provision for tender and settlement in accordance with government classification.— Provide that all tenders of cotton and settlements therefor under such contract shall be in accordance with the classification thereof made under the regulations of the Secretary by such officer or officers of the Government as shall be designated for the purpose, and the costs of such classification shall be fixed, assessed, col- Regulations. lected, and paid as provided in such regulations. The Secretary is authorized to prescribe regulations for carrying out the purposes of this subparagraph and the certificates of the officers of the Government, as to the classification of any cotton for the purposes of this subparagraph shall be accepted in the courts of the United States in all suits between the parties to such contract, or their privies, as prima facie evidence of the true classification of the cotton involved. (2) Incorporation of conditions in contracts.— The provisions of paragraphs (1)(C), (D), (E), (F), and (G) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandums evidencing the same, at or prior to the time the same is signed, the phrase “Subject to United States Cotton Futures Act, subsection (f).” (3) Delivery allowances.— For the purpose of this subsection, the differences above or below the contract price which the receiver shall pay for cotton of grades above or below the basic grade in the settlement of a contract of sale for the future delivery of cotton shall be determined by the actual commercial differences in value thereof upon the sixth business day prior to the day fixed, in accordance with paragraph (1)(F), for the delivery of cotton on the contract, established by the sale of spot cotton in the spot markets of not less than five places designated for the purpose from time to time by the Secretary, as such values were established by the sales of spot cotton, in such designated five or more markets. For purposes of this paragraph, such values in the such spot markets shall be based upon the standards for grades of cotton established by the Secretary. Whenever the value Rules and regulations. of one grade is to be determined from the sale or sales of spot cotton of another grade or grades, such value shall be fixed in accordance with rules and regulations which shall be prescribed for the purpose by the Secretary. (g) Tendered Grade Contracts.— (1) Conditions.— Each tendered grade cotton future contract shall comply with each of the following conditions: (A) Compliance with subsection (f).— Comply with all the terms and conditions of subsection (f) not inconsistent with this subsection; and (B) Provision for contingent specific performance.— Provide that, in case cotton of grade or grades other than the basis grade specified in the contract shall be tendered in performance of the contract, the parties to such contract may agree, at the time of the tender, as to the price of the grade or grades so tendered, and that if they shall not then agree as to such price, then, and in that event, the buyer of said contract shall have the right to demand the specific fulfillment of such contract by the actual delivery of cotton of the basis grade named therein and at the price specified for such basis grade in said contract. (2) Incorporation of conditions in contract.— Contracts made in compliance, with this subsection shall be known as “subsection (g) Contracts”. The provisions of this subsection shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandum evidencing the same, at or prior to the time the same is signed, the phrase “Subject to United States Cotton Futures Act, subsection (g)”. (3) Application of subsection.— Nothing in this subsection shall be so construed as to authorize any contract in which, or in the settlement of or in respect to which, any device or arrangement whatever is resorted to, or any agreement is made, for the determination or adjustment of the price of the grade or grades tendered other than the basis grade specified in the contract by any “fixed difference” system, or by arbitration, or by any other method not provided for by this section. (h) Specific Grade Contracts.— (1) Conditions.— Each specific grade cotton futures contract shall comply with each of the following conditions: (A) Conformity with rulesand regulations.— Con form to the rules and regulations made pursuant to this section. (B) Specification of grade, price, dates of sale and delivery.— Specify the grade, type, sample, or description of the cotton involved in the contract, the price per pound at which such cotton is contracted to be bought or sold, the date of the purchase or sale, and the time when shipment or delivery of such cotton is to be made. (C) Prohibition of delivery of other than specified grade.— Provide that cotton of or within the grade or of the type, or according to the sample or description, specified in the contract shall be delivered thereunder, and that no cotton which does not conform to the type, sample, or description, or which is not of or within the grade specified in the contract shall be tendered or delivered thereunder. (D) Provision for specific performance.— Provide that the delivery of cotton under the contract shall not be effected by means of “setoff” or “ring” settlement, but only by the actual transfer of the specified cotton mentioned in the contract. (2) Incorporation of conditions in contract.— The provisions of paragraphs (1)(A), (C). and (D) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the document or memorandum evidencing the same, at or prior to the time the same is entered into, the words “Subject to United States Cotton Futures Act, subsection (h)”. Ante, p. 1841. (3) Application of subsection.— This subsection shall not be construed to apply to any contract of sale made in compliance with subsection (f) or (g). (i) Liability of Principal for Acts of Agent.— When construing and enforcing the provisions of this section, the act, omission, or failure of any official, agent, or other person acting for or employed by any association, partnership, or corporation within the scope of his employment or office shall, in every case, also be deemed the act, omission, or failure of such association, partnership, or corporation, as well as that of the person. (j) Regulations.— The Secretary is authorized to make such regulations with the force and effect of law as he determines may be necessary to carry out the provisions of this section and the powers vested in him by this section. (k) Validations.— Any person who knowingly violates any regulation made in pursuance of this section, shall, upon conviction thereof be fined not less than $100 nor more than $500, for each violation thereof, in the discretion of the court, and, in case of natural persons, may, in addition be punished by imprisonment for not less than 30 days nor more than 90 days, for each violation, in the discretion of the court except that this subsection shall not apply to violations subject to subsection (d)(3). (l) Applicability to Contracts Prior to Effective Date.— The provisions of this section shall not apply to any cotton futures contract entered into prior to the effective date of this section or to any act or failure to act by any person prior to such effective date and all such prior contracts, acts or failure to act shall continue to be governed by 26 USC 1. the applicable provisions of the Internal Revenue Code of 1954 as in effect prior to the enactment of this section. All designations of bona fide spot markets and all rules and regulations issued by the Secretary pursuant to the applicable provisions of the Internal Revenue Code of 1954 which were in effect on the effective date of this section, shall remain fully effective as designations and regulations under this section until superseded, amended, or terminated by the Secretary. (m) Authorization.— There are authorized to be appropriated such sums as may be necessary to carry out this section. (n) Conforming and Clerical, Amendments.— (1) Section 6808 (relating to cross references) is amended by striking out paragraph (2), and by redesignating paragraphs (3), (6), and (11) as paragraphs (1), (2), and (3), respectively. (2) (A) Section 7233 (relating to failure to pay tax on cotton futures) is repealed. (B) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7233. (3) (A) Section 7263 (relating to penalties concerning cotton futures) is repealed. (B) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7263. (4) (A) Subchapter E of chapter 76 (relating to miscellaneous provisions regarding cotton futures contracts) is repealed. (B) The table of subchapters for chapter 76 is amended by striking out the items relating to subchapter E. (5) Chapter 39 (relating to regulatory taxes) is amended by striking out the chapter heading and the table of subchapters. (6) The table of chapters for subtitle D is amended by striking out the item relating to chapter 39. (o) Effective Date.— The provisions of this section shall take effect on the 90th day after the date of the enactment of this Act.

6. 1982

   Pub. L. 97–248 § 309(a) · 96 Stat. 324

   1. Redesignated · 26 U.S.C. § 6049(a)

      Pub. L. 97–248, § 309(a), redesignated subpars. (A) and (B) of former par. (1) as pars. (1) and (2), respectively, in par. (2) as so redesignated inserted “(as so defined)” after “payments of interest”

   2. Substituted · 26 U.S.C. § 6049(a)

      Pub. L. 97–248, § 309(a), substituted par. (3) for former par. (1)(C) which described corporations with evidence of outstanding indebtedness in registered form for which during any calendar year there was at least $10 of original issue discount includible in the gross income of a holder under section 1232(a)(3) of this title without regard to subpar. (B) thereof

   3. Substituted · 26 U.S.C. § 6049(a)

      Pub. L. 97–248, § 309(a), substituted “of such payments, tax deducted and withheld, and the name and address of the person to whom paid or from whom withheld” for “of such payments and such aggregate amount includible in the gross income of any holder and the name and address of the person to whom paid or such holder” in provisions following par. (3), formerly following par. (1)(C)

   4. Struck · 26 U.S.C. § 6049(a)

      Pub. L. 97–248, § 309(a), struck out former par. (2), which directed persons making aggregate interest payments of less than $10 to another person during any calendar year to report such payments and the recipients when required by the Secretary, and former par. (3), which required all corporations making payments of any amount of interest other than as defined in subsec. (b) to report such payments and the recipients when required by the Secretary

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 97–248, § 309(a), redesignated subpars. (A) and (B) of former par. (1) as pars. (1) and (2), respectively, in par. (2) as so redesignated inserted “(as so defined)” after “payments of interest”, substituted par. (3) for former par. (1)(C) which described corporations with evidence of outstanding indebtedness in registered form for which during any calendar year there was at least $10 of original issue discount includible in the gross income of a holder under section 1232(a)(3) of this title without regard to subpar. (B) thereof, substituted “of such payments, tax deducted and withheld, and the name and address of the person to whom paid or from whom withheld” for “of such payments and such aggregate amount includible in the gross income of any holder and the name and address of the person to whom paid or such holder” in provisions following par. (3), formerly following par. (1)(C), and struck out former par. (2), which directed persons making aggregate interest payments of less than $10 to another person during any calendar year to report such payments and the recipients when required by the Secretary, and former par. (3), which required all corporations making payments of any amount of interest other than as defined in subsec. (b) to report such payments and the recipients when required by the Secretary.

   Enacted provision · exact public law section
   (a) General Rule.— Section 6049 (relating to returns regarding 26 USC 6049. payments of interest) is amended to read as follows: “SEC. 6019. RETURNS REGARDING PAYMENTS OF INTEREST. “(a) Requirement of Reporting.— Every person— “(1) who makes payments of interest (as defined in subsection (b)) aggregating $10 or more to any other person during any calendar year, “(2) who receives payments of interest (as so defined) as a nominee and who makes payments aggregating $10 or more during any calendar year to any other person with respect to the interest so received, or “(3) who is required under subchapter B of chapter 24 to withhold tax on the payment of any interest, shall make a return according to the forms or regulations prescribed by the Secretary, setting forth the aggregate amount of such payments, tax deducted and withheld, and the name and address of the person to whom paid or from whom withheld. “(b) Interest Defined.— “(1) General Rule.— For purposes of subsection (a), the term ‘interest’ means— “(A) interest on any obligation— “(i) issued in registered form, or “(ii) of a type offered to the public, other than any obligation with a maturity (at issue) of not more than 1 year which is held by a corporation, “(B) interest on deposits with persons carrying on the banking business, “(C) amounts (whether or not designated as interest) paid by a mutual savings bank, savings and loan association, building and loan association, cooperative bank, homestead association, credit union, industrial loan association or bank, or similar organization, in respect of deposits, investment certificates, or withdrawable or repurchasable shares, “(D) interest on amounts held by an insurance company under an agreement to pay interest thereon, “(E) interest on deposits with brokers (as defined in section 6045 (c)), Post, p. 600. “(F) interest paid on amounts held by investment companies (as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3)) and on amounts invested in other pooled funds or trusts, and “(G) to the extent provided in regulations prescribed by the Secretary, any other interest (which is not described in paragraph (2)). “(2) Exceptions.— For purposes of subsection (a), the term ‘interest’ does not include— “(A) interest on any obligation issued by a natural person, “(B) interest on any obligation if such interest is exempt from tax under section 103(a) or if such interest is exempt from tax (without regard to the identity of the holder) under any other provision of law, “(C) except to the extent otherwise provided in regulations— “(i) any amount paid to any person referred to in paragraph (2) of section 3452(c) (other than subparagraphs Ante, p. 577. (J) and (K) thereof), or “(ii) any amount described in section 3454(a){2)(D) or (E), “(D) except to the extent otherwise provided in regulations, any amount not described in subparagraph (C) of this paragraph which is income from sources outside the United States or which is paid by— “(i) a foreign government or international organization or any agency or instrumentality thereof, “(ii) a foreign central bank of issue, “(iii) a foreign corporation not engaged in a trade or business in the United States, “(iv) a foreign corporation, the interest payments of which would be exempt from withholding under subchapter A of chapter 3 if paid to a person who is not a United States person, or “(v) a partnership not engaged in a trade or business in the United States and composed in whole of nonresident alien individuals and persons described in clause (i), (ii), or (iii), and “(E) any amount on which the person making payment is required to deduct and withhold a tax under section 1451 (relating to tax-free covenant bonds), or would be so required but for section 1451(d) (relating to benefit of personal exemptions). “(3) Payments by united states nominees, etc., of united states person.— If, within the United States, a United States person— “(A) collects interest (or otherwise acts as a middleman between the payor and payee) from a foreign person described in paragraph (2)(D) or collects interest from a United States person which is income from sources outside the United States for a second person who is a United States person, or “(B) makes payments of such interest to such second United States person, notwithstanding paragraph (2)(D), such payment shall be subject to the requirements of subsection (a) with respect to such second United States person. “(c) Statements to be Furnished to Persons With Respect to Whom Information is Furnished.— “(1) In general.— Every person making a return under subsection (a) shall furnish to each person whose name is set forth in such return a written statement showing— “(A) the name and address of the person making such return, “(B) the aggregate amount of payments to, or the aggregate amount includible in the gross income of, the person as shown on such return, and “(C) the aggregate amount of tax deducted and withheld with respect to such person under subchapter B of chapter 24. “(2) Statement must be furnished on or before january 31.— The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was made. “(3) No statement required where interest is less than $10.— No statement with respect to payments of interest to any person shall be required to be furnished to any person under this subsection if the aggregate amount of payments to such person shown on the return made with respect to paragraph (1) or (2), as the case may be, of subsection (a) is less than $10, “(d) Definitions and Special Rules.— For purposes of this section— “(1) Person.— The term ‘person’ includes any governmental unit and any agency or instrumentality thereof and any international organization and any agency or instrumentality thereof. “(2) Obligation.— The term ‘obligation’ includes bonds, debentures, notes, certificates, and other evidences of indebtedness. “(3) Payments by governmental units.— In the case of payments made by any governmental unit or any agency or instrumentality thereof, the officer or employee having control of the payment of interest (or the person appropriately designated for purposes of this section) shall make the returns and statements required by this section. “(4) Financial institutions, brokers, etc., collecting interest may be substituted for payor.— To the extent and in the manner provided by regulations, in the case of any obligation— “(A) a financial institution, broker, or other person specified in such regulations which collects interest on such obligation for the payee (or otherwise acts as a middleman between the payor and the payee) shall comply with the requirements of subsections (a) and (c), and “(B) no other person shall be required to comply with the requirements of subsections (a) and (c) with respect to any interest on such obligation for which reporting is required pursuant to subparagraph (A). “(5) Interest on certain obligations may be treated on a transactional basis.— “(A) In general.— To the extent and in the manner provided in regulations, this section shall apply with respect to— “(i) any person described in paragraph (4)(A), and “(ii) in the case of any United States savings bonds, any Federal agency making payments thereon, on any transactional basis rather than on an annual aggregation basis. “(B) Separate returns and statements.— If subparagraph (A) applies to interest on any obligation, the return under subsection (a) and the statement furnished under subsection (c) with respect to such transaction may be made separately, but any such statement shall be furnished to the payee at such time as the Secretary may prescribe by regulations but not later than January 31 of the next calendar year. “(C) Statement to payee required in case of transactions involving $10 or more.— In the case of any transaction to which this paragraph applies which involves the payment of $10 or more of interest, a statement of the transaction may be provided to the payee of such interest in lieu of the statement required under subsection (c). Such statement shall be provided during January of the year following the year in which such payment is made. “(6) Treatment of original issue discount.— “(A) In general.— Original issue discount on any obligation shall be reported— “(i) as if paid at the time it is includible in gross income under section 1232A (except that for such purpose Ante, p. 496. the amount reportable with respect to any subsequent holder shall be determined as if he were the original holder), and “(ii) if section 1232A does not apply to the obligation, at maturity (or, if earlier, on redemption). In the case of any obligation not in registered form issued before January 1, 1983, clause (ii) and not clause (i) shall apply. “(B) Original issue discount.— For purposes of this paragraph, the term ‘original issue discount’ has the meaning given to such term by section 1232(b)(1).”.

7. 1982

   Pub. L. 97–248 § 309(a) · 96 Stat. 324

   1. Substituted · 26 U.S.C. § 6049(b)

      Pub. L. 97–248, § 309(a), substituted “subsection (a)” for “subsections (a)(1) and (2)”

   2. Substituted · 26 U.S.C. § 6049(b)

      Pub. L. 97–248, § 309(a), substituted “any obligation (i) issued in registered form, or (ii) of a type offered to the public, other than any obligation with a maturity (at issue) of not more than 1 year which is held by a corporation” for “evidences of indebtedness (including bonds, debentures, notes, and certificates) issued by a corporation in registered form, and, to the extent provided in regulations prescribed by the Secretary, interest on other evidences of indebtedness issued by a corporation of a type offered by corporations to the public”

   3. Substituted · 26 U.S.C. § 6049(b)

      Pub. L. 97–248, § 309(a), substituted “brokers (as defined in section 6045(c))” for “stockbrokers and dealers in securities”

   4. Substituted · 26 U.S.C. § 6049(b)

      Pub. L. 97–248, § 309(a), added subpars. (F) and (G), in par. (2) substituted “subsection (a)” for “subsections (a)(1) and (2)” in provisions preceding subpar. (A)

   5. Added · 26 U.S.C. § 6049(b)

      Pub. L. 97–248, § 309(a), added subpar. (A)

   6. Redesignated · 26 U.S.C. § 6049(b)

      Pub. L. 97–248, § 309(a), redesignated former subpar. (A) as (B), in subpar. (B) as so redesignated inserted reference to exemption under any provision of law

   7. Added · 26 U.S.C. § 6049(b)

      Pub. L. 97–248, § 309(a), added subpar. (C)

   8. Redesignated · 26 U.S.C. § 6049(b)

      Pub. L. 97–248, § 309(a), redesignated former subpar. (B) as (D), in subpar. (D) as so redesignated substituted provisions that the subpar. operates except to the extent otherwise provided in regulations or in subpar. (C) for provisions that the subpar. operates to the extent provided in regulations

   9. Added · 26 U.S.C. § 6049(b)

      Pub. L. 97–248, § 309(a), added cls. (i) and (ii)

   10. Inserted · 26 U.S.C. § 6049(b)

       Pub. L. 97–248, § 309(a), designated existing provisions as cls. (iii) to (v), in cl. (iii) as so designated inserted specification of not being engaged in trade or business in the United States, in cl. (iv) as so designated inserted specification of exemption under subchapter A of chapter 3

   11. Redesignated · 26 U.S.C. § 6049(b)

       Pub. L. 97–248, § 309(a), redesignated former subpar. (C) as (E)

   12. Added · 26 U.S.C. § 6049(b)

       Pub. L. 97–248, § 309(a), added par. (3)

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 97–248, § 309(a), substituted “subsection (a)” for “subsections (a)(1) and (2)” in provisions preceding subpar. (A), in subpar. (A) substituted “any obligation (i) issued in registered form, or (ii) of a type offered to the public, other than any obligation with a maturity (at issue) of not more than 1 year which is held by a corporation” for “evidences of indebtedness (including bonds, debentures, notes, and certificates) issued by a corporation in registered form, and, to the extent provided in regulations prescribed by the Secretary, interest on other evidences of indebtedness issued by a corporation of a type offered by corporations to the public” in subpar. (C) inserted “industrial loan association or bank” to list of payors of interest, in subpar. (E) substituted “brokers (as defined in section 6045(c))” for “stockbrokers and dealers in securities”, added subpars. (F) and (G), in par. (2) substituted “subsection (a)” for “subsections (a)(1) and (2)” in provisions preceding subpar. (A), added subpar. (A), redesignated former subpar. (A) as (B), in subpar. (B) as so redesignated inserted reference to exemption under any provision of law, added subpar. (C), redesignated former subpar. (B) as (D), in subpar. (D) as so redesignated substituted provisions that the subpar. operates except to the extent otherwise provided in regulations or in subpar. (C) for provisions that the subpar. operates to the extent provided in regulations, added cls. (i) and (ii), designated existing provisions as cls. (iii) to (v), in cl. (iii) as so designated inserted specification of not being engaged in trade or business in the United States, in cl. (iv) as so designated inserted specification of exemption under subchapter A of chapter 3, redesignated former subpar. (C) as (E), and added par. (3).

   Enacted provision · exact public law section
   (a) General Rule.— Section 6049 (relating to returns regarding 26 USC 6049. payments of interest) is amended to read as follows: “SEC. 6019. RETURNS REGARDING PAYMENTS OF INTEREST. “(a) Requirement of Reporting.— Every person— “(1) who makes payments of interest (as defined in subsection (b)) aggregating $10 or more to any other person during any calendar year, “(2) who receives payments of interest (as so defined) as a nominee and who makes payments aggregating $10 or more during any calendar year to any other person with respect to the interest so received, or “(3) who is required under subchapter B of chapter 24 to withhold tax on the payment of any interest, shall make a return according to the forms or regulations prescribed by the Secretary, setting forth the aggregate amount of such payments, tax deducted and withheld, and the name and address of the person to whom paid or from whom withheld. “(b) Interest Defined.— “(1) General Rule.— For purposes of subsection (a), the term ‘interest’ means— “(A) interest on any obligation— “(i) issued in registered form, or “(ii) of a type offered to the public, other than any obligation with a maturity (at issue) of not more than 1 year which is held by a corporation, “(B) interest on deposits with persons carrying on the banking business, “(C) amounts (whether or not designated as interest) paid by a mutual savings bank, savings and loan association, building and loan association, cooperative bank, homestead association, credit union, industrial loan association or bank, or similar organization, in respect of deposits, investment certificates, or withdrawable or repurchasable shares, “(D) interest on amounts held by an insurance company under an agreement to pay interest thereon, “(E) interest on deposits with brokers (as defined in section 6045 (c)), Post, p. 600. “(F) interest paid on amounts held by investment companies (as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3)) and on amounts invested in other pooled funds or trusts, and “(G) to the extent provided in regulations prescribed by the Secretary, any other interest (which is not described in paragraph (2)). “(2) Exceptions.— For purposes of subsection (a), the term ‘interest’ does not include— “(A) interest on any obligation issued by a natural person, “(B) interest on any obligation if such interest is exempt from tax under section 103(a) or if such interest is exempt from tax (without regard to the identity of the holder) under any other provision of law, “(C) except to the extent otherwise provided in regulations— “(i) any amount paid to any person referred to in paragraph (2) of section 3452(c) (other than subparagraphs Ante, p. 577. (J) and (K) thereof), or “(ii) any amount described in section 3454(a){2)(D) or (E), “(D) except to the extent otherwise provided in regulations, any amount not described in subparagraph (C) of this paragraph which is income from sources outside the United States or which is paid by— “(i) a foreign government or international organization or any agency or instrumentality thereof, “(ii) a foreign central bank of issue, “(iii) a foreign corporation not engaged in a trade or business in the United States, “(iv) a foreign corporation, the interest payments of which would be exempt from withholding under subchapter A of chapter 3 if paid to a person who is not a United States person, or “(v) a partnership not engaged in a trade or business in the United States and composed in whole of nonresident alien individuals and persons described in clause (i), (ii), or (iii), and “(E) any amount on which the person making payment is required to deduct and withhold a tax under section 1451 (relating to tax-free covenant bonds), or would be so required but for section 1451(d) (relating to benefit of personal exemptions). “(3) Payments by united states nominees, etc., of united states person.— If, within the United States, a United States person— “(A) collects interest (or otherwise acts as a middleman between the payor and payee) from a foreign person described in paragraph (2)(D) or collects interest from a United States person which is income from sources outside the United States for a second person who is a United States person, or “(B) makes payments of such interest to such second United States person, notwithstanding paragraph (2)(D), such payment shall be subject to the requirements of subsection (a) with respect to such second United States person. “(c) Statements to be Furnished to Persons With Respect to Whom Information is Furnished.— “(1) In general.— Every person making a return under subsection (a) shall furnish to each person whose name is set forth in such return a written statement showing— “(A) the name and address of the person making such return, “(B) the aggregate amount of payments to, or the aggregate amount includible in the gross income of, the person as shown on such return, and “(C) the aggregate amount of tax deducted and withheld with respect to such person under subchapter B of chapter 24. “(2) Statement must be furnished on or before january 31.— The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was made. “(3) No statement required where interest is less than $10.— No statement with respect to payments of interest to any person shall be required to be furnished to any person under this subsection if the aggregate amount of payments to such person shown on the return made with respect to paragraph (1) or (2), as the case may be, of subsection (a) is less than $10, “(d) Definitions and Special Rules.— For purposes of this section— “(1) Person.— The term ‘person’ includes any governmental unit and any agency or instrumentality thereof and any international organization and any agency or instrumentality thereof. “(2) Obligation.— The term ‘obligation’ includes bonds, debentures, notes, certificates, and other evidences of indebtedness. “(3) Payments by governmental units.— In the case of payments made by any governmental unit or any agency or instrumentality thereof, the officer or employee having control of the payment of interest (or the person appropriately designated for purposes of this section) shall make the returns and statements required by this section. “(4) Financial institutions, brokers, etc., collecting interest may be substituted for payor.— To the extent and in the manner provided by regulations, in the case of any obligation— “(A) a financial institution, broker, or other person specified in such regulations which collects interest on such obligation for the payee (or otherwise acts as a middleman between the payor and the payee) shall comply with the requirements of subsections (a) and (c), and “(B) no other person shall be required to comply with the requirements of subsections (a) and (c) with respect to any interest on such obligation for which reporting is required pursuant to subparagraph (A). “(5) Interest on certain obligations may be treated on a transactional basis.— “(A) In general.— To the extent and in the manner provided in regulations, this section shall apply with respect to— “(i) any person described in paragraph (4)(A), and “(ii) in the case of any United States savings bonds, any Federal agency making payments thereon, on any transactional basis rather than on an annual aggregation basis. “(B) Separate returns and statements.— If subparagraph (A) applies to interest on any obligation, the return under subsection (a) and the statement furnished under subsection (c) with respect to such transaction may be made separately, but any such statement shall be furnished to the payee at such time as the Secretary may prescribe by regulations but not later than January 31 of the next calendar year. “(C) Statement to payee required in case of transactions involving $10 or more.— In the case of any transaction to which this paragraph applies which involves the payment of $10 or more of interest, a statement of the transaction may be provided to the payee of such interest in lieu of the statement required under subsection (c). Such statement shall be provided during January of the year following the year in which such payment is made. “(6) Treatment of original issue discount.— “(A) In general.— Original issue discount on any obligation shall be reported— “(i) as if paid at the time it is includible in gross income under section 1232A (except that for such purpose Ante, p. 496. the amount reportable with respect to any subsequent holder shall be determined as if he were the original holder), and “(ii) if section 1232A does not apply to the obligation, at maturity (or, if earlier, on redemption). In the case of any obligation not in registered form issued before January 1, 1983, clause (ii) and not clause (i) shall apply. “(B) Original issue discount.— For purposes of this paragraph, the term ‘original issue discount’ has the meaning given to such term by section 1232(b)(1).”.

8. 1982

   Pub. L. 97–248 § 309(a) · 96 Stat. 324

   1. Substituted · 26 U.S.C. § 6049(c)

      Pub. L. 97–248, § 309(a), substituted “subsection (a)” for “subsection (a)(1)” wherever appearing

   2. Amended · 26 U.S.C. § 6049(c)

      Pub. L. 97–248, § 309(a), designated provision before former par. (1) as par. (1)

   3. Redesignated · 26 U.S.C. § 6049(c)

      Pub. L. 97–248, § 309(a), redesignated former pars. (1) and (2) as subpars. (A) and (B), respectively

   4. Added · 26 U.S.C. § 6049(c)

      Pub. L. 97–248, § 309(a), added subpar. (C)

   5. Amended · 26 U.S.C. § 6049(c)

      Pub. L. 97–248, § 309(a), designated first sentence after former par. (2) as par. (2)

   6. Inserted · 26 U.S.C. § 6049(c)

      Pub. L. 97–248, § 309(a), designated second sentence after former par. (2) as par. (3), in par. (3) as so designated inserted “with respect to payments of interest to any person” after “No statement”

   7. Struck · 26 U.S.C. § 6049(c)

      Pub. L. 97–248, § 309(a), struck out “, or the aggregate amount includible in the gross income of,” after “payments to”

   8. Substituted · 26 U.S.C. § 6049(c)

      Pub. L. 97–248, § 309(a), substituted “paragraph (1) or (2)” for “subparagraph (A), (B), or (C)” after “with respect to”

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 97–248, § 309(a), substituted “subsection (a)” for “subsection (a)(1)” wherever appearing, designated provision before former par. (1) as par. (1), redesignated former pars. (1) and (2) as subpars. (A) and (B), respectively, added subpar. (C), designated first sentence after former par. (2) as par. (2), designated second sentence after former par. (2) as par. (3), in par. (3) as so designated inserted “with respect to payments of interest to any person” after “No statement”, struck out “, or the aggregate amount includible in the gross income of,” after “payments to”, and substituted “paragraph (1) or (2)” for “subparagraph (A), (B), or (C)” after “with respect to”.

   Enacted provision · exact public law section
   (a) General Rule.— Section 6049 (relating to returns regarding 26 USC 6049. payments of interest) is amended to read as follows: “SEC. 6019. RETURNS REGARDING PAYMENTS OF INTEREST. “(a) Requirement of Reporting.— Every person— “(1) who makes payments of interest (as defined in subsection (b)) aggregating $10 or more to any other person during any calendar year, “(2) who receives payments of interest (as so defined) as a nominee and who makes payments aggregating $10 or more during any calendar year to any other person with respect to the interest so received, or “(3) who is required under subchapter B of chapter 24 to withhold tax on the payment of any interest, shall make a return according to the forms or regulations prescribed by the Secretary, setting forth the aggregate amount of such payments, tax deducted and withheld, and the name and address of the person to whom paid or from whom withheld. “(b) Interest Defined.— “(1) General Rule.— For purposes of subsection (a), the term ‘interest’ means— “(A) interest on any obligation— “(i) issued in registered form, or “(ii) of a type offered to the public, other than any obligation with a maturity (at issue) of not more than 1 year which is held by a corporation, “(B) interest on deposits with persons carrying on the banking business, “(C) amounts (whether or not designated as interest) paid by a mutual savings bank, savings and loan association, building and loan association, cooperative bank, homestead association, credit union, industrial loan association or bank, or similar organization, in respect of deposits, investment certificates, or withdrawable or repurchasable shares, “(D) interest on amounts held by an insurance company under an agreement to pay interest thereon, “(E) interest on deposits with brokers (as defined in section 6045 (c)), Post, p. 600. “(F) interest paid on amounts held by investment companies (as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3)) and on amounts invested in other pooled funds or trusts, and “(G) to the extent provided in regulations prescribed by the Secretary, any other interest (which is not described in paragraph (2)). “(2) Exceptions.— For purposes of subsection (a), the term ‘interest’ does not include— “(A) interest on any obligation issued by a natural person, “(B) interest on any obligation if such interest is exempt from tax under section 103(a) or if such interest is exempt from tax (without regard to the identity of the holder) under any other provision of law, “(C) except to the extent otherwise provided in regulations— “(i) any amount paid to any person referred to in paragraph (2) of section 3452(c) (other than subparagraphs Ante, p. 577. (J) and (K) thereof), or “(ii) any amount described in section 3454(a){2)(D) or (E), “(D) except to the extent otherwise provided in regulations, any amount not described in subparagraph (C) of this paragraph which is income from sources outside the United States or which is paid by— “(i) a foreign government or international organization or any agency or instrumentality thereof, “(ii) a foreign central bank of issue, “(iii) a foreign corporation not engaged in a trade or business in the United States, “(iv) a foreign corporation, the interest payments of which would be exempt from withholding under subchapter A of chapter 3 if paid to a person who is not a United States person, or “(v) a partnership not engaged in a trade or business in the United States and composed in whole of nonresident alien individuals and persons described in clause (i), (ii), or (iii), and “(E) any amount on which the person making payment is required to deduct and withhold a tax under section 1451 (relating to tax-free covenant bonds), or would be so required but for section 1451(d) (relating to benefit of personal exemptions). “(3) Payments by united states nominees, etc., of united states person.— If, within the United States, a United States person— “(A) collects interest (or otherwise acts as a middleman between the payor and payee) from a foreign person described in paragraph (2)(D) or collects interest from a United States person which is income from sources outside the United States for a second person who is a United States person, or “(B) makes payments of such interest to such second United States person, notwithstanding paragraph (2)(D), such payment shall be subject to the requirements of subsection (a) with respect to such second United States person. “(c) Statements to be Furnished to Persons With Respect to Whom Information is Furnished.— “(1) In general.— Every person making a return under subsection (a) shall furnish to each person whose name is set forth in such return a written statement showing— “(A) the name and address of the person making such return, “(B) the aggregate amount of payments to, or the aggregate amount includible in the gross income of, the person as shown on such return, and “(C) the aggregate amount of tax deducted and withheld with respect to such person under subchapter B of chapter 24. “(2) Statement must be furnished on or before january 31.— The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was made. “(3) No statement required where interest is less than $10.— No statement with respect to payments of interest to any person shall be required to be furnished to any person under this subsection if the aggregate amount of payments to such person shown on the return made with respect to paragraph (1) or (2), as the case may be, of subsection (a) is less than $10, “(d) Definitions and Special Rules.— For purposes of this section— “(1) Person.— The term ‘person’ includes any governmental unit and any agency or instrumentality thereof and any international organization and any agency or instrumentality thereof. “(2) Obligation.— The term ‘obligation’ includes bonds, debentures, notes, certificates, and other evidences of indebtedness. “(3) Payments by governmental units.— In the case of payments made by any governmental unit or any agency or instrumentality thereof, the officer or employee having control of the payment of interest (or the person appropriately designated for purposes of this section) shall make the returns and statements required by this section. “(4) Financial institutions, brokers, etc., collecting interest may be substituted for payor.— To the extent and in the manner provided by regulations, in the case of any obligation— “(A) a financial institution, broker, or other person specified in such regulations which collects interest on such obligation for the payee (or otherwise acts as a middleman between the payor and the payee) shall comply with the requirements of subsections (a) and (c), and “(B) no other person shall be required to comply with the requirements of subsections (a) and (c) with respect to any interest on such obligation for which reporting is required pursuant to subparagraph (A). “(5) Interest on certain obligations may be treated on a transactional basis.— “(A) In general.— To the extent and in the manner provided in regulations, this section shall apply with respect to— “(i) any person described in paragraph (4)(A), and “(ii) in the case of any United States savings bonds, any Federal agency making payments thereon, on any transactional basis rather than on an annual aggregation basis. “(B) Separate returns and statements.— If subparagraph (A) applies to interest on any obligation, the return under subsection (a) and the statement furnished under subsection (c) with respect to such transaction may be made separately, but any such statement shall be furnished to the payee at such time as the Secretary may prescribe by regulations but not later than January 31 of the next calendar year. “(C) Statement to payee required in case of transactions involving $10 or more.— In the case of any transaction to which this paragraph applies which involves the payment of $10 or more of interest, a statement of the transaction may be provided to the payee of such interest in lieu of the statement required under subsection (c). Such statement shall be provided during January of the year following the year in which such payment is made. “(6) Treatment of original issue discount.— “(A) In general.— Original issue discount on any obligation shall be reported— “(i) as if paid at the time it is includible in gross income under section 1232A (except that for such purpose Ante, p. 496. the amount reportable with respect to any subsequent holder shall be determined as if he were the original holder), and “(ii) if section 1232A does not apply to the obligation, at maturity (or, if earlier, on redemption). In the case of any obligation not in registered form issued before January 1, 1983, clause (ii) and not clause (i) shall apply. “(B) Original issue discount.— For purposes of this paragraph, the term ‘original issue discount’ has the meaning given to such term by section 1232(b)(1).”.

9. 1982

   Pub. L. 97–248 § 309(a) · 96 Stat. 324

   Added · 26 U.S.C. § 6049(d)

   Pub. L. 97–248, § 309(a), added subsec. (d)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 97–248, § 309(a), added subsec. (d).

   Enacted provision · exact public law section
   (a) General Rule.— Section 6049 (relating to returns regarding 26 USC 6049. payments of interest) is amended to read as follows: “SEC. 6019. RETURNS REGARDING PAYMENTS OF INTEREST. “(a) Requirement of Reporting.— Every person— “(1) who makes payments of interest (as defined in subsection (b)) aggregating $10 or more to any other person during any calendar year, “(2) who receives payments of interest (as so defined) as a nominee and who makes payments aggregating $10 or more during any calendar year to any other person with respect to the interest so received, or “(3) who is required under subchapter B of chapter 24 to withhold tax on the payment of any interest, shall make a return according to the forms or regulations prescribed by the Secretary, setting forth the aggregate amount of such payments, tax deducted and withheld, and the name and address of the person to whom paid or from whom withheld. “(b) Interest Defined.— “(1) General Rule.— For purposes of subsection (a), the term ‘interest’ means— “(A) interest on any obligation— “(i) issued in registered form, or “(ii) of a type offered to the public, other than any obligation with a maturity (at issue) of not more than 1 year which is held by a corporation, “(B) interest on deposits with persons carrying on the banking business, “(C) amounts (whether or not designated as interest) paid by a mutual savings bank, savings and loan association, building and loan association, cooperative bank, homestead association, credit union, industrial loan association or bank, or similar organization, in respect of deposits, investment certificates, or withdrawable or repurchasable shares, “(D) interest on amounts held by an insurance company under an agreement to pay interest thereon, “(E) interest on deposits with brokers (as defined in section 6045 (c)), Post, p. 600. “(F) interest paid on amounts held by investment companies (as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3)) and on amounts invested in other pooled funds or trusts, and “(G) to the extent provided in regulations prescribed by the Secretary, any other interest (which is not described in paragraph (2)). “(2) Exceptions.— For purposes of subsection (a), the term ‘interest’ does not include— “(A) interest on any obligation issued by a natural person, “(B) interest on any obligation if such interest is exempt from tax under section 103(a) or if such interest is exempt from tax (without regard to the identity of the holder) under any other provision of law, “(C) except to the extent otherwise provided in regulations— “(i) any amount paid to any person referred to in paragraph (2) of section 3452(c) (other than subparagraphs Ante, p. 577. (J) and (K) thereof), or “(ii) any amount described in section 3454(a){2)(D) or (E), “(D) except to the extent otherwise provided in regulations, any amount not described in subparagraph (C) of this paragraph which is income from sources outside the United States or which is paid by— “(i) a foreign government or international organization or any agency or instrumentality thereof, “(ii) a foreign central bank of issue, “(iii) a foreign corporation not engaged in a trade or business in the United States, “(iv) a foreign corporation, the interest payments of which would be exempt from withholding under subchapter A of chapter 3 if paid to a person who is not a United States person, or “(v) a partnership not engaged in a trade or business in the United States and composed in whole of nonresident alien individuals and persons described in clause (i), (ii), or (iii), and “(E) any amount on which the person making payment is required to deduct and withhold a tax under section 1451 (relating to tax-free covenant bonds), or would be so required but for section 1451(d) (relating to benefit of personal exemptions). “(3) Payments by united states nominees, etc., of united states person.— If, within the United States, a United States person— “(A) collects interest (or otherwise acts as a middleman between the payor and payee) from a foreign person described in paragraph (2)(D) or collects interest from a United States person which is income from sources outside the United States for a second person who is a United States person, or “(B) makes payments of such interest to such second United States person, notwithstanding paragraph (2)(D), such payment shall be subject to the requirements of subsection (a) with respect to such second United States person. “(c) Statements to be Furnished to Persons With Respect to Whom Information is Furnished.— “(1) In general.— Every person making a return under subsection (a) shall furnish to each person whose name is set forth in such return a written statement showing— “(A) the name and address of the person making such return, “(B) the aggregate amount of payments to, or the aggregate amount includible in the gross income of, the person as shown on such return, and “(C) the aggregate amount of tax deducted and withheld with respect to such person under subchapter B of chapter 24. “(2) Statement must be furnished on or before january 31.— The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was made. “(3) No statement required where interest is less than $10.— No statement with respect to payments of interest to any person shall be required to be furnished to any person under this subsection if the aggregate amount of payments to such person shown on the return made with respect to paragraph (1) or (2), as the case may be, of subsection (a) is less than $10, “(d) Definitions and Special Rules.— For purposes of this section— “(1) Person.— The term ‘person’ includes any governmental unit and any agency or instrumentality thereof and any international organization and any agency or instrumentality thereof. “(2) Obligation.— The term ‘obligation’ includes bonds, debentures, notes, certificates, and other evidences of indebtedness. “(3) Payments by governmental units.— In the case of payments made by any governmental unit or any agency or instrumentality thereof, the officer or employee having control of the payment of interest (or the person appropriately designated for purposes of this section) shall make the returns and statements required by this section. “(4) Financial institutions, brokers, etc., collecting interest may be substituted for payor.— To the extent and in the manner provided by regulations, in the case of any obligation— “(A) a financial institution, broker, or other person specified in such regulations which collects interest on such obligation for the payee (or otherwise acts as a middleman between the payor and the payee) shall comply with the requirements of subsections (a) and (c), and “(B) no other person shall be required to comply with the requirements of subsections (a) and (c) with respect to any interest on such obligation for which reporting is required pursuant to subparagraph (A). “(5) Interest on certain obligations may be treated on a transactional basis.— “(A) In general.— To the extent and in the manner provided in regulations, this section shall apply with respect to— “(i) any person described in paragraph (4)(A), and “(ii) in the case of any United States savings bonds, any Federal agency making payments thereon, on any transactional basis rather than on an annual aggregation basis. “(B) Separate returns and statements.— If subparagraph (A) applies to interest on any obligation, the return under subsection (a) and the statement furnished under subsection (c) with respect to such transaction may be made separately, but any such statement shall be furnished to the payee at such time as the Secretary may prescribe by regulations but not later than January 31 of the next calendar year. “(C) Statement to payee required in case of transactions involving $10 or more.— In the case of any transaction to which this paragraph applies which involves the payment of $10 or more of interest, a statement of the transaction may be provided to the payee of such interest in lieu of the statement required under subsection (c). Such statement shall be provided during January of the year following the year in which such payment is made. “(6) Treatment of original issue discount.— “(A) In general.— Original issue discount on any obligation shall be reported— “(i) as if paid at the time it is includible in gross income under section 1232A (except that for such purpose Ante, p. 496. the amount reportable with respect to any subsequent holder shall be determined as if he were the original holder), and “(ii) if section 1232A does not apply to the obligation, at maturity (or, if earlier, on redemption). In the case of any obligation not in registered form issued before January 1, 1983, clause (ii) and not clause (i) shall apply. “(B) Original issue discount.— For purposes of this paragraph, the term ‘original issue discount’ has the meaning given to such term by section 1232(b)(1).”.

10. 1982

    Pub. L. 97–248 title III · 96 Stat. 324

    1. Added · 26 U.S.C. § 6049(e)

       Pub. L. 97–248, §§ 303(b), 308(a), provided that, applicable to payments of interest, dividends, and patronage dividends paid or credited after June 30, 1983, a new subsec. (e) is added. Section 102(a), (b) of Pub. L. 98–67, title I, Aug. 5, 1983, 97 Stat. 369

    2. Repealed · 26 U.S.C. § 6049(e)

       Pub. L. 97–248, §§ 303(b), 308(a), provided that, applicable to payments of interest, dividends, and patronage dividends paid or credited after June 30, 1983, a new subsec. (e) is 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

    Source evidence

    Code amendment note
    Subsec. (e). Pub. L. 97–248, §§ 303(b), 308(a), provided that, applicable to payments of interest, dividends, and patronage dividends paid or credited after June 30, 1983, a new subsec. (e) 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.

    Enacted provision · exact public law
    TITLE III— TAXPAYER COMPLIANCE Subtitle A— Withholding on Interest and Dividends SEC. 301. WITHHOLDING ON INTEREST AND DIVIDENDS. Chapter 24 (relating to collection of income tax at source on wages) is amended by adding at the end thereof the following new subchapter: “Subchapter B— Withholding From Interest and Dividends “Sec. 3451. Income tax collected at source on interest, dividends, and patronage dividends. “Sec. 3452. Exemptions from withholding. “Sec. 3453. Payor defined. “Sec. 3454. Definitions of interest, dividend, and patronage dividend. “Sec. 3455. Other definitions and special rules. “Sec. 3456. Administrative provisions. “SEC. 3451. INCOME TAX COLLECTED AT SOURCE ON INTEREST, DIVIDENDS. AND PATRONAGE DIVIDENDS. “(a) Requirement of Withholding.— Except as otherwise provided in this subchapter, the payor of any interest, dividend, or patronage dividend shall withhold a tax equal to 10 percent of the amount of the payment. “(b) Special Rules.— “(1) Time of withholding.— Except as otherwise provided in this subchapter, for purposes of this subchapter— “(A) any payment of interest, dividend, or patronage dividend shall be treated as made, and “(B) the tax imposed by this section shall be withheld, at the time such interest, dividend, or patronage dividend is paid or credited. “(2) Payee unknown.— If a payor is unable to determine the person to whom any interest, dividend, or patronage dividend is payable or creditable, the tax under this section shall be withheld at the time withholding would be required under paragraph (1) if the payee were known and were an individual. “(3) Amount of dividend, etc., unknown.— “(A) In general.— If the payor is unable to determine the portion of a distribution which is a dividend, the tax under this section shall be computed on the gross amount of the distribution. To the extent provided in regulations, a similar rule shall apply in the case of interest and patronage dividends. “(B) Distributions which are not dividends.— To the extent provided in regulations, this section shall not apply to the extent that the portion of a distribution which is not a dividend may reasonably be estimated. “(4) Withholding from alternative source.— The Secretary shall prescribe regulations setting forth the circumstances under which the tax imposed by this section may be paid from an account or source other than the payment which gives rise to the liability for tax. “(c) Liability for payment.— “(1) Payor liable.— Except as otherwise provided in this subchapter, the payor— “(A) shall be liable for the payment of the tax imposed by this section which such payor is required to withhold under this section, and “(B) shall not be liable to any person (other than the United States) for the amount of any such payment. “(2) Reliance on exemption certificates.— The payor shall not be liable for the payment of tax imposed by this section which such payor is required to withhold under this section if— “(A) such payor fails to withhold such tax, and “(B) such failure is due to reasonable reliance on an exemption certificate delivered to such payor under section 3452(f) which is in effect with respect to the payee at the time such tax is required to be withheld under this section. “SEC. 3452. EXEMPTIONS FROM WITHHOLDING. “(a) In General.— Section 3451 shall not apply with respect to— “(1) any payment to an exempt individual, “(2) any payment to an exempt recipient, “(3) any minimal interest payment, or “(4) any qualified consumer cooperative payment. “(b) Exempt Individuals.— “(1) In general.— For purposes of this section, the term ‘exempt individual’ means any individual— “(A) who is described in paragraph (2), and “(B) with respect to whom an exemption certificate is in effect. “(2) Individuals described in this paragraph.— An individual is described in this paragraph if— “(A) such individual’s income tax liability for the preceding taxable year did not exceed $600 ($1,000 in the case of a joint return under section 6013), or “(B) (i) such individual is 65 or older, and “(ii) such individual’s income tax liability for the preceding taxable year did not exceed $1,500 ($2,500 in the case of a joint return under section 6013). “(3) Special rule for married persons.— A husband and wife shall each be treated as satisfying the requirements of paragraph (2)(B)(i) if— “(A) either spouse is 65 or older, and “(B) such husband and wife made a joint return under section 6013 for the preceding taxable year. “(4) Special rule for certain trusts distributing currently.— Under regulations, a trust— “(A) the terms of which provide that all of its income is required to be distributed currently, and “(B) all the beneficiaries of which are individuals described in paragraph (2) or organizations described in subsection (c)(2)(B), shall be treated as an individual described in paragraph (2). “(5) Income tax liability.— For purposes of this subsection, the term ‘income tax liability’ means the amount of the tax imposed by subtitle A for the taxable year, reduced by the sum of the credits allowable against such tax (other than credits allowable by sections 31, 39, and 43). 26 USC 31, 39, 43. “(c) Exempt recipients.— “(1) In general.— For purposes of this section, the term ‘exempt recipient’ means any person described in paragraph (2)— “(A) with respect to whom an exemption certificate is in effect, or “(B) who is described in regulations prescribed by the Secretary which permit exemption from withholding without certification. “(2) Persons described in this paragraph.— A person is described in this paragraph if such person is— “(A) a corporation, “(B) an organization exempt from taxation under section 501(a) or an individual retirement plan, “(C) the United States or a State, “(D) a foreign government or international organization, “(E) a foreign central bank of issue, “(F) a dealer in securities or commodities required to register as such under the laws of the United States or a State, “(G) a real estate investment trust (as defined in section 856), “(H) an entity registered at all times during the taxable year under the Investment Company Act of 1940, 15 USC 80a–51. “(I) a common trust fund (as defined in section 584(a)), “(J) a nominee or custodian (except as otherwise provided in regulations), “(K) to the extent provided in regulations— “(i) a financial institution, “(ii) a broker, or “(iii) any other person specified in such regulations, who collects any interest, dividend, or patronage dividend for the payee or otherwise acts as a middleman between the payor and payee, or “(L) any trust which— “(i) is exempt from tax under section 664(c), or “(ii) is described in section 4947(a)(1). “(3) Payor may require certification.— A person described in paragraph (1)(B) shall not be treated as an exempt recipient for purposes of this section with respect to any payment of such payor if— “(A) an exemption certificate is not in effect with respect to such person, and “(B) the payor does not treat such person as an exempt recipient. “(d) Minimal Interest Payments.— “(1) In general.— For purposes of this section, the term ‘minimal interest payment’ means any payment of interest— “(A) with respect to which an election by the payor made under paragraph (3) is in effect, and “(B) which— “(i) does not exceed $150, and “(ii) if determined for a 1-year period would not exceed $150. “(2) Aggregation of payments to same payee.— To the extent provided in regulations prescribed by the Secretary, payments of interest by a payor to the same payee shall be aggregated for purposes of applying paragraph (1)(B). “(3) Election.— “(A) In general.— Any payor may make an election under this paragraph with respect to any type of interest payments. “(B) Effective until revoked.— Except as provided in regulations prescribed by the Secretary, an election made by any person under this paragraph shall remain in effect until revoked by such person. “(C) Time and manner.— Any election or revocation of an election made under this paragraph shall be made at such time and in such manner as the Secretary shall prescribe by regulations. “(e) Qualified consumer cooperative payment.— For purposes of this section, the term ‘qualified consumer cooperative payment’ means any payment by a cooperative which is exempt from reporting requirements under section 6044(a) by reason of section 6044(c). “(f) Exemption Certificates.— “(1) In general.— “(A) Delivery.— An exempt individual or exempt recipient may deliver an exemption certificate to a payor at any time. Such certificate shall be in such form and contain such information as the Secretary shall prescribe. “(B) Change of status.— Any person who ceases to be an exempt individual or exempt recipient shall, not later than the close of the 10th day after the date of such cessation, notify each payor with whom such person has an exemption certificate of such change in status. No notice shall be required under the preceding sentence with respect to any payor if it reasonably appears that the person will not thereafter receive a payment of interest, dividends, or patronage dividends from such payor. “(2) Effectiveness of certificates.— “(A) General rule.— Except as otherwise provided in regulations prescribed by the Secretary, an exemption certificate shall be effective until— “(i) revoked, or “(ii) notice of change in status is provided pursuant to paragraph (1)(B). “(B) When certificate takes effect.— The Secretary shall prescribe regulations setting forth— “(i) the day on which a filed exemption certificate shall be considered effective, and “(ii) the circumstances under which a payor shall treat an exemption certificate as having ceased to be effective where the Secretary has determined that the person described there in is not an exempt individual or exempt recipient. “SEC. 3453. PAYOR DEFINED. “(a) General Rule.— Except as otherwise provided in this subchapter, for purposes of this subchapter , the term ‘payor’ means the person paying or crediting the interest , dividend, or patronage dividend. “(b) Certain middlemen treated as payors.— For purposes of this subchapter— “(1) In general.— To the extent provided in regulations— “(A) any custodian for, or nominee of, the payee, “(B) any corporate trustee of a trust which is the payee, or “(C) any person which collects the payment for the payee or otherwise acts as a middleman between the payor and the payee, shall be treated as a payor with respect to the payment. “(2) Receipt treated as payment.— To the extent provided in regulations, any person treated as a payor under paragraph (1) shall be treated as having paid the interest, dividend, or patronage dividend when such person received such amount. “(c) Agents, Etc.— In the case of— “(1) a fiduciary or agent with respect to the payment or crediting of any interest, dividend, or patronage dividend, or “(2) any other person who has the control, receipt, custody, or disposal of, or pays or credits any interest, dividend, or patronage dividend for any payor, the Secretary, under regulations prescribed by him, may designate such fiduciary, agent, or other person as a payor with respect to such payment or crediting for purposes of this subchapter. “(d) Treatment of persons to whom subsection (b) or (c) applies.— Any person treated as a payor under subsection (b) or (c)— “(1) shall perform such acts as are required of a payor (within the meaning of subsection (a)) and as may be specified by the Secretary, and “(2) shall be treated as a payor for all provisions of law (including penalties) applicable in respect to a payor (within the meaning of subsection (a)). “(e) Relief From Double Withholding.— The Secretary may by regulations provide that where any person is treated as a payor under subsection (b) or (c) with respect to any payment, any other person who (but for this subsection) would be treated as a payor with respect to such payment shall be relieved from the requirements of this subchapter to the extent provided in such regulations. “(f) Liability of Third Parties Paying or Providing Interest, Dividends, or Patronage Dividends.— To the extent provided in regulations prescribed by the Secretary, rules similar to the rules of section 3505 (relating to liability of third parties paying or providing for wages) shall apply for purposes of this subchapter. For purposes of the preceding sentence, the last sentence of subsection (b) of section 3505 shall be applied by substituting ‘10 percent’ for ‘25 percent’. “SEC. 3454. DEFINITIONS OF INTEREST, DIVIDEND, AND PATRONAGE DIVIDEND. “(a) Interest Defined.— For purposes of this subchapter— “(1) General rule.— The term ‘interest’ means— “(A) interest on any obligation in registered form or of a type offered to the public, “(B) interest on deposits with persons carrying on the banking business, “(C) amounts (whether or not designated as interest) paid by a mutual savings bank, savings and loan association. building and loan association, cooperative bank, homestead association, credit union, industrial loan association or bank, or similar organization, in respect of deposits, investment certificates, or withdrawable or repurchasable shares, “(D) interest on amounts held by an insurance company under an agreement to pay interest thereon, “(E) interest on deposits with brokers (as defined in section 6045(c)), and Post, p. 600. “(F) interest paid on amounts held by investment companies (as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3)) and on amounts invested in other pooled funds or trusts. “(2) Exceptions.— The term ‘interest’ does not include— “(A) interest on any obligation issued by a natural person, “(B) interest on any obligation if such interest is exempt from taxation under section 103(a) or if such interest is exempt from tax (without regard to the identity of the holder) under any other provision of law, “(C) any amount paid on a depository institution tax-exempt certificate (as defined in section 128(c)(1) (as in 95 Stat. 267. effect for taxable years beginning before January 1, 1985)), “(D) 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, “(E) any amount which would be subject to withholding under subchapter A of chapter 3 by the person paying such amount but for the fact that— “(i) such amount is income from sources outside the United States, “(ii) the payor thereof is excepted from the application of section 1441(a) by reason of section 1441(c) or a tax treaty, or “(iii) such amount is original issue discount (within the meaning of section 1232(b)(1)), “(F) any amount which is exempt from tax under— “(i) section 892 (relating to income of foreign governments and of international organizations), or “(ii) section 895 (relating to income derived by a foreign central bank of issue from obligations of the United States or from bank deposits), “(G) except to the extent otherwise provided in regulations, any amount paid by— “(i) a foreign government or international organization or any agency or instrumentality thereof, “(ii) a foreign central bank of issue, “(iii) a foreign corporation not engaged in trade or business in the United States, “(iv) a foreign corporation, the interest payments of which would be exempt from withholding under subchapter A of chapter 3 if paid to a person who is not a United States person, or “(v) a partnership not engaged in a trade or business in the United States and composed in whole of nonresident aliens, individuals and persons described in clause (i), (ii), or (iii). “(H) any amount on which the person making payment is required to withhold a tax under section 1451 (relating to tax-free covenant bonds), or would be so required but for section 1451(d) (relating to benefit of personal exemptions), and “(I) except to the extent otherwise provided in regulations, any amount not described in the foregoing provisions of this paragraph which is paid outside the United States and is income from sources outside the United States. “(3) Adjustment for penalty because of premature withdrawal of funds from time savings accounts or deposits.— To the extent provided in regulations, the amount of any interest on a time savings account, certificate of deposit, or similar class of deposits shall be appropriately reduced for purposes of this suchapter by the amount of any penalty imposed for the premature withdrawal of funds. “(b) Dividend Defined.— For purposes of this subchapter— “(1) General rule.— The term ‘dividend’ means— “(A) any distribution by a corporation which is a dividend (as defined in section 316), and “(B) any payment made by a stockbroker to any person as a substitute for a dividend (as so defined). “(2) Subchapter s distributions after close of year.— The term ‘dividend’ includes any distribution described in section 1375(f) (relating to distributions by electing small business corporations after the close of the taxable year). “(3) Exceptions.— The term ‘dividend’ shall not include— “(A) any amount paid as a distribution of stock described in section 305(e)(2)(A) (relating to reinvestment of dividends 95 Stat. 287. in stock of public utilities), “(B) any amount which is treated as a taxable dividend by reason of section 302 (relating to redemptions of stock), 306 (relating to disposition of certain stock), 356 (relating to receipt of additional consideration in connection with certain reorganizations), or 1081(e)(2) (relating to certain distributions pursuant to order of the Securities and Exchange Commission), “(C) any amount described in subparagraph (D), (E), or (F) of subsection (a)(2), “(D) to the extent provided in regulations, any amount paid by a foreign corporation not engaged in a trade or business in the United States, “(E) any amount which is a capital gain dividend distributed by— “(i) a regulated investment company (as defined in section 852(b)(3)(C)), or “(ii) a real estate investment trust (as defined in section 857(b)(3)(C)), “(F) any amount which is an exempt-interest dividend of a regulated investment company (as defined in section 852(b)(5)(A)), “(G) any amount paid or treated as paid by a regulated investment company during a year if, under regulations prescribed by the Secretary, it is anticipated that at least 95 percent of the dividends paid or treated as paid during such year (not including capital gain distributions) will be exempt-interest dividends, and “(H) any amount described in section 1373 (relating to undistributed taxable income of electing small business corporations). “(c) Patronage Dividend.— For purposes of this subchapter— “(1) In general.— The term ‘patronage dividend’ means— “(A) the amount of any patronage dividend (as defined in section 1388(a)) which is paid in money, qualified written notice of allocation, or other property (except a nonqualified written notice of allocation), “(B) any amount, described in section 1382(c)(2)(A) (relating to certain nonpatronage distributions), which is paid in money, qualified written notice of allocation, or other property (except nonqualified written notice of allocation) by an organization exempt from tax under section 521 (relating to exemption of farmers’ cooperatives from tax), and “(C) any amount paid in money or other property (except written notice of allocation) in redemption of a nonqualified written notice of allocation attributable to any source described in subparagraph (A) or (B). “(2) Exceptions.— The term ‘patronage dividend’ shall not include any amount described in subparagraph (D), (E), or (F) of subsection (a)(2). “(3) Special rules.— In determining the amount of any patronage dividend— “(A) property (other than a written notice of allocation) shall be taken into account at its fair market value, “(B) a qualified written notice of allocation described in section 1388(c)(1)(A) shall be taken into account at its stated dollar amount, and “(C) a patronage dividend part of which is a qualified written notice of allocation described in section 1388(c)(1)(B) (and not in section 1388(c)(1)(A)) shall be taken into account only if 50 percent or more of such dividend is paid in money or by a qualified check, and any such qualified written notice of allocation which is taken into account after the application of this subparagraph shall be taken into account at its stated dollar amount. “(4) Definitions.— For purposes of this subsection— “(A) Qualified written notice of allocation.— The term ‘qualified written notice of allocation’ has the meaning given to such term by section 1388(c). “(B) Nonqualified written notice of allocation.— The term ‘nonqualified written notice of allocaton’ has the meaning given to such term by section 1388(d). “(C) Qualified check.— The term ‘qualified check’ has the meaning given to such term by section 1388(c)(4). “SEC. 3455. OTHER DEFINITIONS AND SPECIAL RULES. “(a) Definitions.— For purposes of this subchapter— “(1) Person.— The term ‘person’ includes any governmental unit and any agency or instrumentality thereof and any international organization. “(2) State.— The term ‘State’ means a State, the District of Columbia, a possession of the United States, any political subdivision of any of the foregoing, and any wholly owned agency or instrumentality of any one or more of the foregoing. “(3) United states.— The term ‘United States’ means the United States and any wholly owned agency or instrumentality thereof. “(4) Foreign government.— The term ‘foreign government’ means a foreign government, a political subdivision of a foreign government, and any wholly owned agency or instrumentality of any one or more of the foregoing. “(5) International organization.— The term ‘international organization’ means an international organization and any wholly owned agency or instrumentality thereof. “(6) Nonresident alien.— The term ‘nonresident alien individual’ includes an alien resident of Puerto Rico. “(7) Withhold, etc., include deduct.— The terms ‘withhold’, ‘withholding’, and ‘withheld’ include deduct, deducting, and deducted. “(b) Treatment of Original Issue Discount.— “(1) In general.— Except as provided in paragraphs (2) and (3) the tax imposed by section 3451 shall apply to the amount of Ante, p. 576. original issue discount on any obligation which is includible in the gross income of the holder during the calendar year. Any such amount shall be treated as a payment for purposes of this subchapter. “(2) Transferred obligations.— “(A) In general.— In the case of original issue discount on any obligation which has been transferred from the original holder, the tax imposed by section 3451 shall apply to such original issue discount as if the subsequent holder were the original holder. “(B) Special rule for short-term obligations.— In the case of any obligation with a fixed maturity date not exceeding 1 year from the date of issue which has been transferred from the original holder, if any subsequent purchaser establishes the date on which, and the purchase price at which, he acquired such obligation, the amount of original issue discount on such obligation shall be determined (subject to such regulations as the Secretary may prescribe) as if it were issued on the date such subsequent purchaser acquired such obligation for an issue price equal to the purchase price at which such subsequent purchaser acquired such obligation. “(3) LIMITATION ON AMOUNT WITHHELD.— “(A) In general.— The amount of tax imposed by section 3451 on the original issue discount on any obligation which is required to be withheld under section 3451(a) in any calendar year shall not exceed the amount of cash paid with respect to such obligation during such calendar year. “(B) Authority of secretary to eliminate limitation in certain cases.— If the Secretary determines by regulations that a type of obligation is frequently used to avoid the purposes of this subchapter, subparagraph (A) shall not apply with respect to original issue discount on any obligation of such type which is issued more than 30 days after the first date on which such regulations are published in the Federal Register. “(C) Payments from which withholding is to be made.— Except to the extent otherwise provided in regulations, the tax imposed by section 3451 with respect to original issue discount for any calendar year shall be withheld from each cash payment made with respect to such obligation during such calendar year in the proportion which the amount of such payment bears to the aggregate of such payments. “(4) Original issue discount defined.— For purposes of this subsection, the term ‘original issue discount’ has the meaning given such term by section 1232(b)(1). “SEC. 3456. ADMINISTRATIVE PROVISIONS. “(a) Return and Payment by Governmental Units.— If the payor of any payment subject to withholding under section 3451 is the United States or a State, or an agency or instrumentality thereof, the return of the tax withheld under this subchapter shall be made by the officer or employee having control of the payment of the amount subject to withholding or by any officer or employee appropriately designated to make such withholding. “(b) Annual Withholding by Financial Institutions.— “(1) In general.— Under regulations prescribed by the Secretary, a financial institution described in subparagraph (B) or (C) of section 3454(a)(1) may elect to defer withholding of the tax Ante, p. 580. imposed by section 3451 during any calendar year on interest paid on savings accounts, interest-bearing checking accounts, and similar accounts until a date which is not later than the last day of such year. “(2) Condition for election.— The regulations prescribed under paragraph (1) shall provide that an election under such paragraph is conditional on agreement by the person making the election— “(A) that the balance in any account subject to such election shall at no time be less than an amount equal to the tax under section 3451 which would have been withheld as of such time if such election were not in effect, and “(B) that if an account subject to such election is closed before the date on which the tax under section 3451 would (but for this subparagraph) be withheld as a result of such an election, the tax shall be withheld before the time of closing such account. “(c) Tax Paid by Recipient.— If a payor, in violation of the provisions of this subchapter, fails to withhold the tax imposed under section 3451, and thereafter the tax against which such tax may be credited is paid, the tax so required to be withheld shall not be collected from the payor; but this subsection shall in no case relieve the payor from liability for any penalties or additions to the tax otherwise applicable in respect of such failure to withhold. “(d) Regulations.— The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subchapter.” SEC. 302. CREDIT AGAINST TAX. (a) In General.— Section 31 (relating to tax withheld on wages) is 26 USC 31. amended to read as follows: “SEC. 31. TAX WITHHELD ON WAGES, INTEREST, DIVIDENDS, AND PATRONAGE DIVIDENDS. “(a) Wage Withholding.— The amount withheld under section 3402 as tax on the wages of any individual shall be allowed to the recipient of the income as a credit against the tax imposed by this subtitle. “(b) Withholding from Interest, Dividends, and Patronage Dividends.— The amount withheld under section 3451 as tax on interest , dividends, and patronage dividends shall be allowed to the recipient of the income as a credit against the tax imposed by this subtitle. “(c) Credit for Special Refunds of Social Security Tax.— The Secretary may prescribe regulations providing for the crediting against the tax imposed by this subtitle of the amount determined by the taxpayer or the Secretary to be allowable under section 6413(c) as a special refund of tax imposed on wages. The amount allowed as a credit under such regulations shall, for purposes of this subtitle, be considered an amount withheld at source as tax under section 3402. “(d) Year For Which Credit Allowed.— “(1) In general.— Except as otherwise provided in paragraph (2), any credit allowed by this section shall be allowed for the taxable year beginning in the calendar year in which the amount was withheld (or, in the case of subsection (c), in which the wages were received). If more than 1 taxable year begins in a calendar year, such amount shall be allowed as a credit for the last taxable year so beginning. “(2) Special rule for certain distributions of subchapter s corporations.— The amount withheld with respect to a distribution by an electing small business corporation (within the meaning of section 1371(b)) which is treated as a distribution of such corporation’s undistributed taxable income for the preceding year under section 1375(f)(1) shall be allowed as a credit for the taxable year of the recipient beginning in the calendar year in which the preceding year of the corporation ends.” (b) Treatment of Estates and Trusts.— (1) In general.— Section 643 (relating to definitions applicable 26 USC 643. to estates and trusts) is amended by adding at the end thereof the following new subsection: “(d) Coordination With Withholding on Interest and Dividends.— Except to the extent otherwise provided in regulations, this subchapter shall be applied with respect to payments subject to withholding under subchapter B of chapter 24— “(1) by allocating between the estate or trust and its beneficiaries any credit allowable under section 31(b) (on the basis of their respective shares of interest , dividends, and patronage dividends taken into account under this subchapter), “(2) by treating each beneficiary to whom such credit is allocated as if an amount equal to such credit had been paid to him by the estate or trust, and “(3) by allowing the estate or trust a deduction in an amount equal to the credit so allocated to beneficiaries.” (2) Technical amendment.— Subsection (a) of section 661 26 USC 661. (relating to deduction for estates and trusts accumulating income or distributing corpus) is amended by adding at the end thereof the following new sentence: “For purposes of paragraph (1), the amount of distributable net income shall be computed without the deduction allowed by section 642(c).” (c) Conforming amendment.— Paragraph (1) of section 6413(c) 26 USC 6413 is amended by striking out “section 31(b)” and inserting in lieu thereof “section 31(c)”. SEC. 303. RETURNS REGARDING PAYMENTS OF DIVIDENDS AND PAYMENTS OF INTEREST. (a) Dividends.— (1) In general.— Paragraph (1) of subsection 6042(a) (relating 26 USC 6042. to returns regarding payments of dividends) is amended— (A) by striking out “or” at the end of subparagraph (A), (B) by inserting “or” at the end of subparagraph (B), (C) by inserting after subparagraph (B) the following new subparagraph: “(C) who is required to withhold tax under section 3451 Ante, p. 576. on any payment of dividends,”, (D) by striking out the period at the end thereof, and (E) by inserting the following at the end thereof “, and, in the case of a payment upon which tax is withheld, the amount of tax withheld.” (2) Statements.— Section 6042(c) (relating to statements to be furnished to persons with respect to whom information is furnished) is amended— (A) by striking out “and” at the end of paragraph (1), (B) by striking out the period at the end of paragraph (2) and inserting in lieu thereof “, and”, (C) by inserting after paragraph (2) the following paragraph: “(3) the amount of tax withheld under section 3451.”, and (D) by striking out “No statement” in the last sentence thereof and inserting in lieu thereof “Except in the case of are turn required by reason of subparagraph (C) of subsection (a)(1), no statement”. (3) Duplicate filed with secretary.— Section 6042 is amended by adding at the end thereof the following new subsection: “(e) Duplicate of subsection (c) statement may be required to be filed with secretary.— A duplicate of any statement made pursuant to subsection (c) which is required to set forth an amount withheld under section 3451 shall, when required by regulations prescribed by the Secretary, be filed with the Secretary.” (b) Interest.— Section 6049 (relating to returns regarding payments Post, p. 591. of interest) is amended by adding at the end thereof the following new subsection: “(e) Duplicate of subsection (c) statement maybe required to be filed with secretary.— A duplicate of any statement made pursuant to subsection (c) which is required to set forth an amount withheld under section 3451 shall, when required by regulations prescribed by the Secretary, be filed with the Secretary.” SEC. 304. RETURNS REGARDING PAYMENTS OF PATRONAGE DIVIDENDS. (a) In General.— Paragraph (1) of subsection 6044(a) is amended 26 USC 6044. to read as follows: “(1) In general.— Except as otherwise provided in this section, every cooperative to which part I of subchapter T of chapter 1 applies which— “(A) makes payments of amounts described in subsection (b) aggregating $10 or more to any person during any calendar year, or “(B) is required to withhold any tax under section 3451, shall make a return according to the forms or regulations prescribed by the Secretary, setting forth the aggregate amount of such payments, the name and address of the person to whom paid, and the amount of tax withheld.” (b) Amounts Subject to Reporting.— Paragraph (1) of section 6044(b) (relating to amounts subject to reporting) is amended by 26 USC 6044. striking out “under subsection (a)”, and by inserting “under paragraph (1)(A) or (2) of subsection (a)”. (c) Statements.— Section 6044(e) (relating to statements to be furnished to persons with respect to whom information is furnished) is amended— (1) by striking out “and” at the end of paragraph (1), (2) by striking out the period at the end of paragraph (2), and inserting “, and” in lieu thereof, (3) by inserting after paragraph (2) the following paragraph: “(3) the amount of tax withheld under section 3451.”, and (4) by striking out “No statement” in the last sentence thereof and inserting in lieu thereof “Except in the case of a return required by reason of subparagraph (B) of subsection (a)(1), no statement”. (d) Duplicate Filed With Secretary.— Section 6044 is amended by adding at the end thereof the following new subsection: “(f) Duplicate of Subsection (E) Statement May Be Required to be Filed With Secretary.— A duplicate of any statement made pursuant to subsection (e) which is required to set forth an amount withheld under section 3451 shall, when required by regulations prescribed by the Secretary, be filed with the Secretary.” SEC. 305. DENIAL OF DEDUCTION FOR CERTAIN TAXES. (a) No Deduction for Tax Withheld at Source on Interest, Dividends, and Patronage Dividends.— Paragraph (1) of section 275(a) (relating to denial of deduction for certain taxes) is 26 USC 275. amended— (1) by striking out “and” at the end of subparagraph (B), (2) by striking out the period at the end of subparagraph (C) and inserting in lieu thereof “; and”, and (3) by inserting after subparagraph (C) the following subparagraph: “(D) the tax withheld at source on interest, dividends, and patronage dividends under section 3451.” (b) No Deduction of Taxes Withheld on Interest and Dividends in Determining Taxable Income.— Subsection (b) of section 3502 (relating to the nondeductibility of taxes in computing taxable 26 USC 3502. income) is amended— (1) by striking out “under chapter 24” and inserting in lieu thereof “under subchapter A of chapter 24”, and (2) by adding at the end thereof the following new subsection: “(c) The tax withheld under subchapter B of chapter 24 shall not be allowed as a deduction in computing taxable income under subtitle A either to the person withholding the tax or to the recipient of the amounts subject to withholding.” SEC. 306. PENALTIES. (a) Civil Penalty.— Paragraph (1) of section 6682(a) (relating to 26 USC 6682. false information with respect to withholding) is amended by inserting “or section 3452(f)(1)(A)” after “section 3402”. (b) Criminal Penalty.— Section 7205 (relating to fraudulent withholding 26 USC 7205. exemption certificate or failure to supply information) is amended— (1) by striking out “Any individual” and inserting in lieu thereof “(a) Withholding on Wages.—Any individual”, and (2) by adding at the end thereof the following new subsection: “(b) Withholding of Interest and Dividends.— Any person who— “(1) willfully files an exemption certificate with any payor under section 3452(D(1)(A), which is known by him to be fraudulent Ante, p. 577. or to be false as to any material matter, or “(2) is required to furnish notice under section 3452(f)(1)(B), and willfully fails to furnish such notice in the manner and at the time required pursuant to section 3452(f)(1)(B) or the regulations prescribed thereunder, shall, in lieu of any penalty otherwise provided, upon conviction thereof, be fined not more than $500, or imprisoned not more than 1 year, or both.” SEC. 307. CONFORMING AND CLERICAL AMENDMENTS. (a) Conforming Amendments.— (1) Paragraph (3) of section 274(e) (relating to disallowance of 26 USC 274. certain entertainment, etc., expenses) is amended by inserting “subchapter A of” before “chapter 24”. (2) Section 3403 (relating to liability for tax) is amended by 26 USC 3403. striking out “this chapter” and inserting in lieu thereof “this subchapter”. (3) Paragraph (4) of section 3507(d) (relating to advance payment 26 USC 3507. of earned income credit) is amended by inserting “subchapter A of” before “chapter 24”. (4) Subchapter (B) of section 6013(g)(1) (relating to joint 26 USC 6013. returns of income tax by husband and wife) is amended by striking out “(relating to wage withholding)” and by inserting in lieu thereof “(relating to withholding on wages, interest, dividends, and patronage dividends)” and by striking out “of wages”. (5) Paragraph (1) of section 6013(h) is amended by striking out “(relating to wage withholding)” and inserting in lieu thereof “(relating to withholding on wages, interest, dividends, and patronage dividends)” and by striking out “of wages”. (6) Paragraph (1) of section 6015(j) (relating to declaration of 95 Stat. 345. estimated income tax by individuals) is amended by striking out “, as defined in section 3401(a),” and inserting in lieu thereof “(as defined in section 3401(a)) , or to the interest, dividends, and patronage dividends (as defined in section 3454),”. (7) Subparagraph (A) of section 6051(f)(1) (relating to receipts 26 USC 6051. for employees) is amended by inserting “subchapter A of” before “chapter 24”. (8) Paragraph (2) of section 6365(c) (relating to definitions and 26 USC 6365. special rules for purposes of the collection of State individual income taxes) is amended by inserting “, interest, dividends, and patronage dividends” before “paid on or after such date”. (9) Subsection (b) of section 6401 (relating to amounts treated 26 USC 6401. as overpayments) is amended by inserting “, interest, dividends, and patronage dividends” after “tax withheld on wages”. (10) Paragraph (1) of section 6413(a) (relating to special credit 26 USC 6413. and refund rules applicable to certain employment taxes) is amended by striking out “or 3402 is paid with respect to any payment of remuneration,” and inserting in lieu thereof “3402 or 3451 is paid with respect to any payment of remuneration, interest, dividends, or other amounts,”. (11) Subsection (b) of section 6413 is amended— 26 USC 6413. (A) by striking from the heading of such subsection the words “of Certain Employment Taxes”, and (B) by striking out “or 3402 is paid or deducted with respect to any payment of remuneration” and inserting in lieu thereof “3402 or 3451 is paid or deducted with respect to any payment of remuneration, interest, dividends, or other amount”. (12) The heading for section 6413 is amended to read as follows: “SEC. 6413. SPECIAL RULES APPLICABLE TO CERTAIN TAXES UNDER SUBTITLE C.” (13) The table of sections for subchapter B of chapter 65 is amended by striking out the item relating to section 6413 and inserting in lieu thereof the following: “Sec. 6413. Special rules applicable to certain taxes under subtitle C.” (14) Subsections (e)(1) and (g)(3) of section 6654 (relating to 26 USC 6654. failure by individuals to pay estimated income tax) are amended by inserting “, interest, dividends, and patronage dividends” after “tax withheld at source on wages”. (15) The last sentence of section 7215(b) (relating to offenses 26 USC 7215. with respect to collected taxes) is amended to read as follows: “For purposes of paragraph (2), a lack of funds existing immediately after the payment of wages or amounts subject to withholding under subchapter B of chapter 24 (whether or not created by the payment of such wages or amounts) shall not be considered to be circumstances beyond the control of a person.” (16) Subsection (d) of section 7654 (relating to coordination of 26 USC 7654. United States and Guam individual income taxes) is amended by inserting “subchapter A of” before “chapter 24”. (17) Section 7701(a)(16) (defining the term “withholding 26 USC 7701. agent”) is amended by striking out “or 1461” and inserting in lieu thereof “1461 or 3451”. (b) Clerical Amendments.— (1) The heading of subtitle C is amended to read as follows: “Subtitle C— Employment Taxes and Collection of Income Tax at Source”. (2) The table of subtitles for the Internal Revenue Code of 1954 is amended by striking out the item relating to subtitle C and inserting in lieu thereof the following: “Subtitle C. Employment taxes and collection of income tax at source.” (3) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 31 and inserting in lieu thereof the following: “Sec. 31. Tax withheld on wages, interest, dividends, and patronage dividends.” (4) Chapter 24 is amended by striking out the chapter heading and inserting in lieu thereof the following: “CHAPTER 24— COLLECTION OF INCOME TAX AT SOURCE “Subchapter A. Withholding from wages. “Subchapter B. Withholding from interest and dividends. “Subchapter A— Withholding From Wages”. (5) The heading for chapter 25 is amended to read as follows: “CHAPTER 25— GENERAL PROVISIONS RELATING TO EMPLOYMENT TAXES AND COLLECTION OF INCOME TAXES AT SOURCE”. (6) The table of chapters for subtitle C is amended by striking out the items relating to chapters 24 and 25 and inserting in lieu thereof the following: “Chapter 24. Collection of income tax at source. “Chapter 25. General provisions relating to employment taxes and collection of income taxes at source.” SEC. 308. EFFECTIVE DATES; SPECIAL RULES. (a) In General.— Except as otherwise provided in this section, the amendments made by this part shall apply to payments of interest, dividends, and patronage dividends paid or credited after June 30, 1983. (b) Delay in Application to Certain Payors.— The Secretary of the Treasury shall prescribe such regulations which delay (but not beyond December 31, 1983) the application of some or all of the provisions of subchapter B of chapter 24 of the Internal Revenue Code of 1954 to any payor until such time as such payor is able to comply without undue hardship with the requirements of such provisions. (c) Temporary Rule for Certain Withholding Exemptions.— Until regulations are prescribed by the Secretary of the Treasury or his delegate under section 3452(c)(1)(B) of the Internal Revenue Code of 1954 (as added by this part), the payor may treat any person whose name reasonably indicates that such person is described in paragraph (2) of section 3452(c) of such Code (other than subparagraph (J) or (K) thereof) as an exempt recipient. (d) Delay in Making Deposits.— The time for making deposits under section 6302 of the Internal Revenue Code of 1954 of the tax imposed by section 3451 of such Code which is withheld by any person shall, to the extent provided in regulations, take into account the cost to such person of instituting a withholding system in order to comply with subchapter B of chapter 24 of such Code. Subtitle B— Improved Information Reporting PART I— EXPANDED REPORTING SEC. 309. REPORTING OF INTEREST. (a) General Rule.— Section 6049 (relating to returns regarding 26 USC 6049. payments of interest) is amended to read as follows: “SEC. 6019. RETURNS REGARDING PAYMENTS OF INTEREST. “(a) Requirement of Reporting.— Every person— “(1) who makes payments of interest (as defined in subsection (b)) aggregating $10 or more to any other person during any calendar year, “(2) who receives payments of interest (as so defined) as a nominee and who makes payments aggregating $10 or more during any calendar year to any other person with respect to the interest so received, or “(3) who is required under subchapter B of chapter 24 to withhold tax on the payment of any interest, shall make a return according to the forms or regulations prescribed by the Secretary, setting forth the aggregate amount of such payments, tax deducted and withheld, and the name and address of the person to whom paid or from whom withheld. “(b) Interest Defined.— “(1) General Rule.— For purposes of subsection (a), the term ‘interest’ means— “(A) interest on any obligation— “(i) issued in registered form, or “(ii) of a type offered to the public, other than any obligation with a maturity (at issue) of not more than 1 year which is held by a corporation, “(B) interest on deposits with persons carrying on the banking business, “(C) amounts (whether or not designated as interest) paid by a mutual savings bank, savings and loan association, building and loan association, cooperative bank, homestead association, credit union, industrial loan association or bank, or similar organization, in respect of deposits, investment certificates, or withdrawable or repurchasable shares, “(D) interest on amounts held by an insurance company under an agreement to pay interest thereon, “(E) interest on deposits with brokers (as defined in section 6045 (c)), Post, p. 600. “(F) interest paid on amounts held by investment companies (as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3)) and on amounts invested in other pooled funds or trusts, and “(G) to the extent provided in regulations prescribed by the Secretary, any other interest (which is not described in paragraph (2)). “(2) Exceptions.— For purposes of subsection (a), the term ‘interest’ does not include— “(A) interest on any obligation issued by a natural person, “(B) interest on any obligation if such interest is exempt from tax under section 103(a) or if such interest is exempt from tax (without regard to the identity of the holder) under any other provision of law, “(C) except to the extent otherwise provided in regulations— “(i) any amount paid to any person referred to in paragraph (2) of section 3452(c) (other than subparagraphs Ante, p. 577. (J) and (K) thereof), or “(ii) any amount described in section 3454(a){2)(D) or (E), “(D) except to the extent otherwise provided in regulations, any amount not described in subparagraph (C) of this paragraph which is income from sources outside the United States or which is paid by— “(i) a foreign government or international organization or any agency or instrumentality thereof, “(ii) a foreign central bank of issue, “(iii) a foreign corporation not engaged in a trade or business in the United States, “(iv) a foreign corporation, the interest payments of which would be exempt from withholding under subchapter A of chapter 3 if paid to a person who is not a United States person, or “(v) a partnership not engaged in a trade or business in the United States and composed in whole of nonresident alien individuals and persons described in clause (i), (ii), or (iii), and “(E) any amount on which the person making payment is required to deduct and withhold a tax under section 1451 (relating to tax-free covenant bonds), or would be so required but for section 1451(d) (relating to benefit of personal exemptions). “(3) Payments by united states nominees, etc., of united states person.— If, within the United States, a United States person— “(A) collects interest (or otherwise acts as a middleman between the payor and payee) from a foreign person described in paragraph (2)(D) or collects interest from a United States person which is income from sources outside the United States for a second person who is a United States person, or “(B) makes payments of such interest to such second United States person, notwithstanding paragraph (2)(D), such payment shall be subject to the requirements of subsection (a) with respect to such second United States person. “(c) Statements to be Furnished to Persons With Respect to Whom Information is Furnished.— “(1) In general.— Every person making a return under subsection (a) shall furnish to each person whose name is set forth in such return a written statement showing— “(A) the name and address of the person making such return, “(B) the aggregate amount of payments to, or the aggregate amount includible in the gross income of, the person as shown on such return, and “(C) the aggregate amount of tax deducted and withheld with respect to such person under subchapter B of chapter 24. “(2) Statement must be furnished on or before january 31.— The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was made. “(3) No statement required where interest is less than $10.— No statement with respect to payments of interest to any person shall be required to be furnished to any person under this subsection if the aggregate amount of payments to such person shown on the return made with respect to paragraph (1) or (2), as the case may be, of subsection (a) is less than $10, “(d) Definitions and Special Rules.— For purposes of this section— “(1) Person.— The term ‘person’ includes any governmental unit and any agency or instrumentality thereof and any international organization and any agency or instrumentality thereof. “(2) Obligation.— The term ‘obligation’ includes bonds, debentures, notes, certificates, and other evidences of indebtedness. “(3) Payments by governmental units.— In the case of payments made by any governmental unit or any agency or instrumentality thereof, the officer or employee having control of the payment of interest (or the person appropriately designated for purposes of this section) shall make the returns and statements required by this section. “(4) Financial institutions, brokers, etc., collecting interest may be substituted for payor.— To the extent and in the manner provided by regulations, in the case of any obligation— “(A) a financial institution, broker, or other person specified in such regulations which collects interest on such obligation for the payee (or otherwise acts as a middleman between the payor and the payee) shall comply with the requirements of subsections (a) and (c), and “(B) no other person shall be required to comply with the requirements of subsections (a) and (c) with respect to any interest on such obligation for which reporting is required pursuant to subparagraph (A). “(5) Interest on certain obligations may be treated on a transactional basis.— “(A) In general.— To the extent and in the manner provided in regulations, this section shall apply with respect to— “(i) any person described in paragraph (4)(A), and “(ii) in the case of any United States savings bonds, any Federal agency making payments thereon, on any transactional basis rather than on an annual aggregation basis. “(B) Separate returns and statements.— If subparagraph (A) applies to interest on any obligation, the return under subsection (a) and the statement furnished under subsection (c) with respect to such transaction may be made separately, but any such statement shall be furnished to the payee at such time as the Secretary may prescribe by regulations but not later than January 31 of the next calendar year. “(C) Statement to payee required in case of transactions involving $10 or more.— In the case of any transaction to which this paragraph applies which involves the payment of $10 or more of interest, a statement of the transaction may be provided to the payee of such interest in lieu of the statement required under subsection (c). Such statement shall be provided during January of the year following the year in which such payment is made. “(6) Treatment of original issue discount.— “(A) In general.— Original issue discount on any obligation shall be reported— “(i) as if paid at the time it is includible in gross income under section 1232A (except that for such purpose Ante, p. 496. the amount reportable with respect to any subsequent holder shall be determined as if he were the original holder), and “(ii) if section 1232A does not apply to the obligation, at maturity (or, if earlier, on redemption). In the case of any obligation not in registered form issued before January 1, 1983, clause (ii) and not clause (i) shall apply. “(B) Original issue discount.— For purposes of this paragraph, the term ‘original issue discount’ has the meaning given to such term by section 1232(b)(1).”. (b) Technical Amendments.— (1) Subsection (a) of section 6041 (relating to information at 26 USC 6041. source) is amended— (A) by striking out “6049(a)(1)” and inserting in lieu thereof “6049(a)”, and (B) by striking out “6045, 6049(a)(2), or 6049(a)(3)” and inserting in lieu thereof “or 6045”. (2) Subsection (b) of section 6652 (relating to failure to file 95 Stat. 343. certain information returns) is amended by adding “or” at the end of paragraph (1) and by striking out paragraphs (3) and (4). (3) Paragraph (1) of section 6678 is amended by striking out 26 USC 6678. “6049(a)(1)” and inserting in lieu thereof “6049(a)”. (c) Effective Date.— The amendments made by this section shall 26 USC 6049 note. apply to amounts paid (or treated as paid) after December 31, 1982. SEC. 310. OBLIGATIONS REQUIRED TO BE REGISTERED. (a) United States Obligations.— The Second Liberty Bond Act is amended by adding at the end thereof the following new section: “Sec. 28. (a) Every registration-required obligation of the United 31 USC 757c–5. States (or of any agency or instrumentality thereof) shall be in registered form. “(b) For purposes of this section— “(1) Except as provided in paragraph (2), the term ‘registration-required obligation’ means any obligation other than an obligation which— “(A) is not of a type offered to the public, or “(B) has a maturity (at issue) of not more than 1 year. “(2) The term ‘registration-required obligation’ shall not include any obligation if— “(A) there are arrangements reasonably designed to ensure that such obligation will be sold (or resold in connection with the original issue) only to a person who is not a United States person, and “(B) in the case of an obligation not in registered form— “(i) interest on such obligation is payable only outside the United States and its possessions, and “(ii) on the face of such obligation there is a statement that any United States person who holds such obligation will be subject to limitations under the United States income tax laws. “(c) (1) For purposes of subsection (a), a book entry obligation shall be treated as in registered form if the right to principal of, and stated interest on, such obligation may be transferred only through a book entry consistent with regulations prescribed by the Secretary of the Treasury. “(2) The Secretary of the Treasury shall prescribe such regulations as may be necessary to carry out the purpose of subsection (a) where there is a nominee or chain of nominees.”. (b) Other Obligations.— (1) Obligations must be in registered form to be tax-exempt.— Section 103 (relating to interest on certain governmental 95 Stat. 350. obligations) is amended by redesignating subsection (j) as subsection (k) and by inserting after subsection (i) the following new subsection: “(j) Obligations Must Be in Registered Form to be Tax-Exempt.— “(1) In general.— Nothing in subsection (a) or in any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any registration-required obligation unless the obligation is in registered form. “(2) Registration-required obligation.— The term ‘registration-required obligation’ means any obligation other than an obligation which— “(A) is not of a type offered to the public, “(B) has a maturity (at issue) of not more than 1 year, or “(C) is described in section 163(f)(2)(B). “(3) Special rules.— “(A) Book entries permitted.— For purposes of paragraph (1), a book entry obligation shall be treated as in registered form if the right to the principal of, and stated interest on, such obligation may be transferred only through a book entry consistent with regulations prescribed by the Secretary. “(B) Nominees.— The Secretary shall prescribe such regulations as may be necessary to carry out the purpose of paragraph (1) where there is a nominee or chain of nominees.” (2) Denial of deduction for interest if obligation not in registered form.— Section 163 (relating to deduction for interest) Ante, p. 498. is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection: “(f) Denial of Deduction for Interest on Certain Obligations not in Registered Form.— “(1) In general.— Nothing in subsection (a) or in any other provision of law shall be construed to provide a deduction for interest on any registration-required obligation unless such obligation is in registered form. “(2) Registration-required obligation.— For purposes of this section— “(A) In general.— The term ‘registration-required obligation’ means any obligation (including any obligation issued by a governmental entity) other than an obligation which— “(i) is issued by a natural person, “(ii) is not of a type offered to the public, “(iii) has a maturity (at issue) of not more than 1 year, or “(iv) is described in subparagraph (B). “(B) Certain obligations not included.— An obligation is described in this subparagraph if— “(i) there are arrangements reasonably designed to ensure that such obligation will be sold (or resold in connection with the original issue) only to a person who is not a United States person, and “(ii) in the case of an obligation not in registered form— “(I) interest on such obligation is payable only outside the United States and its possessions, and “(II) on the face of such obligation there is a statement that any United States person who holds such obligation will be subject to limitations under the United States income tax laws. “(C) Authority to include other obligations.— Clauses (ii) and (iii) of subparagraph (A), and subparagraph (B), shall not apply to any obligation if— “(i) such obligation is of a type which the Secretary has determined by regulations to be used frequently in avoiding Federal taxes, and “(ii) such obligation is issued after the date on which the regulations referred to in clause (i) take effect. “(3) Book entries permitted, etc.— For purposes of this subsection, rules similar to the rules of section 103(j)(3) shall 95 Stat. 350. apply.” (3) Denial of earnings and profits adjustment for interest on registration-required obligations not in registered form.— Section 312 (relating to earnings and profits) is amended 26 USC 312. by adding at the end thereof the following new subsection: “(m) No Adjustment for Interest Paid on Certain Registration-Required Obligations Not in Registered Form.— The earnings and profits of any corporation shall not be decreased by any interest with respect to which a deduction is not or would not be allowable by reason of section 163(f), unless at the time of issuance the issuer is a foreign corporation that is not a controlled foreign corporation (within the meaning of section 957), a foreign investment company (within the meaning of section 1246(b)), or a foreign personal holding company (within the meaning of section 552) and the issuance did not have as a purpose the avoidance of section 163(f) of this subsection”. (4) Excise tax on issuers of registration-required obligations which are not in registered form.— (A) In general.— Subtitle D (relating to miscellaneous excise taxes) is amended by adding after chapter 38 the following new chapter: “CHAPTER 39— REGISTRATION-REQUIRED OBLIGATIONS “Sec. 4701. Tax on issuer of registration-required obligation not in registered form. “SEC. 4701. TAX ON ISSUER OF REGISTRATION-REQUIRED OBLIGATION NOT IN REGISTERED FORM. “(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 103(j). “(2) Registered form.— The term ‘registered form’ has the same meaning as when used in section 163(f).” (B) Conforming amendment.— The table of chapters for subtitle D is amended by inserting after chapter 38 the following: “Chapter 39. Registration-required obligations.” (5) Denial of deduction for losses on certain obligations not in registered form.— Section 165 (as amended by this Act) Ante, p. 422. is amended by redesignating subsection (j) as subsection (k) and by inserting after subsection (i) the following new subsection: “(j) Denial of Deduction for Losses on Certain Obligations Not in Registered Form.— “(1) In general.— Nothing in subsection (a) or in any other provision of law shall be construed to provide a deduction for any loss sustained on any registration-required obligation unless such obligation is in registered form (or the issuance of such obligation was subject to tax under section 4701). “(2) Definitions.— For purposes of this subsection— “(A) Registration-required obligation.— The term ‘registration-required obligation’ has the meaning given to such term by section 163(0(2) except that clause (iv) of subparagraph (A), and subparagraph (B), of such section shall not apply. “(B) Registered form.— The term ‘registered form’ has the same meaning as when used in section 163(f). “(3) Exceptions.— The Secretary may, by regulations, provide that this subsection and subsection (d) of section 1232 shall not apply with respect to obligations held by any person if— “(A) such person holds such obligations in connection with a trade or business outside the United States, “(B) such person holds such obligations as a broker dealer (registered under Federal or State law) for sale to customers in the ordinary course of his trade or business, “(C) such person complies with reporting requirements with respect to ownership, transfers, and payments as the Secretary may require, or “(D) such person promptly surrenders the obligation to the issuer for the issuance of a new obligation in registered form. but only if such obligations are held under arrangements provided in regulations or otherwise which are designed to assure that such obligations are not delivered to any United States person other than a person described in subparagraph (A), (B), or (C).” (6) Denial of capital gain treatment for gains on certain obligations not in registered form.— Section 1232 (relating to 26 USC 1232. bonds and other evidences of indebtedness) is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: “(d) Denial of Capital Gain Treatment for Gains On Certain Obligations Not in Registered Form.— “(1) In general.— If any registration-required obligation is not in registered form, any gain on the sale or other disposition of such obligation shall be treated as ordinary income (unless the issuance of such obligation was subject to tax under section 4701). “(2) Definitions.— For purposes of this subsection— “(A) Registration-required obligation.— The term ‘registration-required obligation’ has the meaning given to such term by section 163(f)(2) except that clause (iv) of subparagraph (A), and subparagraph (B), of such section shall not apply. “(B) Registered form.— The term ‘registered form’ has the same meaning as when used in section 163(f).” (c) Technical Amendments.— (1) Subparagraph (A) of section 103(b)(4) (relating to certain 26 USC 103. exempt activities) is amended by striking out “if each obligation issued pursuant to the issue is in registered form and”. (2) (A) Paragraph (1) of section 103(h) (relating to certain obligations must be in registered form and not guaranteed or subsidized under an energy program) is amended by striking out subparagraph (A) and by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively. (B) The subsection heading for subsection (h) of section 103 is amended by striking out “Must Be in Registered Form and Not” and inserting in lieu thereof “Must Not Be”. (3) (A) Subsection (j) of section 103A (relating to other requirements) 26 USC 103A. is amended by striking out paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (B) Subparagraph (B) of section 103A(c)(2) (defining qualified mortgage issue) is amended by striking out “and (0 and paragraphs (2) and (3) of subsection (j)” and inserting in lieu thereof “(f), and (J)”. (C) Subparagraph (C) of section 103A(c)(2) is amended by striking out “, and paragraph (1) of subsection (j)”. (D) Subparagraph (C) of section 103A(c)(3) (defining qualified veterans’ mortgage bond) is amended by striking out “subsection (j)(2)” and inserting in lieu thereof “subsection (j)(l)”. (4) Subparagraph (A) of section 103A(c)(3) (defining qualified veterans’ mortgage bond) is amended by striking out “in registered form”. (d) Effective Dates.— (1) In general.— Except as otherwise provided in this subsection, the amendments made by this section shall apply to obligations issued after December 31, 1982. (2) Long-term u.s. obligations.— The amendment made by subsection (a) shall apply to obligations issued after the date of the enactment of this Act under the first section of the Second Liberty Bond Act. 31 USC 752. (3) Exception for certain warrants, etc.— The amendments made by subsection (b) shall not apply to any obligations issued after December 31, 1982, on the exercise of a warrant or the conversion of a convertible obligation if such warrant or obligation was offered or sold outside the United States without registration under the Securities Act of 1933 and was issued 15 USC 77a. before August 10, 1982. A rule similar to the rule of the preceding sentence shall also apply in the case of any regulations issued under section 163(f)(2)(C) of the Internal Revenue Code of 1954 (as added by this section) except that the date on which such regulations take effect shall be substituted for “August 10, 1982”. SEC. 311. RETURNS OF BROKERS. (a) General Rule.— (1) Returns.— Section 6045 (relating to returns of brokers) is 26 USC 6045. amended to read as follows: “SEC. 6045. RETURNS OF BROKERS. “(a) General Rule.— Every person doing business as a broker shall, when required by the Secretary, make a return, in accordance with such regulations as the Secretary may prescribe, showing the name and address of each customer, with such details regarding gross proceeds and such other information as the Secretary may by forms or regulations require with respect to such business. “(b) Statements to be Furnished to Customers.— Every person making a return under subsection (a) shall furnish to each customer whose name is set forth in such return a written statement showing— “(1) the name and address of the person making such return, and “(2) the information shown on such return with respect to such customer. The written statement required under the preceding sentence shall be furnished to the customer on or before January 31 of the year following the calendar year for which the return under subsection (a) was made. “(c) Definitions.— For purposes of this section— “(1) Broker.— The term ‘broker’ includes— “(A) a dealer, “(B) a barter exchange, and “(C) any other person who (for a consideration) regularly acts as a middleman with respect to property or services. “(2) Customer.— The term ‘customer’ means any person for whom the broker has transacted any business. “(3) Barter exchange.— The term ‘barter exchange’ means any organization of members providing property or services who jointly contract to trade or barter such property or services.” (2) Penalty.— Paragraph (1) of section 6678 (relating to penalty 26 USC 6678. for failure to furnish certain statements) is amended— (A) by inserting “6045(b),” after “6044(e),”, and (B) by inserting “6045(a),” after “6044(a)(1),”. (b) Barter Exchange Treated as Third-Party Recordkeeper.— Paragraph (3) of section 7609(a) (defining third-party recordkeeper) 26 USC 7609. is amended by striking out “and” at the end of subparagraph (E), by striking out the period at the end of subparagraph (F) and inserting in lieu thereof “; and”, and by adding at the end thereof the following new subparagraph: “(G) any barter exchange (as defined in section 6045(c)(3)).” (c) Effective Dates.— (1) Subsection (a).— The amendments made by subsection (a) shall take effect on the date of the enactment of this Act, except that— (A) regulations relating to reporting by commodities and securities brokers shall be issued under section 6045 of the Internal Revenue Code of 1954 (as amended by this Act) within 6 months after the date of the enactment of this Act, and (B) such regulations shall not apply to transactions occurring before January 1, 1983. (2) Subsection (b).— —The amendments made by subsection (b) 26 USC 7609 note. shall apply to summonses served after December 31, 1982. SEC. 312. INFORMATION REPORTING REQUIREMENTS FOR PAYMENTS OF REMUNERATION FOR SERVICES AND DIRECT SALES. (a) General Rule.— Subpart B of part III of subchapter A of chapter 61 (relating to information concerning transactions with other persons) is amended by inserting after section 6041 the following new section: SEC. 6041A. RETURNS REGARDING PAYMENTS OF REMUNERATION FOR SERVICES AND DIRECT SALES. “(a) Returns Regarding Remuneration for Services.— If— “(1) any service-recipient engaged in a trade or business pays in the course of such trade or business during any calendar year remuneration to any person for services performed by such person, and “(2) the aggregate of such remuneration paid to such person during such calendar year is $600 or more, then the service-recipient shall make a return, according to the forms or regulations prescribed by the Secretary, setting forth the aggregate amount of such payments and the name and address of the recipient of such payments. For purposes of the preceding “Service-recipient.” sentence, the term ‘service-recipient’ means the person for whom the service is performed. “(b) Direct Sales of $5,000 or More.— “(1) In general.— If— “(A) any person engaged in a trade or business in the course of such trade or business during any calendar year sells consumer products to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis which the Secretary prescribes by regulations, for resale (by the buyer or any other person) in the home or otherwise than in a permanent retail establishment, and “(B) the aggregate amount of the sales to such buyer during such calendar year is $5,000 or more, then such person shall make a return, according to the forms or regulations prescribed by the Secretary, setting forth the name and address of the buyer to whom such sales are made. “(2) Definitions.— For purposes of paragraph (1)— “(A) Buy-sell basis.— A transaction is on a buy-sell basis if the buyer performing the services is entitled to retain part or all of the difference between the price at which the buyer purchases the product and the price at which the buyer sells the product as part or all of the buyer’s remuneration for the services, and “(B) Deposit-commission basis.— A transaction is on a deposit-commission basis if the buyer performing the services is entitled to retain part or all of a purchase deposit paid by the consumer in connection with the transaction as part or all of the buyer’s remuneration for the services. “(c) Certain Services Not Included.— No return shall be required under subsection (a) or (b) if a statement with respect to the services is required to be furnished under section 6051, 6052, or 6053. “(d) Applications to Governmental Units.— “(1) Treated as persons.— The term ‘person’ includes any governmental unit (and any agency or instrumentality thereof). “(2) Special rules.— In the case of any payment by a governmental entity or any agency or instrumentality thereof— “(A) subsection (a) shall be applied without regard to the trade or business requirement contained therein, and “(B) any return under this section shall be made by the officer or employee having control of the payment or appropriately designated for the purpose of making such return. “(e) Statements To Be Furnished to Persons With Respect to Whom Information is Required to Be Furnished.— Every person required to make are turn under subsection (a) or (b) shall furnish to each person whose name is required to be set forth in such return a written statement showing— “(1) the name and address of the person required to make such return, and “(2) in the case of subsection (a), the aggregate amount of payments to the person required to be shown on such return. The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was made. “(f) Recipient to Furnish Name, Address, and Identification Number; Inclusion on Return.— “(1) Furnishing of information.— Any person with respect to whom a return or statement is required under this section to be made by another person shall furnish to such other person his name, address, and identification number at such time and in such manner as the Secretary may prescribe by regulations. “(2) Inclusion on return.— The person to whom an identification number is furnished under paragraph (1) shall include such number on any return which such person is required to file under this section and to which such identification number relates.” (b) Penalty for Failure to File Statement.— Section 6678(1) 95 Stat. 344. (relating to failure to file statement) is amended— (1) by inserting “6041A(e),” after “6041(d),”, and (2) by inserting “6041A(a) or (b),” after “6041(a),”. (c) Effective Date.— The amendments made by this section shall 26 USC 6041A note. apply to payments and sales made after December 31, 1982. SEC. 313. STATE AND LOCAL INCOME TAX REFUNDS. (a) In General.— Subpart B of part III of subchapter A of chapter 61 (relating to information concerning transactions with other persons) is amended by adding at the end thereof the following new section: “SEC. 6050E. STATE AND LOCAL INCOME TAX REFUNDS. “(a) Requirement of Reporting.— Every person who, with respect to any individual, during any calendar year makes payments of refunds of State or local income taxes (or allows credits or offsets with respect to such taxes) aggregating $10 or more shall make a return according to forms or regulations prescribed by the Secretary setting forth the aggregate amount of such payments, credits, or offsets, and the name and address of the individual with respect to whom such payment, credit, or offset was made. “(b) Statements to Be Furnished to Individuals With Respect to Whom Information is Furnished.— Every person making a return under subsection (a) shall furnish to each individual whose name is set forth in such return a written statement showing— “(1) the name of the State or political subdivision thereof, and “(2) the aggregate amount shown on the return of refunds, credits, and offsets to the individual. The written statement required under the preceding sentence shall be furnished to the individual during January of the calendar year following the calendar year for which the return under subsection (a) was made. “(c) Person Defined.— For purposes of this section, the term ‘person’ means the officer or employee having control of the payment of the refunds (or the allowance of the credits or offsets) or the person appropriately designated for purposes of this section.” (b) Conforming Amendment.— The table of sections for subpart B of part III of subchapter A of chapter 61 is amended by adding at the end thereof the following new item: “Sec. 6050E. State and local income tax refunds.” (c) Effective Date.— The amendments made by this section shall 26 USC 6050E note. apply to payments of refunds, and credits and offsets made, after December 31, 1982. SEC. 314. EMPLOYER REPORTING WITH RESPECT TO TIPS. (a) In General.— Section 6053 (relating to reporting of tips) is 26 USC 6053. amended by adding at the end thereof the following new subsection: “(c) Reporting Requirements Relating To Certain Large Food Or Beverage Establishments.— “(1) Report to secretary.— In the case of a large food or beverage establishment, each employer shall report to the Secretary, at such time and manner as the Secretary may prescribe by regulation, the following information with respect to each calendar year: “(A) The gross receipts of such establishment from the provision of food and beverages (other than nonallocable receipts). “(B) The aggregate amount of charge receipts (other than nonallocable receipts). “(C) The aggregate amount of charged tips shown on such charge receipts. “(D) The sum of— “(i) the aggregate amount reported by employees to the employer under subsection (a), plus “(ii) the amount the employer is required to report under section 6051 with respect to service charges of 26 USC 6051. less than 10 percent. “(E) With respect to each employee, the amount allocated to such employee under paragraph (3). “(2) Furnishing of statement to employees.— Each employer described in paragraph (1) shall furnish, in such manner as the Secretary may prescribe by regulations, to each employee of the large food or beverage establishment a written statement for each calendar year showing the following information: “(A) The name and address of such employer. “(B) The name of the employee. “(C) The amount allocated to the employee under paragraph (3) for all payroll periods ending within the calendar year. Any statement under this paragraph shall be furnished to the employee during January of the calendar year following the calendar year for which such statement is made. “(3) Employee Allocation of 8 Percent of Gross Receipts.— “(A) In general.— For purposes of paragraphs (1)(E) and (2)(C), the employer of a large food or beverage establishment shall allocate (as tips for purposes of the requirements of this subsection) among employees performing services during any payroll period who customarily receive tip income an amount equal to the excess of— “(i) 8 percent of the gross receipts (other than nonallocable receipts) of such establishment for the payroll period, over “(ii) the aggregate amount reported by such employees to the employer under subsection (a) for such period. “(B) Method of allocation.— The employer shall allocate the amount under subparagraph (A)— “(i) on the basis of a good faith agreement by the employer and the employees, or “(ii) in the absence of an agreement under clause (i), in the manner determined under regulations prescribed by the Secretary. “(C) The secretary may lower the percentage required to be allocated.— The Secretary may reduce (but not below 5 percent) the percentage of gross receipts required to be allocated under subparagraph (A) where he determines that the percentage of gross receipts constituting tips is less than 8 percent. “(4) Large food or beverage establishment.— For purposes of this subsection, the term ‘large food or beverage establishment’ means any trade or business (or portion thereof)— “(A) which provides food or beverages, “(B) with respect to which the tipping of employees serving food or beverages by customers is customary, and “(C) which normally employed more than 10 employees on a typical business day during the preceding calendar year. For purposes of subparagraph (C), rules similar to the rules of subsections (a) and (h) of section 52 shall apply under regulations prescribed by the Secretary. “(5) Employer not to be liable for wrong allocations.— The employer shall not be liable to any person if any amount is improperly allocated under paragraph (3)(B) if such allocation is done in accordance with the regulations prescribed under paragraph (3)(B). “(6) Nonallocable receipts defined.— For purposes of this subsection, the term ‘nonallocable receipts’ means receipts which are allocable to— “(A) carry out sales, or “(B) services with respect to which a service charge of 10 percent or more is added. “(7) Application to new businesses.— The Secretary shall prescribe regulations for the application of this subsection to new businesses.” (b) Penalty for failure to furnish statement.— Subparagraph (D) of section 6678(3) is amended by striking out “section 6053(b)” 95 Stat. 343. and inserting in lieu thereof “subsection (b) or (c) of section 6053(c).” (c) Study of Tip Compliance.— The Secretary of the Treasury or Report to congressional committees. 26 USC 6053 note. his delegate shall submit before January 1, 1987, to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate a report with respect to tip compliance in the food and beverage service industry. Such study shall include, but not be limited to, an analysis of tipping patterns, tip-sharing arrangements, and tip compliance patterns. (d) Conforming Amendment.— The last sentence of section 6001 26 USC 6001. (relating to notice or regulations requiring records, statements, and special returns) is amended by inserting “, records necessary to comply with section 6053(c),” after “charge receipts”. (e) Effective Dates.— (1) In general.— The amendments made by this section shall apply to calendar years beginning after December 31, 1982. (2) Special rule for 1983.— For purposes of section 6053(c) of the Internal Revenue Code of 1954, in the case of payroll periods ending before April 1, 1983, an employer must only report with respect to such periods— (A) amounts described in subparagraphs (A), (B), (C), and (D) of section 6053(c)(1) of such Code, and (B) the name, and identification number, wages paid to, and tips reported by, each tipped employee. PART II— PROVISIONS TO IMPROVE REPORTING GENERALLY SEC. 315. INCREASED PENALTIES FOR FAILURE TO FILE INFORMATION RETURN OR TO FURNISH STATEMENT. (a) In General.— Subsection (a) of section 6652 (relating to failure 26 USC 6652. to file certain information returns, etc.) is amended to read as follows: “(a) Returns Relating to Information at Source, Payments of Dividends, Etc., and Certain Transfers of Stock.— “(1) In general.— In the case of each failure— “(A) to file a statement of the amount of payments to another person required by— “(i) section 6041 (a) or (b) (relating to certain information at source), “(ii) section 6042(a)(1) (relating to payments of dividends), “(iii) section 6044(a)(1) (relating to payments of patronage dividends), “(iv) section 6049(a) (relating to payments of interest), Ante, p. 592. “(v) section 6050A(a) (relating to reporting requirements of certain fishing boat operators), or “(vi) section 6042(e), 6044(0, 6049(e), or 6051(d) (relating Ante, pp. 587, 588. to information returns with respect to income tax withheld), or “(B) to make a return required by— “(i) subsection (a) or (b) of section 6041A (relating to Ante, p. 601. returns of direct sellers). “(ii) section 6045 (relating to returns of brokers), Ante, p. 600. “(iii) section 6052(a) (relating to reporting payment of wages in the form of group term life insurance), or “(iv) section 6053(c)(1) (relating to reporting with respect to certain tips), on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid (upon notice and demand by the Secretary and in the same manner as tax), by the person failing to file a statement referred to in subparagraph (A) or failing to make a return referred to in subparagraph (B), $50 for each such failure, but the total amount imposed on the delinquent person for all such failures during any calendar year shall not exceed $50,000. “(2) Penalty in case op intentional disregard.— If 1 or more failures to which paragraph (1) applies are due to intentional disregard of the filing requirement, then with respect to such failures— “(A) the penalty imposed under paragraph (1) shall not be less than an amount equal to— “(i) in the case of a return not described in clauses (ii) and (iii), 10 percent of the aggregate amount of the items required to be reported, “(ii) in the case of a return required to be filed by section 6045, 5 percent of the gross proceeds required to be reported, and “(iii) in the case of a return required to be filed by section 6041A(b), $100 for each such failure, and “(B) the $50,000 limitation under paragraph (1) shall not apply.” (b) Increase in Addition to Tax for Failure to File Certain Returns or Statements in Connection With Plans of Deferred Compensation.— Subsection (0 of section 6652 (relating to information 26 USC 6652. required in connection with certain plans of deferred compensation) is amended— (1) by striking out “$10” and inserting in lieu thereof “$25”, and (2) by striking out “$5,000” and inserting in lieu thereof “$15,000”. (c) Increase in Civil Penalty for Failure to Furnish Certain Statements.— Section 6678 (relating to failure to furnish certain 26 USC 6678. statements) is amended— (1) by striking out “$10” and inserting in lieu thereof “$50”, and (2) by striking out “$25,000” and inserting in lieu thereof “$50,000”. (d) Effective Date.— The amendments made by this section shall 26 USC 6652 note. apply with respect to returns or statements the due date for the filing of which (without regard to extensions) is after December 31, 1982. SEC. 316. INCREASE IN CIVIL PENALTY ON FAILURE TO SUPPLY IDENTIFYING NUMBERS. (a) In General.— Subsection (a) of section 6676 (relating to failure 26 USC 6676. to supply identifying numbers) is amended to read as follows: “(a) Civil Penalties.— “(1) In general.— If any person who is required by regulations prescribed under section 6109— “(A) to include his taxpayer identification number in any return, statement, or other document, “(B) to furnish his taxpayer identification number to another person, or “(C) to include in any return, statement, or other document made with respect to another person the taxpayer identification number of such other person, fails to comply with such requirement at the time prescribed by such regulations, such person shall, unless it is shown that such failure is due to reasonable cause and not to willful neglect, pay a penalty of $5 for each such failure described in subparagraph (A) and $50 for each such failure described in subparagraph (B) or (C), except that the total amount imposed on such person for all such failures during any calendar year shall not exceed $50,000. “(2) Taxpayer identification number defined.— The term ‘taxpayer identification number’ means the identifying number assigned to a person under section 6109.” (b) Effective Date.— The amendments made by this section shall 26 USC 6676 note. apply with respect to returns the due date for the filing of which (without regard to extensions) is after December 31, 1982. SEC. 317. EXTENSION OF WITHHOLDING TO CERTAIN PAYMENTS WHERE IDENTIFYING NUMBER NOT FURNISHED OR INACCURATE. (a) In General.— Section 3402 (relating to withholding at source) 26 USC 3402. is amended by adding at the end thereof the following new subsection: “(s) Extension of Withholding to Certain Payments Where Identifying Number Not Furnished or Inaccurate.— “(1) In general.— If, in the case of any backup withholding payment— “(A) the payee fails to furnish his taxpayer identification number to the payor, or “(B) the Secretary notifies the payor that the number furnished by the payee is incorrect, then the payor shall deduct and withhold from such payment a tax equal to 15 percent of such payment. “(2) Period for which withholding is in effect.— “(A) Failure to Furnish Number.— In the case of any failure described in subparagraph (A) of paragraph (1), paragraph (1) shall apply to any backup withholding payment made during the period during which the taxpayer identification number has not been furnished. “(B) Notification of Incorrect Number.— In any case where there is a notification described in subparagraph (B) of paragraph (1), pa ragraph (1) shall apply to any backup withholding payment made— “(i) after the close of the 15th day after the day on which the payor was so notified, and “(ii) before the payee furnishes another taxpayer identification number. “(C) 15-day grace periods.— “(i) After correction.— Unless the payor otherwise elects, pa ragraph (1) shall also apply to any backup withholding payment made after the close of the period described in subparagraph (A) or (B) (as the case may be) and before the 16th day after the close of such period. “(ii) After notification.— If the payor so elects, paragraph (1) shall also apply to any backup withholding payment made during the 15-day period described in clause (i) of subparagraph (B). “(3) Backup withholding payments.— “(A) In general.— For purposes of this subsection, the term ‘backup withholding payment’ means any payment of a kind, and to a payee, required to be shown on a return required under— “(i) section 6041 (a) or (b) (relating to certain information at source), “(ii) section 6041A(a) (relating to returns regarding payments to nonemployees), “(iii) section 6042(a) (relating to payments of dividends), “(iv) section 6044 (relating to returns regarding patronage dividends) but only to the extent of payments of money. “(v) section 6045 (relating to returns of brokers), Ante, p. 600. “(vi) section 6049(a) (relating to payments of interest), Ante, p. 592. or “(vii) section 6050A (relating to reporting requirements of certain fishing boat operators), but only to the extent of payments of the proceeds of the catch. “(B) Special rule.— For purposes of this subsection, the determination of whether any payment is of a kind required to be shown on a return described in subparagraph (A) shall be made without regard to any minimum amount which must be paid before a return is required. “(4) Payments must aggregate $ 600 before withholding required from payments described in section 6041(a) or 6041 a.— In the case of any payment which is of a kind required to be shown on a return required under section 6041(a) or 6041A(a) and which is made during any calendar year, no Ante, p. 601. amount shall be deducted and withheld with respect to such payment unless— “(A) the aggregate amount of such payment and all previous such payments to the payee involved during such calendar year equals or exceeds $600, “(B) the payor was required under section 6041(a) or 6041A(a) to file a return for the preceding calendar year with respect to payments to the payee involved, or “(C) during the preceding calendar year the payor made backup withholding payments to the payee with respect to which amounts were required to be deducted and withheld under paragraph (1). “(5) Definitions and special rules.— For purposes of this subsection— “(A) Obviously incorrect number.— A payee shall be treated as failing to furnish his taxpayer identification number if the number furnished does not contain the proper number of digits. “(B) Payee furnishes 2 incorrect numbers.— If the payee furnishes a payor 2 incorrect numbers, the payor shall, after receiving notice of the second incorrect number, treat the payee as not having furnished another taxpayer identification number under paragraph (2)(B)(ii) until the day on which the payor receives notification from the Secretary that a correct taxpayer identification number has been furnished. “(C) Exception for payments to certain payees.— Paragraph (1) shall not apply to any payment made to— “(i) the United States (as defined in section 3455(a)(3)), Ante, p. 583. “(ii) any State (as defined in section 3455(a)(2)), “(iii) an organization which is exempt from taxation under section 501(a), “(iv) any foreign government (as defined in section 3455(a)(4)) or international organization (as defined in section 3455(a)(5)), or “(v) any other person specified in regulations. “(D) Taxpayer identification number.— The term ‘taxpayer identification number’ means the identifying number assigned to a person under section 6109. “(E) Amounts for which withholding otherwise required.— No tax shall be deducted or withheld under this subsection with respect to any amount for which withholding is otherwise required by this title. “(F) Exemption while waiting for number.— The Secretary shall prescribe regulations for exemptions from the tax imposed by paragraph (1) during periods during which a person is waiting for receipt of a taxpayer identification number. “(G) Nominees.— In the case of a backup withholding payment described in clause (i) or (v) of paragraph (3)(A) to a nominee, in the manner provided in regulations, both the nominee and the ultimate payee shall be treated as the payee. “(H) Requirement of notice to payee.— Whenever the Secretary notifies a payor under paragraph (1)(B) that the taxpayer identification number 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. “(I) Requirement of notice to secretary.— If the Secretary notifies a payor under paragraph (1)(B) that the taxpayer identification number furnished by any payee is incorrect and such payee subsequently furnishes another taxpayer identification number to the payor, the payor shall promptly notify the Secretary of the other taxpayer identification number so furnished. “(J) Coordination with other sections.— For purposes of section 31, this chapter (other than subsection (n) of this section), and so much of subtitle F (other than section 7205) as relates to this chapter, payments which are subject to withholding under this subsection shall be treated as if they were wages paid by an employer to an employee.” (b) Effective Date.— The amendments made by subsection (a) 26 USC 3402 note. shall apply to payments made after December 31, 1983. SEC. 318. MINIMUM PENALTY FOR EXTENDED FAILURE TO FILE. (a) In General.— Subsection (a) of section 6651 (relating to failure 26 USC 6651. to file tax return or to pay tax) is amended by adding at the end thereof the following new sentence: “In the case of a failure to file a return of tax imposed by chapter 1 within 60 days of the date prescribed for filing of such return (determined with regard to any extensions of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, the addition to tax under paragraph (1) shall not be less than the lesser of $100 or 100 percent of the amount required to be shown as tax on such return.” (b) Conforming Amendments.— Section 6651(c)(1) (relating to additions under more than one paragraph) is amended— (1) by adding at the end of subparagraph (A) the following new sentence: “In any case described in the last sentence of subsection (a), the amount of the addition under paragraph (1) of subsection (a) shall not be reduced under the preceding sentence below the amount provided in such last sentence.”, and (2) by inserting “(determined without regard to the last sentence of such subsection)” after “paragraph (1) of subsection (a)” in subparagraph (B). (c) Effective Date.— The amendments made by this section shall 26 USC 6651 note. apply to returns the due date for filing of which (including extensions) is after December 31, 1982. SEC. 319. INFORMATION RETURNS. Section 6011 (relating to general requirement of return, statement, 26 USC 6011. or list) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Regulations Requiring Returns on Magnetic Tape, Etc.— The Secretary shall prescribe regulations providing standards for determining which returns must be filed on magnetic media or in other machine-readable form. The Secretary may not require returns of any tax imposed by subtitle A on individuals, estates, and trusts to be other than on paper forms supplied by the Secretary. In prescribing such regulations, the Secretary shall take into account (among other relevant factors) the ability of the taxpayer to comply at a reasonable cost with such a filing requirement.” Subtitle C— Abusive Tax Shelters, Etc.; Substantial Underpayments; False Documents; Frivolous Returns PART I— ABUSIVE TAX SHELTERS, ETC. SEC. 320. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS, ETC. (a) General Rule.— Subchapter B of chapter 68 (relating to assessable penalties) is amended by adding at the end thereof the following new section: “SEC. 6700. PROMOTING ABUSIVE TAX SHELTERS, ETC. “(a) Imposition of Penalty.— Any person who— “(1) (A) organizes (or assists in the organization of)— “(i) a partnership or other entity, “(ii) any investment plan or arrangement, or “(iii) any other plan or arrangement, or “(B) participates in the sale of any interest in an entity or plan or arrangement referred to in subparagraph (A), and “(2) makes or furnishes (in connection with such organization or sale)— “(A) a statement with respect to the allowability of any deduction or credit, the excludability of any income, or the securing of any other tax benefit by reason of holding an interest in the entity or participating in the plan or arrangement which the person knows or has reason to know is false or fraudulent as to any material matter, or “(B) a gross valuation overstatement as to any material matter, shall pay a penalty equal to the greater of $1,000 or 10 percent of the gross income derived or to be derived by such person from such activity. “(b) Rules Relating to Penalty for Gross Valuation Over-Statements.— “(1) Gross valuation overstatement defined.— For purposes of this section, the term ‘gross valuation overstatement’ means any statement as to the value of any property or services if— “(A) the value so stated exceeds 200 percent of the amount determined to be the correct valuation, and “(B) the value of such property or services is directly related to the amount of any deduction or credit allowable under chapter 1 to any participant. “(2) Authority to waive.— The Secretary may waive all or any part of the penalty provided by subsection (a) with respect to any gross valuation overstatement on a showing that there was a reasonable basis for the valuation and that such valuation was made in good faith. “(c) Penalty in addition to other penalties.— The penalty imposed by this section shall be in addition to any other penalty provided by law.” (b) Clerical Amendment.— The table of sections for subchapter B of chapter 68 is amended by adding at the end thereof the following new item: “Sec. 6700. Promoting abusive tax shelters, etc.” (c) Effective Date.— The amendments made by this section shall 26 USC 6700 note. take effect on the day after the date of the enactment of this Act. SEC. 321. ACTION TO ENJOIN PROMOTERS OF ABUSIVE TAX SHELTERS, ETC. (a) General Rule.— Subchapter A of chapter 76 (relating to civil actions by the United States) is amended by redesignating section 7408 as section 7409 and by inserting after section 7407 the following 26 USC 7409. new section: “SEC. 7408. ACTION TO ENJOIN PROMOTERS OF ABUSIVE TAX SHELTERS. ETC. “(a) Authority to Seek Injunction.— A civil action in the name of the United States to enjoin any person from further engaging in conduct subject to penalty under section 6700 (relating to penalty for promoting abusive tax shelters, etc.) may be commenced at the request of the Secretary, Any action under this section shall be brought in the district court of the United States for the district in which such person resides, has his principal place of business, or has engaged in conduct subject to penalty under section 6700. The court may exercise its jurisdiction over such action (as provided in section 7402(a)) separate and apart from any other action brought by the United States against such person. “(b) Adjudication and Decree.— In any action under subsection (a), if the court finds— “(1) that the person has engaged in any conduct subject to penalty under section 6700 (relating to penalty for promoting abusive tax shelters, etc.), and “(2) that injunctive relief is appropriate to prevent recurrence of such conduct, the court may enjoin such person from engaging in such conduct or in any other activity subject to penalty under section 6700. “(c) Citizens and Residents Outside The United States.— If any citizen or resident of the United States does not reside in, and does not have his principal place of business in, any United States judicial district, such citizen or resident shall be treated for purposes of this section as residing in the District of Columbia.” (b) Clerical Amendment.— The table of sections for subchapter A of chapter 76 is amended by striking out the last item and inserting in lieu thereof the following: “Sec. 7408. Action to enjoin promoters of abusive tax shelters, etc. “Sec. 7409. Cross references.” (c) Effective Date.— The amendments made by this section shall 26 USC 7408 note. take effect on the day after the date of the enactment of this Act. SEC. 322. PROCEDURAL RULES APPLICABLE TO PENALTIES UNDER SECTIONS 6700. 6701, AND 6702. (a) General Rule.— Subchapter B of chapter 68 (relating to assessable penalties) is amended by adding at the end thereof the following new section: “SEC. 6703. RULES APPLICABLE TO PENALTIES UNDER SECTIONS 6700, 6701, AND 6702. “(a) Burden of Proof.— In any proceeding involving the issue of whether or not any person is liable for a penalty under section 6700, 6701, or 6702, the burden of proof with respect to such issue shall be on the Secretary. “(b) Deficiency Procedures Not to Apply.— Subchapter B of chapter 63 (relating to deficiency procedures) shall not apply with respect to the assessment or collection of the penalties provided by sections 6700, 6701, and 6702. “(c) Extension of Period of Collection Where Person Pays 15 Percent of Penalty.— “(1) In general.— If, within 30 days after the day on which notice and demand of any penalty under section 6700, 6701, or 6702 is made against any person, such person pays an amount which is not less than 15 percent of the amount of such penalty and files a claim for refund of the amount so paid, no levy or proceeding in court for the collection of the remainder of such penalty shall be made, begun, or prosecuted until the final resolution of a proceeding begun as provided in paragraph (2). Notwithstanding the provisions of section 7421(a), the beginning of such proceeding or levy during the time such prohibition is in force may be enjoined by a proceeding in the proper court. “(2) Person must bring suit in district court to determine his liability for penalty.— If, within 30 days after the day on which his claim for refund of any partial payment of any penalty under section 6700, 6701, or 6702 is denied (or, if earlier, within 30 days after the expiration of 6 months after the day on which he filed the claim for refund), the person fails to begin a proceeding in the appropriate United States district court for the determination of his liability for such penalty, paragraph (1) shall cease to apply with respect to such penalty, effective on the day following the close of the applicable 30-day period referred to in this paragraph. “(3) Suspension of running of period of limitations on collection.— The running of the period of limitations provided in section 6502 on the collection by levy or by a proceeding in court in respect of any penalty described in paragraph (1) shall be suspended for the period during which the Secretary is prohibited from collecting by levy or a proceeding in court.” (b) Clerical Amendment.— The table of sections for subchapter B of chapter 68 is amended by adding at the end thereof the following new section: “Sec. 6703. Rules applicable to penalties under sections 6700, 6701, and 6702.” (c) Effective Date.— The amendments made by this section shall 26 USC 6703 note. take effect on the day after the date of the enactment of this Act. PART II— SUBSTANTIAL UNDERPAYMENT; FALSE DOCUMENTS; FRIVOLOUS RETURNS; ETC. SEC. 323. PENALTY FOR SUBSTANTIAL UNDERSTATEMENT. (a) In General.— Subchapter A of chapter 68 (relating to additions to tax and additional amounts) is amended by redesignating section 6661 as section 6662 and by inserting after section 6660 the 26 USC 6662. following new section: “SEC. 6661. SUBSTANTIAL UNDERSTATEMENT OF LIABILITY. “(a) Addition to Tax.— If there is a substantial understatement of income tax for any taxable year, there shall be added to the tax an amount equal to 10 percent of the amount of any underpayment attributable to such understatement. “(b) Definition and Special Rule.— “(1) Substantial understatement.— “(A) In general.— For purposes of this section, there is a substantial understatement of income tax for any taxable year if the amount of the understatement for the taxable year exceeds the greater of— “(i) 10 percent of the tax required to be shown on the return for the taxable year, or “(ii) $5,000. “(B) Special rule for corporations.— In the case of a corporation other than an electing small business corporation (as defined in section 1371(b)) or a personal holding company (as defined in section 542), paragraph (1) shall be applied by substituting ‘$10,000’ for ‘$5,000’. “(2) Understatement.— “(A) In general.— For purposes of paragraph (1), the term ‘understatement’ means the excess of— “(i) the amount of the tax required to be shown on the return for the taxable year, over “(ii) the amount of the tax imposed which is shown on the return. “(B) Reduction for understatement due to position of taxpayer or disclosed item.— The amount of the understatement under subparagraph (A) shall be reduced by that portion of the understatement which is attributable to— “(i) the tax treatment of any item by the taxpayer if there is or was substantial authority for such treatment, or “(ii) any item with respect to which the relevant facts affecting the item’s tax treatment are adequately disclosed in the return or in a statement attached to the return. “(C) Special rules in cases involving tax shelters.— “(i) In general.— In the case of any item attributable to a tax shelter— “(I) subparagraph (B)(ii) shall not apply, and “(II) subparagraph (B)(i) shall not apply unless (in addition to meeting the requirements of such subparagraph) the taxpayer reasonably believed that the tax treatment of such item by the taxpayer was more likely than not the proper treatment. “(ii) Tax shelter.— For purposes of clause (i), the term ‘tax shelter’ means— “(I) a partnership or other entity, “(II) any investment plan or arrangement, or “(III) any other plan or arangement, if the principal purpose of such partnership, entity, plan, or arrangement is the avoidance or evasion of Federal income tax. “(3) Coordination with penalty imposed by section 6659.— For purposes of determining the amount of the addition to tax assessed under subsection (a), there shall not be taken into account that portion of the substantial understatement on which a penalty is imposed under section 6659 (relating to 95 Stat. 341. addition to tax in the case of valuation overstatements). “(c) Authority to Waive.— The Secretary may waive all or any part of the addition to tax provided by this section on a showing by the taxpayer that there was reasonable cause for the understatement (or part thereof) and that the taxpayer acted in good faith.” (b) Conforming Amendment.— The table of sections for subchapter A of chapter 68 is amended by striking out the last item and inserting in lieu thereof the following: “Sec. 6661. Substantial understatement of liability. “Sec. 6662. Applicable rules.” (c) Effective Date.— The amendments made by this section shall 26 USC 6661 note. apply to returns the due date (determined without regard to extension) for filing of which is after December 31, 1982. SEC. 324. PENALTIES FOR DOCUMENTS UNDERSTATING TAX LIABILITY. (a) General Rule.— Subchapter B of chapter 68 (relating to assessable penalties) is amended by inserting after section 6700 the following new section: “SEC. 6701. PENALTIES FOR AIDING AND ABETTING UNDERSTATEMENT OF TAX LIABILITY. “(a) Imposition of Penalty.— Any person— “(1) who aids or assists in, procures, or advises with respect to, the preparation or presentation of any portion of a return, affidavit, claim, or other document in connection with any matter arising under the internal revenue laws, “(2) who knows that such portion will be used in connection with any material matter arising under the internal revenue laws, and “(3) who knows that such portion (if so used) will result in an understatement of the liability for tax of another person, shall pay a penalty with respect to each such document in the amount determined under subsection (b). “(b) Amount of Penalty.— “(1) In general.— Except as provided in paragraph (2), the amount of the penalty imposed by subsection (a) shall be $1,000. “(2) Corporations.— If the return, affidavit, claim, or other document relates to the tax liability of a corporation, the amount of the penalty imposed by subsection (a) shall be $10,000. “(3) Only 1 penalty per person per period.— If any person is subject to a penalty under subsection (a) with respect to any document relating to any taxpayer for any taxable period (or where there is no taxable period, any taxable event), such person shall not be subject to a penalty under subsection (a) with respect to any other document relating to such taxpayer for such taxable period (or event). “(c) Activities of Subordinates.— “(1) In general.— For purposes of subsection (a), the term ‘procures’ includes— “(A) ordering (or otherwise causing) a subordinate to do an act, and “(B) knowing of, and not attempting to prevent, participation by a subordinate in an act. “(2) Subordinate.— For purposes of paragraph (1), the term ‘subordinate’ means any other person (whether or not a director, officer, employee, or agent of the taxpayer involved) over whose activities the person has direction, supervision, or control. “(d) Taxpayer Not Required to Have Knowledge.— Subsection (a) shall apply whether or not the understatement is with the knowledge or consent of the persons authorized or required to present the return, affidavit, claim, or other document. “(e) Certain Actions Not Treated as Aid or Assistance.— For purposes of subsection (a)(1), a person furnishing typing, reproducing, or other mechanical assistance with respect to a document shall not be treated as having aided or assisted in the preparation of such document by reason of such assistance. “(f) Penalty in Addition to Other Penalties.— “(1) In general.— Except as provided by paragraph (2), the penalty imposed by this section shall be in addition to any other penalty provided by law. “(2) Coordination with return preparer penalties.— No penalty shall be assessed under subsection (a) or (b) of section 6694 on any person with respect to any document for which a penalty is assessed on such person under subsection (a).” (b) Clerical Amendment.— The table of sections for subchapter B of chapter 68 is amended by inserting after the item relating to section 6700 the following new item: “Sec. 6701. Penalties for aiding and abetting understatement of tax liability.” (c) Effective Date.— The amendments made by this section shall 26 USC 6701 note. take effect on the day after the date of the enactment of this Act. (d) Cross Reference.— For provisions relating to burden of proof and prepayment forum, see section 6703 of the Internal Revenue Code of 1954, as added by section 333 of this Act. SEC. 325. FRAUD PENALTY. (a) General Rule.— Subsection (b) of section 6653 (relating to 26 USC 6653. fraud penalty) is amended to read as follows: “(b) Fraud.— “(1) In general.— If any part of any underpayment (as defined in subsection (c)) of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 50 percent of the underpayment. “(2) Additional amount for portion attributable to fraud.— There shall be added to the tax (in addition to the amount determined under paragraph (1)) an amount equal to 50 percent of the interest payable under section 6601— “(A) with respect to the portion of the underpayment described in paragraph (1) which is attributable to fraud, and “(B) for the period beginning on the last day prescribed by law for payment of such underpayment (determined without regard to any extension) and ending on the date of the assessment of the tax (or, if earlier, the date of the payment of the tax). “(3) No negligence addition when there is addition for fraud.— The addition to tax under this subsection shall be in lieu of any amount determined under subsection (a). “(4) Special rule for joint returns.— In the case of a joint return under section 6013, this subsection shall not apply with respect to the tax of the spouse unless some part of the underpayment is due to the fraud of such spouse.” (b) Effective Date.— The amendment made by subsection (a) 26 USC 6653 note. shall apply with respect to taxes the last day prescribed by law for payment of which (determined without regard to any extension) is after the date of enactment of this Act. SEC. 326. PENALTY FOR FRIVOLOUS RETURNS. (a) General Rule.— Subchapter B of chapter 68 (relating to assessable penalties) is amended by inserting after section 6701 the following new section: “SEC. 6702. FRIVOLOUS INCOME TAX RETURN. “(a) Civil Penalty.— If— “(1) any individual files what purports to be a return of the tax imposed by subtitle A but which— “(A) does not contain information on which the substantial correctness of the self-assessment may be judged, or “(B) contains information that on its face indicates that the self-assessment is substantially incorrect; and “(2) the conduct referred to in paragraph (1) is due to— “(A) a position which is frivolous, or “(B) a desire (which appears on the purported return) to delay or impede the administration of Federal income tax laws, then such individual shall pay a penalty of $500. “(b) Penalty in Addition to Other Penalties.— The penalty imposed by subsection (a) shall be in addition to any other penalty provided by law.” (b) Clerical Amendment.— The table of sections for subchapter B of chapter 68 is amended by inserting after the item relating to section 6701 the following new item: “Sec. 6702. Frivolous income tax return.” (c) Effective Date.— The amendments made by this section shall 26 USC 6702 note. apply with respect to documents filed after the date of the enactment of this Act. (d) Cross Reference.— For provisions relating to burden of proof and prepayment forum, see section 6703 of the Internal Revenue Code of 1954 as added by section 333 of this Act. SEC. 327. RELIEF FROM CRIMINAL PENALTY FOR FAILURE TO FILE ESTIMATED TAX WHERE TAXPAYER FALLS WITHIN STATUTORY EXCEPTIONS. Section 7203 (relating to willful failure to file return, supply 26 USC 7203. information, or pay tax) is amended by adding at the end thereof the following new sentence: “In the case of any person with respect to whom there is a failure to pay any estimated tax, this section shall not apply to such person with respect to such failure if there is no addition to tax under section 6654 or 6655 with respect to such failure.” SEC. 328. ADJUSTMENTS TO ESTIMATED TAX PROVISIONS. (a) Waiver of Penalty Where Individual Did Not Have Tax Liabilities for Preceding Taxable Year.— (1) Section 6654 (relating to failure by individual to pay 95 Stat. 346. estimated tax) is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection: “(h) Exception Where No Tax Liability for Preceding Taxable Year.— No addition to tax shall be imposed under subsection (a) for any taxable year if— “(1) the individual did not have any liability for tax for the preceding taxable year, “(2) the preceding taxable year was a taxable year of 12 months, and “(3) the individual was a citizen or resident of the United States throughout the preceding taxable year.” (2) Subsection (g) of section 6654 is amended by striking out “and (f)” and inserting in lieu thereof “(f), and (h)”. (b) Elimination of Requirements to File Declarations of Estimated Tax.— (1) Section 6015 (relating to declaration of estimated income 95 Stat. 345. tax by individuals) is amended by adding at the end thereof the following new subsection: “(k) Termination.— No declaration shall be required under this section for any taxable year beginning after December 31, 1982.” (2) Section 6073 (relating to time for filing declarations of 26 USC 6073. estimated income tax by individuals) is amended by adding at the end thereof the following new subsection: “(f) Termination.— This section shall not apply to any taxable year beginning after December 31, 1982.” (3) Section 6153 (relating to installment payments of estimated 26 USC 6153. income tax by individuals) is amended by striking out subsection (g) and inserting in lieu thereof the following: “(g) Special Rules for Taxable Years Beginning After 1982.— In the case of taxable years beginning after 1982— “(1) this section shall be applied as if the requirements of sections 6015 and 6073 remained in effect, and “(2) the amount of the estimated tax taken into account under this section shall be determined under rules similar to the rules of subsections (b) and (d) of section 6654.” (c) Effective Date.— The amendments made by this section 26 USC 6015 note. shall apply to taxable years beginning after December 31, 1982. SEC. 329. INCREASES IN CERTAIN CRIMINAL FINES. (a) Attempt to Evade or Defeat Tax.— Section 7201 (relating to 26 USC 7201. attempt to evade or defeat tax) is amended by striking out “$10,000” and inserting in lieu thereof “$100,000 ($500,000 in the case of a corporation)”. (b) Willful Failure to File Return, Supply Information, or Pay Tax.— Section 7203 (relating to willful failure to file return, 26 USC 7203. supply information, or pay tax) is amended by striking out “$10,000” and inserting in lieu thereof “$25,000 ($100,000 in the case of a corporation)”. (c) Fraud and False Statements.— Section 7206 (relating to fraud 26 USC 7206. and false statements) is amended by striking out “$5,000” and inserting in lieu thereof “$100,000 ($500,000 in the case of a corporation)”. (d) Fraudulent Returns, Statements, or Other Documents.— Section 7207 (relating to fraudulent returns, statements, or other 26 USC 7207. documents) is amended by striking out “$1,000” each place it appears and inserting in lieu thereof “$10,000 ($50,000 in the case of a corporation)”. (e) Effective Date.— The amendments made by this section shall 26 USC 7201 note. apply to offenses committed after the date of the enactment of this Act. SEC. 330. SPECIAL RULES WITH RESPECT TO CERTAIN CASH. (a) In General.— Subchapter A of chapter 70 (relating to jeopardy) is amended by adding at the end thereof the following new part: “PART III— SPECIAL RULES WITH RESPECT TO CERTAIN CASH “Sec. 6867. Presumptions where owner of large amount of cash is not identified. “SEC. 6867. PRESUMPTIONS WHERE OWNER OF LARGE AMOUNT OF CASH IS NOT IDENTIFIED. “(a) General Rule.— If the individual who is in physical possession of cash in excess of $10,000 does not claim such cash— “(1) as his, or “(2) as belonging to another person whose identity the Secretary can readily ascertain and who acknowledges ownership of such cash, then, for purposes of sections 6851 and 6861, it shall be presumed that such cash represents gross income of a single individual for the taxable year in which the possession occurs, and that the collection of tax will be jeopardized by delay. “(b) Rules for Assessing.— In the case of any assessment resulting from the application of subsection (a)— “(1) the entire amount of the cash shall be treated as taxable income for the taxable year in which the possession occurs, “(2) such income shall be treated as taxable at a 50-percent rate, and “(3) except as provided in subsection (c), the possessor of the cash shall be treated (solely with respect to such cash) as the taxpayer for purposes of chapters 63 and 64 and section 7429(a)(1). “(c) Effect of Later Substitution of True Owner.— If, after an assessment resulting from the application of subsection (a), such assessment is abated and replaced by an assessment against the owner of the cash, such later assessment shall be treated for purposes of all laws relating to lien, levy and collection as relating back to the date of the original assessment. “(d) Definitions.— For purposes of this section— “(1) Cash.— The term ‘cash’ includes any cash equivalent. “(2) Cash equivalent.— The term ‘cash equivalent’ means— “(A) foreign currency, “(B) any bearer obligation, and “(C) any medium of exchange which— “(i) is of a type which has been frequently used in illegal activities, and “(ii) is specified as a cash equivalent for purposes of this part in regulations prescribed by the Secretary. “(3) Value of Cash Equivalent.— Any cash equivalent shall be taken into account— “(A) in the case of a bearer obligation, at its face amount, and “(B) in the case of any other cash equivalent, at its fair market value.” (b) Clerical Amendment.— The table of parts for such subchapter A is amended by adding at the end thereof the following new item: “Part III. Special rules with respect to certain cash.” (c) Effective Date.— The amendments made by subsections (a) 26 USC 6867 note. and (b) shall take effect on the day after the date of the enactment of this Act. Subtitle D— Administrative Summons SEC. 331. SPECIAL PROCEDURES FOR THIRD-PARTY SUMMONSES. (a) Proceeding to Quash.— Paragraph (2) of section 7609(b) (relating 26 USC 7609. to right to intervene; right to stay compliance) is amended to read as follows: “(2) Proceeding to quash.— “(A) In general.— Notwithstanding any other law or rule of law, any person who is entitled to notice of a summons under subsection (a) shall have the right to begin a proceeding to quash such summons not later than the 20th day after the day such notice is given in the manner provided in subsection (a)(2). In any such proceeding, the Secretary may seek to compel compliance with the summons. “(B) Requirement of notice to person summoned and to secretary.— If any person begins a proceeding under subparagraph (A) with respect to any summons, not later than the close of the 20-day period referred to in subparagraph (A) such person shall mail by registered or certified mail a copy of the petition to the person summoned and to such office as the Secretary may direct in the notice referred to in subsection (a)(1). “(C) Intervention; etc.— Notwithstanding any other law or rule of law, the person summoned shall have the right to intervene in any proceeding under subparagraph (A). Such person shall be bound by the decision in such proceeding (whether or not the person intervenes in such proceeding).” (b) Restriction on Examination.— Subsection (d) of section 7609 (relating to restriction on examination of records) is amended to read as follows: “(d) Restriction on Examination of Records.— No examination of any records required to be produced under a summons as to which notice is required under subsection (a) may be made— “(1) before the close of the 23rd day after the day notice with respect to the summons is given in the manner provided in subsection (a)(2), or “(2) where a proceeding under subsection (b)(2)(A) was begun within the 20-day period referred to in such subsection and the requirements of subsection (b)(2)(B) have been met, except in accordance with an order of the court having jurisdiction of such proceeding or with the consent of the person beginning the proceeding to quash.” (c) Jurisdiction.— Subsection (h) of section 7609 (relating to jurisdiction 26 USC 7609. of district court) is amended to read as follows: “(h) Jurisdiction of District Court; Etc.— “(1) Jurisdiction.— The United States district court for the district within which the person to be summoned resides or is found shall have jurisdiction to hear and determine any proceeding brought under subsection (b)(2), (f), or (g). An order denying the petition shall be deemed a final order which may be appealed. “(2) Special rule for proceedings under subsections (f) and (g).— The determinations required to be made under subsections (f) and (g) shall be made ex parte and shall be made solely on the petition and supporting affidavits. “(3) Priority.— Except as to cases the court considers of greater importance, a proceeding brought for the enforcement of any summons, or a proceeding under this section, and appeals, takes precedence on the docket over all other cases and shall be assigned for hearing and decided at the earliest practicable date .” (d) Conforming Amendments.— (1) Paragraph (1) of section 7609(a) is amended— (A) by striking out “14th day” and inserting in lieu thereof “23rd day”, and (B) by striking out the last sentence and inserting in lieu thereof the following: “Such notice shall be accompanied by a copy of the summons which has been served and shall contain an explanation of the right under subsection (b)(2) to bring a proceeding to quash the summons.” (2) The subsection heading for subsection (b) of section 7609 is amended to read as follows: “(b) Right to Intervene; Right to Proceeding To Quash.—”. (e) Effective Date.— The amendments made by this section shall 26 USC 7609 note. apply to summonses served after December 31, 1982. SEC. 332. DUTY OF THIRD-PARTY RECORDKEEPER. (a) General Rule.— Section 7609 (relating to special procedures Supra. for third-party summonses) is amended by adding at the end thereof the following new subsection: “(i) Duty of Third-Party Recordkeeper.— “(1) Recordkeeper must assemble records and be prepared to produce records.— On receipt of a summons described in subsection (c), the third-party recordkeeper shall proceed to assemble the records requested, or such portion thereof as the Secretary may prescribe, and shall be prepared to produce the records pursuant to the summons on the day on which the records are to be examined. “(2) Secretary may give recordkeeper certificate.— The Secretary may issue a certificate to the third-party recordkeeper that the period prescribed for beginning a proceeding to quash a summons has expired and that no such proceeding began within such period, or that the taxpayer consents to the examination. “(3) Protection for recordkeeper who discloses.— Any third-party recordkeeper, or agent or employee thereof, making a disclosure of records pursuant to this section in good-faith reliance on the certificate of the Secrtetary or an order of a court requiring production of records shall not be liable to any customer or other person for such disclosure” (b) Effective Date.— The amendment made by subsection (a) 26 USC 7609 note. shall apply to summonses served after December 31, 1982. SEC. 333. LIMITATION ON USE OF ADMINISTRATIVE SUMMONS. (a) In general.— Section 7602 (relating to examination of books 26 USC 7602. and witnesses) is amended by striking out “For the purpose” and inserting in lieu thereof “(a) Authority To Summon, Etc.—For the purpose” and by adding at the end thereof the following new subsections: “(b) Purpose May Include Inquiry Into Offense.— The purposes for which the Secretary may take any action described in paragraph (1), (2), or (3) of subsection (a) include the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws. “(c) No Administrative Summons When There is Justice Department Referral.— “(1) Limitation of Authority.— No summons may be issued under this title, and the Secretary may not begin any action under section 7604 to enforce any summons, with respect to any person if a Justice Department referral is in effect with respect to such person. “(2) Justice department referral in effect.— For purposes of this subsection— “(A) In general.— A Justice Department referral is in effect with respect to any person if— “(i) the Secretary has recommended to the Attorney General a grand jury investigation of, or the criminal prosecution of, such person for any offense connected with the administration or enforcement of the internal revenue laws, or “(ii) any request is made under section 6103(h)(3)(B) for the disclosure of any return or return information (within the meaning of section 6103(b)) relating to such person. “(B) Termination.— A Justice Department referral shall cease to be in effect with respect to a person when— “(i) the Attorney General notifies the Secretary, in writing, that— “(I) he will not prosecute such person for any offense connected with the administration or enforcement of the internal revenue laws, “(II) he will not authorize a grand jury investigation of such person with respect to such an offense, or “(III) he will discontinue such a grand jury investigation, “(ii) a final disposition has been made of any criminal proceeding pertaining to the enforcement of the internal revenue laws which was instituted by the Attorney General against such person, or “(iii) the Attorney General notifies the Secretary, in writing, that he will not prosecute such person for any offense connected with the administration or enforce-ment of the internal revenue laws relating to the request described in subparagraph (A)(ii). “(3) Taxable years, etc., treated separately.— For purposes of this subsection, each taxable period (or, if there is no taxable period, each taxable event) and each tax imposed by a separate chapter of this title shall be treated separately.” (b) Effective Date.— The amendments made by subsection (a) 6 USC 7602 note. shall take effect on the day after the date of the enactment of this Act. Subtitle E— Withholding on Pensions and Other Retirement Income SEC. 334. WITHHOLDING ON PENSIONS. ANNUITIES, AND CERTAIN OTHER DEFERRED INCOME. (a) In General.— Chapter 24 (relating to collection of income tax at source on wages) is amended by adding at the end thereof the following new section: “SEC. 3405. SPECIAL RULES FOR PENSIONS, ANNUITIES. AND CERTAIN OTHER DEFERRED INCOME. “(a) Pensions, Annuities, Etc.— “(1) Withholding as if payment were wages.— The payor of any periodic payment (as defined in subsection (d)(2)) shall withhold from such payment the amount which would be required to be withheld from such payment if such payment were a payment of wages by an employer to an employee for the appropriate payroll period. “(2) Election of no withholding.— An individual may elect to have paragraph (1) not apply with respect to periodic payments made to such individual. Such an election shall remain in effect until revoked by such individual. “(3) When election takes effect.— Any election under this subsection (and any revocation of such an election) shall take effect as provided by subsection (f)(3) of section 3402 for withholding exemption certificates. “(4) Amount withheld where no withholding exemption certificate in effect.— In the case of any payment with respect to which a withholding exemption certificate is not in effect, the amount withheld under paragraph (1) shall be determined by treating the payee as a married individual claiming 3 withholding exemptions. “(b) Nonperiodic Distribution.— “(1) Withholding.— The payor of any nonperiodic distribution (as defined in subsection (d)(3)) shall withhold from such distribution the amount determined under paragraph (2). “(2) Amount of withholding.— “(A) Distributions which are not qualified total distributions.— In the case of any nonperiodic distribution which is not a qualified total distribution, the amount withheld under paragraph (1) shall be the amount determined by multiplying such distribution by 10 percent. “(B) Qualified total distributions.— In the case of any nonperiodic distribution which is a qualified total distribution, the amount withheld under paragraph (1) shall be determined under tables (or other computational procedures) prescribed by the Secretary which are based on the amount of tax which would be imposed on such distribution under section 402(e) if the recipient elected to treat such distribution as a lump-sum distribution (within the meaning of section 402(e)(4)(A)). “(C) Special rule for distributions by reasons of death.— In the case of any distribution described in subparagraph (B) from or under any plan or contract described in section 401(a), 403(a), or 403(b) which is made by reason of a participant ’s death, the Secretary, in prescribing tables or procedures under paragraph (1), shall take into account the exclusion from gross income provided by section 101(b) (whether or not allowable). “(3) 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) Liability for Withholding.— “(1) In general.— Except as provided in paragraph (2), the payor of a designated distribution (as defined in subsection (d)(1)) shall withhold, and be liable for, payment of the tax required to be withheld under this section. “(2) 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. 26 USC 46 note. “(d) Definitions and Special Rules.— For purposes of this section— “(1) Designated distribution.— “(A) In general.— Except as provided in subparagraph (B), the term ‘designated distribution’ means any distribution or payment from or under— “(i) 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, and “(ii) the portion of a distribution or payment which it is reasonable to beheve is not 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) Qualified total distribution.— “(A) In general.— The term ‘qualified total distribution’ means any distribution which— “(i) is a designated distribution, “(ii) it is reasonable to believe is made within 1 taxable year of the recipient, “(iii) is made under a plan described in section 401(a), or 403(a), and “(iv) consists of the balance to the credit of the employee under such plan. “(B) Special rule for accumulated deductible employee contributions.— For purposes of subparagraph (A), accumulated deductible employee contributions (within the meaning of section 72(o)(5)(B)) shall be treated separately 95 Stat. 278. in determining if there has been a qualified total distribution. “(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 employer securities of the employer corporation (within the meaning of section 402(a)(3))) received in the distribution. “(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’. “(e) 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.” (b) Filing of Reports.— Section 6047 (relating to information 26 USC 6047. concerning certain trusts and annuity and bond purchase plans) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Reports by Employers, Plan Administrators, Etc.— “(1) In general.— The Secretary shall by forms or regulations require that— “(A) the employer maintaining, or the plan administrator (within the meaning of section 414(g)) of, a plan from which designated distributions (as defined in section 3405(d)(1)) may be made, and “(B) any person issuing any contract under which designated distributions (as so defined) may be made, make returns and reports regarding such plan (or contract) to the Secretary, to the participants and beneficiaries of such plan (or contract), and to such other persons as the Secretary may by regulations prescribe. “(2) Form, Etc., of Reports.— Such reports shall be in such form, made at such time, and contain such information as the Secretary may prescribe by forms or regulations.” (c) Penalty for Failure to Keep Records Necessary to Comply With Reporting Requirements of Section 6047(e).— (1) In general.— Subchapter B of chapter 68 (relating to assessable penalties) is amended by adding at the end thereof the following new section: “SEC. 6704. FAILURE TO KEEP RECORDS NECESSARY TO MEET REPORTING REQUIREMENTS UNDER SECTION 6047(e). “(a) Liability for Penalty.— Any person who— “(1) has a duty to report or may have a duty to report any information under section 6047(e), and “(2) fails to keep such records as may be required by regulations prescribed under section 6047(e) for the purpose of providing the necessary data base for either current reporting or future reporting, shall pay a penalty for each calendar year for which there is any failure to keep such records. “(b) Amount of Penalty.— “(1) In general.— The penalty of any person for any calendar year shall be $50, multiplied by the number of individuals with respect to whom such failure occurs in such year. “(2) Maximum amount.— The penalty under this section of any person for any calendar year shall not exceed $50,000. “(c) Exceptions.— “(1) Reasonable cause.— No penalty shall be imposed by this section on any person for any failure which is shown to be due to reasonable cause and not to willful neglect. “(2) Inability to correct previous failure.— No penalty shall be imposed by this section on any failure by a person if such failure is attributable to a prior failure which has been penalized under this section and with respect to which the person has made all reasonable efforts to correct the failure. “(3) Pre-1983 failures.— No penalty shall be imposed by this section on any person for any failure which is attributable to a failure occurring before January 1, 1983, if the person has made all reasonable efforts to correct such pre-1983 failure.” (2) Clerical amendment.— The table of sections for subchapter B of chapter 68 is amended by adding at the end thereof the following new section: “Sec. 6704. Failure to keep records necessary to meet reporting requirements under section 6047(e).” (d) Coordination with voluntary withholding on certain payments other than wages.— Subsection (o) of section 3402 26 USC 3402. (relating to extension of withholding to certain payments other than wages) is amended by adding at the end thereof the following new paragraph: “(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(d)(1)).” (e) Effective Dates.— (1) Amendment made by subsections (a) and (b).— Except as provided in paragraph (4), the amendment made by subsections (a) and (d) shall apply to payments or other distributions made after December 31, 1982. (2) Amendments made by subsection (b).— Except as provided in paragraph (4), the amendments made by subsection (b) shall take effect on January 1, 1983. (3) Amendments made by subsection (c).— The amendments made by subsection (c) 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 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 Regulations. 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. SEC. 335. PARTIAL ROLLOVERS OF IRA DISTRIBUTIONS PERMITTED. (a) General Rule.— (1) Paragraph (3) of section 408(d) is amended by adding at the 26 USC 408. end thereof the following new subparagraph: “(C) Partial rollovers permitted.— “(i) In general.— If any amount paid or distributed out of an individual retirement account or individual retirement annuity would meet the requirements of subparagraph (A) but for the fact that the entire amount was not paid into an eligible plan as required by clause (i), (ii), or (iii) of subparagraph (A), such amount shall be treated as meeting the requirements of subparagraph (A) to the extent it is paid into an eligible plan referred to in such clause not later than the 60th day referred to in such clause. “(ii) Eligible plan.— For purposes of clause (i), the term ‘eligible plan’ means any account, annuity, bond, contract, or plan referred to in subparagraph (A).” (2) Paragraph (3) of section 409(b) is amended by adding at the 26 USC 409. end thereof the following new subparagraph: “(D) Partial rollovers permitted.— Rules similar to the rules of section 408(d)(3)(C) shall apply for purposes of subparagraph (C).” (b) Effective date.— The amendments made by subsection (a) 26 USC 408 note. shall apply to distributions made after December 31, 1982, in taxable years ending after such date. Subtitle F— Transactions Outside the United States or Involving Foreign Persons SEC. 336. JURISDICTION OF COURT AND ENFORCEMENT OF SUMMONS IN CASE OF PERSONS RESIDING OUTSIDE THE UNITED STATES. (a) General Rule.— Subsection (a) of section 7701 (relating to 26 USC 7701. definitions) is amended by adding at the end thereof the following new paragraph: “(38) Persons residing outside united states.— If any citizen or resident of the United States does not reside in (and is not found in) any United States judicial district, such citizen or resident shall be treated as residing in the District of Columbia for purposes of any provision of this title relating to— “(A) jurisdiction of courts, or “(B) enforcement of summons.” (b) Effective Date.— The amendment made by subsection (a) 26 USC 7701 note. shall take effect on the day after the date of the enactment of this Act. SEC. 337. ADMISSIBILITY OF EVIDENCE MAINTAINED IN FOREIGN COUNTRIES. (a) General Rule.— Part III of subchapter N of chapter 1 (relating to income from sources without the United States) is amended by adding at the end thereof the following new subpart: “Subpart I— Admissibility of Documentation Maintained in Foreign Countries “Sec. 982. Admissibility of documentation maintained in foreign countries. “SEC. 982. ADMISSIBILITY OF DOCUMENTATION MAINTAINED IN FOREIGN COUNTRIES. “(a) General Rule.— If the taxpayer fails to substantially comply with any formal document request arising out of the examination of the tax treatment of any item (hereinafter in this section referred to as the ‘examined item’) before the 90th day after the date of the mailing of such request on motion by the Secretary, any court having jurisdiction of a civil proceeding in which the tax treatment of the examined item is an issue shall prohibit the introduction by the taxpayer of any foreign-based documentation covered by such request. “(b) Reasonable Cause Exception.— “(1) In general.— Subsection (a) shall not apply with respect to any documentation if the taxpayer establishes that the failure to provide the documentation as requested by the Secretary is due to reasonable cause. “(2) Foreign nondisclosure law not reasonable cause.— For purposes of paragraph (1), the fact that a foreign jurisdiction would impose a civil or criminal penalty on the taxpayer (or any other person) for disclosing the requested documentation is not reasonable cause. “(c) Formal Document Request.— For purposes of this section— “(1) Formal document request.— The term ‘formal document request’ means any request (made after the normal request procedures have failed to produce the requested documentation) for the production of foreign-based documentation which is mailed by registered or certified mail to the taxpayer at his last known address and which sets forth— “(A) the time and place for the production of the documentation, “(B) a statement of the reason the documentation previously produced (if any) is not sufficient, “(C) a description of the documentation being sought, and “(D) the consequences to the taxpayer of the failure to produce the documentation described in subparagraph (C). “(2) Proceeding to quash.— “(A) In general.— Notwithstanding any other law or rule of law, any person to whom a formal document request is mailed shall have the right to begin a proceeding to quash such request not later than the 90th day after the day such request was mailed. In any such proceeding, the Secretary may seek to compel compliance with such request. “(B) Jurisdiction.— The United States district court for the district in which the person (to whom the formal document request is mailed) resides or is found shall have jurisdiction to hear any proceeding brought under subparagraph (A). An order denying the petition shall be deemed a final order which may be appealed. “(C) Suspension of 90-day period.— The running of the 90-day period referred to in subsection (a) shall be suspended during any period during which a proceeding brought under subparagraph (A) is pending. “(d) Definitions and special rules.— For purposes of this section— “(1) Foreign-based documentation.— The term ‘foreign-based documentation’ means any documentation which is outside the United States and which may be relevant or material to the tax treatment of the examined item. “(2) Documentation.— The term ‘documentation’ includes books and records. “(3) Foreign-connected.— An item shall be treated as foreign-connected if— “(A) such item is directly or indirectly from a source outside the United States, or “(B) such item (in whole or in part)— “(i) purports to arise outside the United States, or “(ii) is otherwise dependent on transactions occurring outside the United States. “(4) Authority to extend 90-day period.— The Secretary, and any court having jurisdiction over a proceeding under subsection (c)(2), may extend the 90-day period referred to in subsection (a). “(e) Suspension of statute of limitations.— If any person takes any action as provided in subsection (c)(2), the running of any period of limitations under section 6501 (relating to the assessment and collection of tax) or under section 6531 (relating to criminal prosecutions) with respect to such person shall be suspended for the period during which the proceeding under such subsection, and appeals therein, are pending.” (b) Clerical Amendment.— The table of subparts for part III of subchapter N of chapter 1 is amended by adding at the end thereof the following new item: “Subpart I. Admissibility of documentation maintained in foreign countries.” (c) Effective Date.— The amendments made by this section shall 26 USC 982 note. apply with respect to formal document requests (as defined in section 982(c)(1) of the Internal Revenue Code of 1954, as added by this section) mailed after the date of the enactment of this Act. SEC. 338. PENALTY FOR FAILURE TO FURNISH INFORMATION WITH RESPECT TO CERTAIN FOREIGN CORPORATIONS. (a) In General.— Section 6038 (relating to information with 26 USC 6038. respect to certain foreign corporations) is amended by redesignating subsections (b), (c), and (d) as subsections (c), (d), and (e), respectively, and by inserting after subsection (a) the following new subsection: “(b) Dollar Penalty For Failure To Furnish Information.— “(1) In general.— If any person fails to furnish, within the time prescribed under paragraph (2) of subsection (a), any information with respect to any foreign corporation required under paragraph (1) of subsection (a), such person shall pay a penalty of $1,000 for each annual accounting period with respect to which such failure exists. “(2) Increase in penalty where failure continues after notification.— If any failure described in paragraph (1) continues for more than 90 days after the day on which the Secretary mails notice of such failure to the United States person, such person shall pay a penalty (in addition to the amount required under paragraph (1)) of $1,000 for each 30-day period (or fraction thereof) during which such failure continues with respect to any annual accounting period after the expiration of such 90-day period. The increase in any penalty under this paragraph shall not exceed $24,000.” (b) Coordination with existing reduction in foreign tax credit.— Subsection (c) of section 6038 (as redesignated by subsection (a)) is amended— (1) by inserting “and subsection (b)” after “subsection” in paragraph (3)(B), and (2) by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph: “(3) Coordination with subsection (b).— The amount of the reduction which (but for this paragraph) would be made under paragraph (1) with respect to any annual accounting period shall be reduced by the amount of the penalty imposed by subsection (b) with respect to such period.” (c) Technical Amendments.— (1) The subsection heading of subsection (c) of section 6038 (as redesignated by subsection (a)) is amended to read as follows: “(c) Penalty of Reducing Foreign Tax Credit.—”. (2) Paragraph (1) of section 6038(a) is amended by striking out “within the meaning of subsection (d)(1)” and inserting in lieu thereof “within the meaning of subsection (e)(1)”. (3) The last sentence of paragraph (1) of section 6038(c) (as redesignated by subsection (a)) is amended by inserting “of such failure” after “notice”. (d) Effective Date.— The amendments made by this section shall 26 USC 6038 note. apply with respect to information for annual accounting periods ending after the date of the enactment of this Act. SEC. 339. INFORMATION REQUIREMENTS WITH RESPECT TO CERTAIN FOREIGN-OWNED CORPORATIONS. (a) General Rule.— Subpart A of part III of subchapter A of chapter 61 is amended by inserting after section 6038 the following new section: “SEC. 6038A. INFORMATION WITH RESPECT TO CERTAIN FOREIGN-OWNED CORPORATIONS. “(a) Requirement.— If, at any time during a taxable year, a corporation (hereinafter in this section referred to as the ‘reporting corporation’)— “(1) is a domestic corporation or is a foreign corporation engaged in trade or business within the United States, and “(2) is controlled by a foreign person, such corporation shall furnish, at such time and in such manner as the Secretary shall by regulations prescribe, the information described in subsection (b). “(b) Required Information.— For purposes of subsection (a), the information described in this subsection is such information as the Secretary may prescribe by regulations relating to— “(1) the name, principal place of business, nature of business, and country or countries in which organized or resident, of each corporation which— “(A) is a member of the same controlled group as the reporting corporation, and “(B) had any transaction with the reporting corporation during its taxable year, “(2) the manner in which the reporting corporation is related to each corporation referred to in paragraph (1), and “(3) transactions between the reporting corporation and each foreign corporation which is a member of the same controlled group as the reporting corporation. “(c) Definitions.— For purposes of this section— “(1) Control.— The term ‘control’ has the meaning given to such term by section 6038(d)(1); except that ‘at least 50 percent’ shall be substituted for ‘more than 50 percent’ each place it appears in such section. “(2) Controlled group.— The term ‘controlled group’ means any controlled group of corporations within the meaning of section 1563(a); except that— “(A) ‘at least 50 percent’ shall be substituted— “(i) for ‘at least 80 percent’ each place it appears in section 1563(a)(1), and “(ii) for ‘more than 50 percent’ each place it appears in section 1563(a)(2)(B), and “(B) the determination shall be made without regard to subsections (a)(4) and (e)(3)(C) of section 1563. “(3) Foreign person.— The term ‘foreign person’ means any person who is not a United States person. For purposes of the preceding sentence, the term ‘United States person’ has the meaning given to such term by section 7701(a)(30); except that any individual who is a citizen of any possession of the United States (but not otherwise a citizen of the United States) and who is not a resident of the United States shall not be treated as a United States person. “(d) Penalty for Failure to Furnish Information.— “(1) In general.— If a reporting corporation fails to furnish (within the time prescribed by regulations) any information described in subsection (b), such corporation shall pay a penalty of $1,000 for each taxable year with respect to which such failure occurs. “(2) Increase in penalty where failure continues after notification.— If any failure described in paragraph (1) continues for more than 90 days after the day on which the Secretary mails notice of such failure to the reporting corporation, such corporation shall pay a penalty (in addition to the amount required under paragraph (1)) of $1,000 for each 30-day period (or fraction thereof) during which such failure continues after the expiration of such 90-day period. The increase in any penalty under this paragraph shall not exceed $24,000. “(3) Reasonable cause.— For purposes of this subsection, the time prescribed by regulations to furnish information (and the beginning of the 90-day period after notice by the Secretary) shall be treated as not earlier than the last day on which (as shown to the satisfaction of the Secretary) reasonable cause existed for failure to furnish the information. “(e) Cross Reference.— “For provisions relating to criminal penalties for violation of this section, see section 7203.” (b) Clerical Amendment.— The table of sections for subpart A of part III of subchapter A of chapter 61 is amended by inserting the following new item after the item relating to section 6038: “Sec. 6038A. Information with respect to certain foreign-owned corporations.” (c) Effective Date.— The amendments made by this section shall 26 USC 6038A note. apply to taxable years beginning after December 31, 1982. SEC. 340. RETURNS WITH RESPECT TO FOREIGN PERSONAL HOLDING COMPANIES. (a) General Rule.— Section 6035 (relating to returns of officers, 26 USC 6035. directors, and shareholders of foreign personal holding companies) is amended to read as follows: “SEC. 6035. RETURNS OF OFFICERS, DIRECTORS, AND SHAREHOLDERS OF FOREIGN PERSONAL HOLDING COMPANIES. “(a) General Rule.— Each United States citizen or resident who is an officer, director, or 10-percent shareholder of a corporation which was a foreign personal holding company (as defined in section 552) for any taxable year shall file a return with respect to such taxable year setting forth— “(1) the shareholder information required by subsection (b), “(2) the income information required by subsection (c), and “(3) such other information with respect to such corporation as the Secretary shall by forms or regulations prescribe as necessary for carrying out the purposes of this title. “(b) Shareholder Information.— The shareholder information required by this subsection with respect to any taxable year shall be— “(1) the name and address of each person who at any time during such taxable year held any share in the corporation, “(2) a description of each class of shares and the total number of shares of such class outstanding at the close of the taxable year, “(3) the number of shares of each class held by each person, and “(4) any changes in the holdings of shares during the taxable year. For purposes of paragraphs (1), (3), and (4), the term ‘share’ includes any security convertible into a share in the corporation and any option granted by the corporation with respect to any share in the corporation. “(c) Income Information.— The income information required by this subsection for any taxable year shall be the gross income, deductions, credits, taxable income, and undistributed foreign personal holding company income of the corporation for the taxable year. “(d) Time and Manner for Furnishing Information.— The information required under subsection (a) shall be furnished at such time and in such manner as the Secretary shall by forms and regulations prescribe. “(e) Definition and Special Rules.— “(1) 10-percent shareholder.— For purposes of this section, the term ‘10-percent shareholder’ means any individual who owns directly or indirectly (within the meaning of section 554) 10 percent or more in value of the outstanding stock of a foreign corporation. “(2) Time for making determinations.— “(A) In general.— Except as provided in subparagraph (B), the determination of whether any person is an officer, director, or 10-percent shareholder with respect to any foreign corporation shall be made as of the date on which the return is required to be filed. “(B) Special rule.— If after the application of subparagraph (A) no person is required to file a return under subsection (a) with respect to any foreign corporation for any taxable year, the determination of whether any person is an officer, director, or 10-percent shareholder with respect to such foreign corporation shall be made on the last day of such taxable year on which there was such a person who was a United States citizen or resident. “(3) 2 or more persons required to furnish information with respect to same foreign corporation.— If, but for this paragraph, 2 or more persons would be required to furnish information under subsection (a) with respect to the same foreign corporation for the same taxable year, the Secretary may by regulations provide that such information shall be required only from 1 person.” (b) Application of Penalty.— (1) Subsection (a) of section 6679 is amended by striking out 26 USC 6679. “section 6046” and inserting in lieu thereof “section 6035 or 6046”. (2) The section heading for section 6679 is amended to read as follows: “SEC. 6679. FAILURE TO FILE RETURNS OR SUPPLY INFORMATION UNDER SECTION 6035 OR 6046.” (3) The item relating to section 6679 in the table of sections for subchapter B of chapter 68 is amended to read as follows: “Sec. 6679. Failure to file returns or supply information under section 6035 or 6046.” (c) Effective Date.— The amendment made by this section shall 26 USC 6035 note. apply to taxable years of foreign corporations beginning after the date of the enactment of this Act. SEC. 341. AUTHORITY TO DELAY DATE FOR FILING CERTAIN RETURNS RELATING TO FOREIGN CORPORATIONS AND FOREIGN TRUSTS. (a) Foreign Corporations.— Subsection (d) of section 6046 (relating 26 USC 6046. to time for filing returns as to organization or reorganization of foreign corporations and as to acquisitions of their stock) is amended by inserting before the period at the end thereof the following: “(or on or before such later day as the Secretary may by forms or regulations prescribe)”. (b) Foreign Trusts.— Subsection (a) of section 6048 (relating to 26 USC 6048. returns as to certain foreign trusts) is amended by inserting “(or on or before such later day as the Secretary may by regulations prescribe)” after “the 90th day”. (c) Effective Date.— The amendments made by this section shall 26 USC 6046 note. apply to returns filed after the date of the enactment of this Act. SEC. 342. WITHHOLDING OF TAX ON NONRESIDENT ALIENS AND FOREIGN CORPORATIONS. Not later than 2 years after the date of the enactment of this Act, the Secretary of the Treasury or his delegate shall prescribe regulations establishing certification procedures, refund procedures, or other procedures which ensure that any benefit of any treaty relating to withholding of tax under sections 1441 and 1442 of the Internal Revenue Code of 1954 is available only to persons entitled to such benefit. SEC. 343. TECHNICAL AMENDMENT RELATING TO PENALTY UNDER SECTION 905(c). (a) General Rule.— Subsection (c) of section 905 (relating to 26 USC 905. adjustments on payment of accrued taxes) is amended by striking out the last sentence. (b) Effective Date.— The amendment made by subsection (a) 26 USC 905 note. shall have the same effect as if the last sentence of section 905(c) had never been enacted. Subtitle G— Modification of Interest Provisions SEC. 344. INTEREST COMPOUNDED DAILY. (a) In General.— Subchapter C of chapter 67 (relating to determination of rate of interest) is amended by adding at the end thereof the following new section: “SEC. 6622. INTEREST COMPOUNDED DAILY. “(a) General Rule.— In computing the amount of any interest required to be paid under this title or sections 1961(c)(1) or 2411 of title 28, United States Code, by the Secretary or by the taxpayer, or any other amount determined by reference to such amount of interest, such interest and such amount shall be compounded daily. “(b) Exception for Penalty for Failure to File Estimated Tax.— Subsection (a) shall not apply for purposes of computing the amount of any addition to tax under section 6654 or 6655.” (b) Conforming Amendments.— (1) Section 6601(e) (relating to applicable rules) is amended by 26 USC 6601. striking out paragraph (2) and redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively. (2) The table of sections for subchapter C of chapter 67 is amended by inserting after section G621 the following new item: “Sec. 6622. Interest compounded daily.” (3) (A) The heading for subchapter C of chapter 67 is amended by inserting “; Compounding of Interest” after “Rate”. (B) The item relating to subchapter C in the table of subchapters for chapter 67 is amended by inserting “; compounding of interest” after “rate”. (c) Effective Date.— The amendments made by this section shall 26 USC 6622 note. apply to interest accruing after December 31, 1982. SEC. 345. DETERMINATION OF RATE OF INTEREST TO BE MADE SEMI-ANNUALLY. (a) In General.— Subsection (b) of section 6621 (relating to determination 26 USC 6621. of rate of interest) is amended to read as follows: “(b) Adjustment of Interest Rate.— “(1) Establishment of adjusted rate.— If the adjusted prime rate charged by banks (rounded to the nearest full percent)— “(A) during the 6-month period ending on September 30 of any calendar year, or “(B) during the 6-month period ending on March 31 of any calendar year, differs from the interest rate in effect under this section on either such date, respectively, then the Secretary shall establish, within 15 days after the close of the applicable 6-month period, an adjusted rate of interest equal to such adjusted prime rate. “(2) Effective date of adjustment.— Any adjusted rate of interest established under paragraph (1) shall become effective— “(A) on January 1 of the succeeding year in the case of an adjustment attributable to paragraph (1)(A), and “(B) on July 1 of the same year in the case of an adjustment attributable to paragraph(l)(B).” (b) Effective Date.— The amendment made by this section shall 26 USC 6621 note. apply to adjustments taking effect on January 1, 1983. SEC. 346. RESTRICTIONS ON PAYMENT OF INTEREST FOR CERTAIN PERIODS. (a) Interest With Respect to Delinquent Returns.— Section 6611(b) (relating to period for which interest on refunds is paid) is 26 USC 6611. amended by adding at the end thereof the following new paragraph: “(3) Late returns.— Notwithstanding paragraph (1) or (2) in the case of a return of tax which is filed after the last date prescribed for filing such return (determined with regard to extensions), no interest shall be allowed or paid for any day before the date on which the return is filed.” (b) No Interest if Return Not in Processible Form.— Section 6611 (relating to interest on overpayments) is amended by redesignating subsection (i) as subsection (j) and by adding after subsection (h) the following new subsection: “(i) No Interest Until Return in Processible Form.— “(1) For purposes of subsections (b)(3), (e), and (h), a return shall not be treated as filed until it is filed in processible form. “(2) For purposes of paragraph (1), a return is in a processible form if— “(A) such return is filed on a permitted form, and “(B) such return contains— “(i) the taxpayer’s name, address, and identifying number and the required signature, and “(ii) sufficient required information (whether on the return or on required attachments) to permit the mathematical verification of tax liability shown on the return.” (c) Modification of Interest in the Case of Carrybacks.— (1) Overpayments.— (A) Paragraph (1) of section 6611(f) (relating to refund of 26 USC 6611. income tax caused by carryback or adjustment for unused deductions) is amended by striking out “the close of the taxable year” and inserting in lieu thereof “the filing date for the taxable year”. (B) Subparagraph (A) of section 6611(0(2) is amended by striking out “the close of” each place it appears and inserting in lieu thereof “the filing date for”. (C) Subsection (D of section 6611 is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph: “(3) Special rules for paragraphs (1) and (2).— “(A) Filing date.— For purposes of this subsection, the term ‘filing date’ means the last date prescribed for filing the return of tax imposed by subtitle A for the taxable year (determined without regard to extensions). “(B) Coordination with subsection (e).— “(i) In general.— FOR PURPOSES OF SUBSECTION (e)— “(I) any overpayment described in paragraph (1) or (2) shall be treated as an overpayment for the loss year, and “(II) such subsection shall be applied with respect to such overpayment by treating the return for the loss year as not filed before claim for such overpayment is filed. “(ii) Loss year.— For purposes of this subparagraph, the term ‘loss year’ means— “(I) in the case of a carryback of a net operating loss or net capital loss, the taxable year in which such loss arises, and “(II) in the case of a credit carryback, the taxable year in which such credit carryback arises (or, with respect to any portion of a credit carryback from a taxable year attributable to a net operating loss carryback, a capital loss carryback, or other credit carryback from a subsequent taxable year, such subsequent taxable year).” (D) Subsection (g) of section 6611 is amended by striking out “the close of the taxable year” and inserting in lieu thereof “the filing date (as defined in subsection (f)(3)) for the taxable year”. (2) Underpayments.— (A) Paragraph (1) of section 6601(d) (relating to income 26 USC 6601. tax reduced by carryback for adjustment for certain unused deductions) is amended by striking out “the last day of the taxable year” and inserting in lieu thereof “the filing date for the taxable year”. (B) Subparagraph (A) of section 6601(d)(2) is amended by striking out “the last day of the” each place it appears and inserting in lieu thereof “the filing date for”. (C) Subsection (d) of section 6601 is amended by adding at the end thereof the following new paragraph: “(4) Filing date.— For purposes of this subsection, the term ‘filing date’ has the meaning given to such term by section 6611(f)(3)(A).” (d) Effective Dates.— (1) In General.— The amendments made by subsections (a) and (b) shall apply to returns filed after the 30th day after the date of the enactment of this Act. (2) Subsection (C).— The amendments made by subsection (c) shall apply to interest accruing after the 30th day after the date of the enactment of this Act. Subtitle H— Taxpayer Safeguard Amendments SEC. 347. INCREASE IN CERTAIN EXEMPTIONS FROM LEVY. (a) General Rule.— (1) Fuel, provisions, furniture, and personal effects.— Paragraph (2) of section 6334(a) (relating to property exempt 26 USC 6334. from levy) is amended by striking out “$500” and inserting in lieu thereof “$1,500”. (2) Books and tools of a trade, business, or profession.— Paragraph (3) of section 6334(a) is amended by striking out “$250” and inserting in lieu thereof “$1,000”. (3) Wages, salary, or other income.— Paragraph (1) of section 6334(d) (relating to exempt amount of wages, salary, or other income) is amended— (A) by striking out “$50” and inserting in lieu thereof “$75”, and (B) by striking out “$15” and inserting in lieu thereof “$25”. (b) Effective Date.— The amendments made by subsection (a) 26 USC 6334 note. shall apply to levies made after December 31, 1982. SEC. 348. REQUIRED RELEASE OF LIEN. (a) General Rule.— So much of subsection (a) of section 6325 26 USC 6325. (relating to release of lien) as precedes paragraph (1) thereof is amended to read as follows: “(a) Release of Lien.— Subject to such regulations as the Secretary may prescribe, the Secretary shall issue a certificate of release of any lien imposed with respect to any internal revenue tax not later than 30 days after the day on which—”. (b) Effective Date.— The amendment made by subsection (a) 26 USC 6325 note. shall apply with respect to liens— (1) which are filed after December 31, 1982, (2) which are satisfied after December 31, 1982, or (3) with respect to which the taxpayer after December 31, 1982, requests the Secretary of the Treasury or his delegate to issue a certificate of release on the grounds that the liability was satisfied or legally unenforceable. SEC. 349. REQUIREMENT OF TIMELY NOTICE OF LEVY. (a) General Rule.— Section 6331 (relating to levy and distraint) is 26 USC 6331. amended by redesignating subsection (e) as subsection (f) and by striking out subsection (d) and inserting in lieu thereof the following new subsections: “(d) Requirement of Notice Before Levy.— “(1) In general.— Levy may be made under subsection (a) upon the salary or wages or other property of any person with respect to any unpaid tax only after the Secretary has notified such person in writing of his intention to make such levy. “(2) 10-day requirement.— The notice required under paragraph (1) shall be— “(A) given in person, “(B) left at the dwelling or usual place of business of such person, or “(C) sent by certified or registered mail to such person’s last known address, no less than 10 days before the day of the levy. “(3) Jeopardy.— Paragraph (1) shall not apply to a levy if the Secretary has made a finding under the last sentence of subsection (a) that the collection of tax is in jeopardy. “(e) Continuing Levy on Salary and Wages.— “(1) Effect of Levy.— The effect of a levy on salary or wages payable to or received by a taxpayer shall be continuous from the date such levy is first made until the liability out of which such levy arose is satisfied or becomes unenforceable by reason of lapse of time. “(2) Release and Notice of Release.— With respect to a levy described in paragraph (1), the Secretary shall promptly release the levy when the liability out of which such levy arose is satisfied or becomes unenforceable by reason of lapse of time, and shall promptly notify the person upon whom such levy was made that such levy has been released.” (b) Effective Date.— The amendment made by subsection (a) 26 USC 6331 note. shall apply to levies made after December 31, 1982. SEC. 349A. EXTENSION OF PERIOD FOR REDEMPTION OF REAL PROPERTY. (a) General Rule.— Paragraph (1) of section 6337(b) (relating to 26 USC 6337. period for redemption of real estate after sale) is amended by striking out “120 days” and inserting in lieu thereof “180 days”. (b) Effective Date.— The amendment made by subsection (a) 26 USC 6337 note. shall apply with respect to property sold after the date of the enactment of this Act. SEC. 350. AMOUNT OF DAMAGES IN CASE OF WRONGFUL LEVY. (a) General Rule.— Subparagraph (C) of section 7426(b)(2) (relating 26 USC 7426. to amount of damages) is amended to read as follows: “(C) if such property was sold, grant a judgment for an amount not exceeding the greater of— “(i) the amount received by the United States from the sale of such property, or “(ii) the fair market value of such property immediately before the levy.” (b) Effective Date.— The amendment made by subsection (a) 26 USC 7426 note. shall apply with respect to levies made after December 31, 1982. Subtitle I— Other Provisions SEC. 351. DISALLOWANCE OF DEDUCTIONS RELATING TO NARCOTICS TRAFFICKING. (a) In General.— Part IX of subchapter B of chapter 1 (relating to items not deductible) is amended by adding at the end thereof the following new section: “SEC. 280E. EXPENDITURES IN CONNECTION WITH THE ILLEGAL SALE OF DRUGS. “No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any 21 USC 812. State in which such trade or business is conducted.” (b) Conforming Amendment.— The table of sections for part IX of subchapter B of chapter 1 of such Code is amended by adding at the end thereof the following new item: “Sec. 280E. Expenditures in connection with the illegal sale of drugs.” (c) Effective Date.— The amendments made by this section shall 26 USC 280E note. apply to amounts paid or incurred after the date of the enactment of this Act in taxable years ending after such date. SEC. 352. SENSE OF CONGRESS WITH RESPECT TO PROVIDING OF ADDITIONAL FUNDS TO INTERNAL REVENUE SERVICE. It is the sense of the Congress that there be appropriated for the use of the Internal Revenue Service to provide additional staff— (1) for fiscal year 1983, the amounts proposed in the President’s budget for fiscal year 1983, and (2) such amounts in excess of the amount requested for such purpose in the President’s proposed budgets as may be necessary to provide sufficient improved enforcement to increase revenues by $1 billion in fiscal year 1984 and $2 billion in fiscal year 1985. SEC. 353. REPORT ON FORMS. Not later than June 30, 1983, the Secretary of the Treasury or his delegate shall study and report to the Congress methods of modifying the design of the forms used by the Internal Revenue Service to achieve greater accuracy in the reporting of income and the matching of information reports and returns with the returns of tax imposed by chapter 1 of the Internal Revenue Code of 1954. SEC. 354. EXEMPTION OF VETERANS’ ORGANIZATIONS. (a) In General.— Paragraph (19) of section 501(c) (relating to 26 USC 501. exemption of veterans’ organizations) is amended— (1) by striking out “war veterans” the first place it appears and inserting in lieu thereof “past or present members of the Armed Forces of the United States” , and (2) by amending subparagraph (B) to read as follows: “(B) at least 75 percent of the members of which are past or present members of the Armed Forces of the United States and substantially all of the other members of which are individuals who are cadets or are spouses, widows, or widowers of past or present members of the Armed Forces of the United States or of cadets, and”. (b) Associations Organized Before 1880.— Subsection (c) of section 501 (relating to exempt organizations) is amended by adding at 26 USC 501. the end thereof the following new paragraph: “(23) any association organized before 1880 more than 25 percent of the members of which are present or past members of the Armed Forces and a principal purpose of which is to provide insurance and other benefits to veterans or their dependents.” (c) Effective Date.— The amendments made by subsections (a) 26 USC 501 note. and (b) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 355. AMENDMENT TO COMMUNICATIONS ACT OF 1934. Title III of the Communications Act of 1934 is amended by inserting immediately after section 330 therein the following new section: “very high frequency stations “Sec. 331. It shall be the policy of the Federal Communications 47 USC 331. Commission to allocate channels for very high frequency commercial television broadcasting in a manner which ensures that not less than one such channel shall be allocated to each State, if technically feasible. In any case in which licensee of a very high frequency commercial television broadcast station notifies the Commission to the effect that such licensee will agree to the reallocation of its channel to a community within a State in which there is allocated no very high frequency commercial television broadcast channel at the time such notification, the Commission shall, notwithstanding any other provision of law, order such reallocation and issue a license to such licensee for that purpose pursuant to such notification for a term of not to exceed 5 years as provided in section 307(d) of the Communications Act of 1934.” 47 USC 307. SEC. 356. CONFIDENTIALITY AND DISCLOSURE OF RETURNS AND RETURN INFORMATION. (a) In General.— Subsection (i) of section 6103 (relating to disclosure 26 USC 6103. to Federal officers or employees for administration of Federal laws not relating to tax administration) is amended by redesignating paragraph (6) as paragraph (7) and by striking out paragraphs (1), (2), (3), (4), and (5) and inserting in lieu thereof the following: “(1) Disclosure of returns and return information for use in criminal investigations.— “(A) In general.— Except as provided in paragraph (6), any return or return information with respect to any specified taxable period or periods shall, pursuant to and upon the grant of an ex parte order by a Federal district court judge or magistrate under subparagraph (B), be open (but only to the extent necessary as provided in such order) to inspection by, or disclosure to, officers and employees of any Federal agency who are personally and directly engaged in— “(i) preparation for any judicial or administrative proceeding pertaining to the enforcement of a specifically designated Federal criminal statute (not involving tax administration) to which the United States or such agency is or may be a party. “(ii) any investigation which may result in such a proceeding, or “(iii) any Federal grand jury proceeding pertaining to enforcement of such a criminal statute to which the United States or such agency is or may be a party, solely for the use of such officers and employees in such preparation, investigation, or grand jury proceeding. “(B) Application for order.— The Attorney General, the Deputy Attorney General, the Associate Attorney General, any Assistant Attorney General, any United States attorney, any special prosecutor appointed under section 593 of title 28, United States Code, or any attorney in charge of a criminal division organized crime strike force established pursuant to section 510 of title 28, United States Code, may authorize an application to a Federal district court judge or magistrate for the order referred to in subparagraph (A). Upon such application, such judge or magistrate may grant such order if he determines on the basis of the facts submitted by the applicant that— “(i) there is reasonable cause to believe, based upon information believed to be reliable, that a specific criminal act has been committed, “(ii) there is reasonable cause to believe that the return or return information is or may be relevant to a matter relating to the commission of such act, and “(iii) the return or return information is sought exclusively for use in a Federal criminal investigation or proceeding concerning such act, and the information sought to be disclosed cannot reasonably be obtained, under the circumstances, from another source. “(2) Disclosure of return information other than taxpayer return information for use in criminal investigations.— “(A) In General.— Except as provided in paragraph (6), upon receipt by the Secretary of a request which meets the requirements of subparagraph (B) from the head of any Federal agency or the Inspector General thereof, or, in the case of the Department of Justice, the Attorney General, the Deputy Attorney General, the Associate Attorney General, any Assistant Attorney General, the Director of the Federal Bureau of Investigation, the Administrator of the Drug Enforcement Administration, any United States attorney, any special prosecutor appointed under section 593 of title 28, United States Code, or any attorney in charge of a criminal division organized crime strike force established pursuant to section 510 of title 28, United States Code, the Secretary shall disclose return information (other than taxpayer return information) to officers and employees of such agency who are personally and directly engaged in— “(i) preparation for any judicial or administrative proceeding described in paragraph (1)(A)(i), “(ii) any investigation which may result in such a proceeding, or “(iii) any grand jury proceeding described in paragraph (1)(A)(iii), solely for the use of such officers and employees in such preparation, investigation, or grand jury proceeding. “(B) Requirements.— A request meets the requirements of this subparagraph if the request is in writing and sets forth— “(i) the name and address of the taxpayer with respect to whom the requested return information relates; “(ii) the taxable period or periods to which such return information relates; “(iii) the statutory authority under which the proceeding or investigation described in subparagraph (A) is being conducted; and “(iv) the specific reason or reasons why such disclosure is, or may be, relevant to such proceeding or investigation. “(C) Taxpayer Identity.— For purposes of this paragraph, a taxpayer’s identity shall not be treated as taxpayer return information. “(3) Disclosure of return in formation to apprise appropriate officials of criminal activities or emergency circumstances.— “(A) Possible violations of federal criminal law.— “(i) In general.— Except as provided in paragraph (6), the Secretary may disclose in writing return information (other than taxpayer return information) which may constitute evidence of a violation of any Federal criminal law (not involving tax administration) to the extent necessary to apprise the head of the appropriate Federal agency charged with the responsibility of enforcing such law. The head of such agency may disclose such return information to officers and employees of such agency to the extent necessary to enforce such law. “(ii) Taxpayer identity.— If there is return information (other than taxpayer return information) which may constitute evidence of a violation by any taxpayer of any Federal criminal law (not involving tax administration), such taxpayer’s identity may also be disclosed under clause (i). “(B) Emergency Circumstances.— “(i) Danger of death or physical injury.— Under circumstances involving an imminent danger of death or physical injury to any individual, the Secretary may disclose return information to the extent necessary to apprise appropriate officers or employees of any Federal or State law enforcement agency of such circumstances. “(ii) Flight from federal prosecution.— Under circumstances involving the imminent flight of any individual from Federal prosecution, the Secretary may disclose return information to the extent necessary to apprise appropriate officers or employees of any Federal law enforcement agency of such circumstances. “(4) Use of certain disclosed returns and return information in judicial or administrative proceedings.— “(A) Returns and taxpayer return information.— Except as provided in subparagraph (C), any return or taxpayer return information obtained under paragraph (1) may be disclosed in any judicial or administrative proceeding pertaining to enforcement of a specifically designated Federal criminal statute or related civil forfeiture (not involving tax administration) to which the United States or a Federal agency is a party— “(i) if the court finds that such return or taxpayer return information is probative of a matter in issue relevant in establishing the commission of a crime or the guilt or liability of a party, or “(ii) to the extent required by order of the court pursuant to section 3500 of title 18, United States Code, or rule 16 of the Federal Rules of Criminal Procedure. 18 USC app. “(B) Return information (other than taxpayer return information).— Except as provided in subparagraph (C), any return information (other than taxpayer return information) obtained under paragraph (1), (2), or (3)(A) may be disclosed in any judicial or administrative proceeding pertaining to enforcement of a specifically designated Federal criminal statute or related civil forfeiture (not involving tax administration) to which the United States or a Federal agency is a party. “(C) Confidential informant; impairment of investigations.— No return or return information shall be admitted into evidence under subparagraph (A)(i) or (B) if the Secretary determines and notifies the Attorney General or his delegate or the head of the Federal agency that such admission would identify a confidential informant or seriously impair a civil or criminal tax investigation. “(D) Consideration of confidentiality policy.— In ruling upon the admissibility of returns or return information, and in the issuance of an order under subparagraph (A)(ii), the court shall give due consideration to congressional policy favoring the confidentiality of returns and return information as set forth in this title. “(E) Reversible error.— The admission into evidence of any return or return information contrary to the provisions of this paragraph shall not, as such, constitute reversible error upon appeal of a judgment in the proceeding. “(5) Disclosure to locate fugitives from justice.— “(A) In general.— Except as provided in paragraph (6), the return of an individual or return information with respect to such individual shall, pursuant to and upon the grant of an ex parte order by a Federal district court judge or magistrate under subparagraph (B), be open (but only to the extent necessary as provided in such order) to inspection by, or disclosure to, officers and employees of any Federal agency exclusively for use in locating such individual. “(B) Application for order.— Any person described in paragraph (1)(B) may authorize an application to a Federal district court judge or magistrate for an order referred to in subparagraph (A). Upon such application, such judge or magistrate may grant such order if he determines on the basis of the facts submitted by the applicant that— “(i) a Federal arrest warrant relating to the commission of a Federal felony offense has been issued for an individual who is a fugitive from justice, “(ii) the return of such individual or return information with respect to such individual is sought exclusively for use in locating such individual, and “(iii) there is reasonable cause to believe that such return or return information may be relevant in determining the location of such individual. “(6) Confidential informants; impairment of investigations.— The Secretary shall not disclose any return or return information under paragraph (1), (2), (3)(A), (5), or (7) if the Secretary determines (and, in the case of a request for disclosure pursuant to a court order described in paragraph (1)(B) or (5)(B), certifies to the court) that such disclosure would identify a confidential informant or seriously impair a civil or criminal tax investigation.”. (b) Conforming Amendments.— (1) Subsection (p) of section 6103 (relating to procedure and 26 USC 6103. recordkeeping) is amended— (A) by striking out “(6)(A)(ii)” in paragraph (3)(A) and inserting in lieu thereof “(7)(A)(ii)”, (B) by striking out “(d)” in paragraph (3)(C)(i) and inserting in lieu thereof “(d), (i)(3)(B)(i),”, (C) by striking out “such requests” in paragraph (3)(C)(i)(II) and inserting in lieu thereof “such requests or otherwise”, (D) by striking out “(i)(1), (2), or (5)” each place it appears in paragraph (4) and inserting in lieu thereof “(i)(1), (2), (3), or (5)”, (E) by striking out “(d)” each place it appears in paragraph (4) and inserting in lieu thereof “(d), (i)(3)(B)(i),”, and (F) by striking out “subsection (i)(6)(A)(ii)” in paragraph (6)(B)(i) and inserting in lieu thereof “subsection (i)(7)(A)(ii)”. (2) Paragraph (2) of section 7213(a) (relating to unauthorized 26 USC 7213. disclosure of information) is amended by striking out “(d)” and inserting in lieu thereof “(d), (i)(3)(B)(i),”. (c) Effective Date.— The amendments made by this section shall 26 USC 6103 note. take effect on the day after the date of the enactment of this Act. SEC. 357. CIVIL DAMAGES AGAINST UNITED STATES FOR UNAUTHORIZED DISCLOSURES BY AN EMPLOYEE. (a) In General.— Subchapter B of chapter 76 (relating to proceedings by taxpayers and third parties) is amended by redesignating section 7431 as section 7432 and inserting after section 7430 the 26 USC 7432. following new section: “SEC. 7431. CIVIL DAMAGES FOR UNAUTHORIZED DISCLOSURE OF RETURNS AND RETURN INFORMATION. “(a) In General.— “(1) Disclosure by employee of united states.— If any officer or employee of the United States knowingly, or by reason of negligence, discloses any return or return information with respect to a taxpayer in violation of any provision of section 6103, such taxpayer may bring a civil action for damages against the United States in a district court of the United States. “(2) Disclosure by a person who is not an employee of united states.— If any person who is not an officer or employee of the United States knowingly, or by reason of negligence, discloses any return or return information with respect to a taxpayer in violation of any provision of section 6103, such taxpayer may bring a civil action for damages against such person in a district court of the United States. “(b) No Liability for Good Faith But Erroneous Interpretation.— No liability shall arise under this section with respect to any disclosure which results from a good faith, but erroneous, interpretation of section 6103. “(c) Damages.— In any action brought under subsection (a), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of— “(1) the greater of— “(A) $1,000 for each act of unauthorized disclosure of a return or return information with respect to which such defendant is found liable, or “(B) the sum of— “(i) the actual damages sustained by the plaintiff as a result of such unauthorized disclosure, plus “(ii) in the case of a willful disclosure or a disclosure which is the result of gross negligence, punitive damages, plus “(2) the costs of the action. “(d) Period for bringing action.— Notwithstanding any other provision of law, an action to enforce any liability created under this section may be brought, without regard to the amount in controversy, at any time within 2 years after the date of discovery by the plaintiff of the unauthorized disclosure. “(e) Return; Return Information.— For purposes of this section, the terms ‘return’ and ‘return information’ have the respective meanings given such terms in section 6103(b).” (b) Conforming Amendments.— (1) Section 7217 (relating to civil damages for unauthorized Repeal. 26 USC 7217. disclosure of returns and return information) is hereby repealed. (2) The table of sections for part I of subchapter A of chapter 75 is amended by striking out the item relating to section 7217. (3) The table of sections for subchapter B of chapter 76 is amended by striking out the item relating to section 7431 and inserting in lieu thereof the following: “Sec. 7431. Civil damages for unauthorized disclosure of returns and return information. “Sec. 7432. Cross references.” (c) Effective Date.— The amendments made by this section shall 26 USC 7431 note. apply with respect to disclosures made after the date of enactment of this Act. SEC. 358. DISCLOSURE FOR USE IN CERTAIN AUDITS BY GENERAL ACCOUNTING OFFICE. (a) In General.— Paragraph (7) of section 6103(i) (relating to Ante, p. 641. disclosure to Comptroller General), as redesignated by section 396(a), is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: “(B) Audits of other agencies.— “(i) In general.— Nothing in this section shall prohibit any return or return information obtained under this title by any Federal agency (other than an agency referred to in subparagraph (A)) for use in any program or activity from being open to inspection by, or disclosure to, officers and employees of the General Accounting Office if such inspection or disclosure is— “(I) for purposes of, and to the extent necessary in, making an audit authorized by law of such program or activity, and “(II) pursuant to a written request by the Comptroller General of the United States to the head of such Federal agency, “(ii) Information from secretary.— If the Comptroller General of the United States determines that the returns or return information available under clause (i) are not sufficient for purposes of making an audit of any program or activity of a Federal agency (other than an agency referred to in subparagraph (A)), upon written request by the Comptroller General to the Secretary, returns and return information (of the type authorized by subsection (1) or (m) to be made available to the Federal agency for use in such program or activity) shall be open to inspection by, or disclosure to, officers and employees of the General Accounting Office for the purpose of, and to the extent necessary in, making such audit. “(iii) Requirement of notification upon completion of audit.— Within 90 days after the completion of an audit with respect to which returns or return information were opened to inspection or disclosed under clause (i) or (ii), the Comptroller General of the United States shall notify in writing the Joint Committee on Taxation of such completion. Such notice shall include— “(I) a description of the use of the returns and return information by the Federal agency involved, “(II) such recommendations with respect to the use of returns and return information by such Federal agency as the Comptroller General deems appropriate, and “(III) a statement on the impact of any such recommendations on confidentiality of returns and return information and the administration of this title. “(iv) Certain restrictions made applicable.— The restrictions contained in subparagraph (A) on the disclosure of any returns or return information open to inspection or disclosed under such subparagraph shall also apply to returns and return information open to inspection or disclosed under this subparagraph.” (b) Conforming Amendments.— (1) Subparagraph (A) of section 6103(i)(7) of such Code (as 26 USC 6103. redesignated by this Act) is amended by striking out “subparagraph (B)” and inserting in lieu thereof “subparagraph (C)”. (2) Subparagraph (C) of section 6103(i)(7) of such Code (as redesignated by this Act) is amended by striking out “subparagraph (A)” and inserting in lieu thereof “subparagraph (A) or (B)”. (c) Effective Date.— The amendments made by this section shall 26 USC 6103 note. take effect on the day after the date of the enactment of this Act.

11. 1983

    Surface Transportation Assistance Act of 1982

    Pub. L. 97–424 title V § 547(b)(4) · 96 Stat. 2097

    Substituted · 26 U.S.C. § 6049(b)(2)(B)

    Pub. L. 97–424 substituted “this title” for “law”

    Source evidence

    Code amendment note
    Subsec. (b)(2)(B). Pub. L. 97–424 substituted “this title” for “law”.

    Enacted provision · exact public law section
    (4) Ante, p. 591. Section 6049(b)(2)(B) (relating to returns regarding payments of interest) is amended by striking out “law” and inserting in lieu thereof “this title”.

12. 1983

    Interest and Dividend Tax Compliance Act of 1983

    Pub. L. 98–67 § 102(e)(1) · 97 Stat. 369

    1. Struck · 26 U.S.C. § 6049(a)

       Pub. L. 98–67, § 102(e)(1), struck out par. (3) which related to persons required under subchapter B of chapter 24 to withhold tax on the payment of interest and, in provisions following par. (2)

    2. Substituted · 26 U.S.C. § 6049(a)

       Pub. L. 98–67, § 102(e)(1), substituted “and the name and address of the person to whom paid” for “, tax deducted and withheld, and the name and address of the person to whom paid or from whom withheld”

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 98–67, § 102(e)(1), struck out par. (3) which related to persons required under subchapter B of chapter 24 to withhold tax on the payment of interest and, in provisions following par. (2), substituted “and the name and address of the person to whom paid” for “, tax deducted and withheld, and the name and address of the person to whom paid or from whom withheld”.

    Enacted provision · exact public law section
    (1) Subsection (a) of section 6049 (relating to returns regarding payments of interest) is amended— (A) by inserting “or” at the end of paragraph (1), (B) by striking out “or” at the end of paragraph (2), (C) by striking out paragraph (3), and (D) by striking out “, tax deducted and withheld, and the name and address of the person to whom paid or from whom withheld”, and inserting in lieu thereof “and the name and address of the person to whom paid”.

13. 1983

    Interest and Dividend Tax Compliance Act of 1983

    Pub. L. 98–67 § 102(e)(2) · 97 Stat. 369

    1. Amended · 26 U.S.C. § 6049(b)(2)(C)

       Pub. L. 98–67, § 102(e)(2), amended subpar. (C) generally

    2. Substituted · 26 U.S.C. § 6049(b)(2)(C)

       Pub. L. 98–67, § 102(e)(2), substituting in cl. (i) “person described in paragraph (4), or” for “person referred to in paragraph (2) of section 3452(c) (other than subparagraphs (J) and (K) thereof), or”

    3. Substituted · 26 U.S.C. § 6049(b)(2)(C)

       Pub. L. 98–67, § 102(e)(2), substituting in cl. (i) “described in paragraph (5),” for “described in section 3454(a)(2)(D) or (E),”

    Source evidence

    Code amendment note
    Subsec. (b)(2)(C). Pub. L. 98–67, § 102(e)(2), amended subpar. (C) generally, substituting in cl. (i) “person described in paragraph (4), or” for “person referred to in paragraph (2) of section 3452(c) (other than subparagraphs (J) and (K) thereof), or” and in cl. (ii) “described in paragraph (5),” for “described in section 3454(a)(2)(D) or (E),”.

    Enacted provision · exact public law section
    (2) Subsection (b) of section 6049 (defining interest) is amended— (A) by amending subparagraph (C) of paragraph (2) to read as follows: “(C) except to the extent otherwise provided in regulations— “(i) any amount paid to any person described in paragraph (4), or “(ii) any amount described in paragraph (5),”, and (B) by adding at the end thereof the following new paragraphs: “(4) Persons described in this paragraph.— A person is described in this paragraph if such person is— “(A) a corporation, “(B) an organization exempt from taxation under section 501(a) or an individual retirement plan, “(C) the United States or any wholly owned agency or instrumentality thereof, “(D) a State, the District of Columbia, a possession of the United States, any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing, “(E) a foreign government, a political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one or more of the foregoing, “(F) an international organization or any wholly owned agency or instrumentality thereof, “(G) a foreign central bank of issue, “(H) a dealer in securities or commodities required to register as such under the laws of the United States or a State, the District of Columbia, or a possession of the United States, “(I) a real estate investment trust (as defined in section 856), “(J) an entity registered at all times during the taxable 15 USC 80a-51. year under the Investment Company Act of 1940, “(K) a common trust fund (as defined in section 584(a)), or “(L) any trust which— “(i) is exempt from tax under section 664(c), or “(ii) is described in section 4947(a)(1). “(5) Amounts described in this paragraph.— An amount is described in this paragraph if such amount— “(A) is subject to withholding under subchapter A of chapter 3 (relating to withholding of tax on nonresident 26 USC 1441. aliens and foreign corporations) by the person paying such amount, or “(B) would be subject to withholding under subchapter A of chapter 3 by the person paying such amount but for the fact that— “(i) such amount is income from sources outside the United States, “(ii) the payor thereof is exempt from the application of section 1441(a) by reason of section 1441(c) or a tax treaty, or “(iii) such amount is original issue discount (within the meaning of section 1232(b)(1)).”.

14. 1983

    Interest and Dividend Tax Compliance Act of 1983

    Pub. L. 98–67 § 102(e)(2)(B) · 97 Stat. 369

    Added · 26 U.S.C. § 6049(b)(4); 26 U.S.C. § 6049(b)(5)

    Pub. L. 98–67, § 102(e)(2)(B), added pars. (4) and (5)

    Source evidence

    Code amendment note
    Subsec. (b)(4), (5). Pub. L. 98–67, § 102(e)(2)(B), added pars. (4) and (5).

    Enacted provision · exact public law section
    (B) by adding at the end thereof the following new paragraphs: “(4) Persons described in this paragraph.— A person is described in this paragraph if such person is— “(A) a corporation, “(B) an organization exempt from taxation under section 501(a) or an individual retirement plan, “(C) the United States or any wholly owned agency or instrumentality thereof, “(D) a State, the District of Columbia, a possession of the United States, any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing, “(E) a foreign government, a political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one or more of the foregoing, “(F) an international organization or any wholly owned agency or instrumentality thereof, “(G) a foreign central bank of issue, “(H) a dealer in securities or commodities required to register as such under the laws of the United States or a State, the District of Columbia, or a possession of the United States, “(I) a real estate investment trust (as defined in section 856), “(J) an entity registered at all times during the taxable 15 USC 80a-51. year under the Investment Company Act of 1940, “(K) a common trust fund (as defined in section 584(a)), or “(L) any trust which— “(i) is exempt from tax under section 664(c), or “(ii) is described in section 4947(a)(1). “(5) Amounts described in this paragraph.— An amount is described in this paragraph if such amount— “(A) is subject to withholding under subchapter A of chapter 3 (relating to withholding of tax on nonresident 26 USC 1441. aliens and foreign corporations) by the person paying such amount, or “(B) would be subject to withholding under subchapter A of chapter 3 by the person paying such amount but for the fact that— “(i) such amount is income from sources outside the United States, “(ii) the payor thereof is exempt from the application of section 1441(a) by reason of section 1441(c) or a tax treaty, or “(iii) such amount is original issue discount (within the meaning of section 1232(b)(1)).”.

15. 1983

    Interest and Dividend Tax Compliance Act of 1983

    Pub. L. 98–67 § 102(e)(3) · 97 Stat. 369

    Struck · 26 U.S.C. § 6049(c)(1)(C)

    Pub. L. 98–67, § 102(e)(3), struck out subpar. (C) which related to aggregate amount of tax deducted and withheld with respect to the person under subchapter B of chapter 24

    Source evidence

    Code amendment note
    Subsec. (c)(1)(C). Pub. L. 98–67, § 102(e)(3), struck out subpar. (C) which related to aggregate amount of tax deducted and withheld with respect to the person under subchapter B of chapter 24.

    Enacted provision · exact public law section
    (3) Paragraph (1) of section 6049(c) (relating to statements to 96 Stat. 591. 26 USC 6049. be furnished to persons with respect to whom information is furnished) is amended— (A) by inserting “and” at the end of subparagraph (A), (B) by striking out “, and” at the end of subparagraph (B) and inserting in lieu thereof a period, and (C) by striking out subparagraph (C).

16. 1983

    Interest and Dividend Tax Compliance Act of 1983

    Pub. L. 98–67 § 108(a) · 97 Stat. 369

    1. Amended · 26 U.S.C. § 6049(c)(2)

       Pub. L. 98–67, § 108(a), amended par. (2) generally

    2. Inserted · 26 U.S.C. § 6049(c)(2)

       Pub. L. 98–67, § 108(a), inserting provision allowing the written statement to be furnished either in person or in a separate mailing by first-class mail and authorizing the Secretary to prescribe by regulation the form that the written statement must take

    Source evidence

    Code amendment note
    Subsec. (c)(2). Pub. L. 98–67, § 108(a), amended par. (2) generally, inserting provision allowing the written statement to be furnished either in person or in a separate mailing by first-class mail and authorizing the Secretary to prescribe by regulation the form that the written statement must take.

    Enacted provision · exact public law section
    (a) Interest.— Section 6049(c)(2) (relating to time statement must Ante, p. 371. be furnished) is amended to read as follows: “(2) Time and form of statement.— The written statement under paragraph (1)— “(A) shall be furnished (either in person or in a separate mailing by first-class mail) to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was made, and “(B) shall be in such form as the Secretary may prescribe by regulations.”

17. 1983

    Interest and Dividend Tax Compliance Act of 1983

    Pub. L. 98–67 § 102(a) · 97 Stat. 369

    Repealed · 26 U.S.C. § 6049(e)

    Pub. L. 98–67, § 102(a), repealed amendments made by Pub. L. 97–248. See 1982 Amendment note below

    Source evidence

    Code amendment note
    Subsec. (e). Pub. L. 98–67, § 102(a), repealed amendments made by Pub. L. 97–248. See 1982 Amendment note below.

    Enacted provision · exact public law section
    (a) In General.— Subtitle A of title III of the Tax Equity and Effective date. 26 USC 3451 note. 96 Stat. 576. Fiscal Responsibility Act of 1982 (relating to withholding of tax from interest and dividends) is hereby repealed as of the close of June 30, 1983.

18. 1984

    Tax Reform Act of 1984

    Pub. L. 98–369 § 474(r)(29)(J) · 98 Stat. 494

    Struck · 26 U.S.C. § 6049(b)(2)(E)

    Pub. L. 98–369, § 474(r)(29)(J), struck out subpar. (E) which related to amounts on which the person making payments was required to deduct and withhold a tax under section 1451 (relating to tax-free covenant bonds), or would have been so required but for section 1451(d) (relating to benefit of personal exemptions)

    Source evidence

    Code amendment note
    Subsec. (b)(2)(E). Pub. L. 98–369, § 474(r)(29)(J), struck out subpar. (E) which related to amounts on which the person making payments was required to deduct and withhold a tax under section 1451 (relating to tax-free covenant bonds), or would have been so required but for section 1451(d) (relating to benefit of personal exemptions).

    Enacted provision · exact public law section
    (J) Paragraph (2) of section 6049(b) (relating to amounts 26 USC 6049. not treated as interest) is amended— (i) by adding “and” at the end of subparagraph (C), (ii) by striking out “, and” at the end of subparagraph and inserting in lieu thereof a period, and (iii) by striking out subparagraph (E).

19. 1984

    Tax Reform Act of 1984

    Pub. L. 98–369 § 42(a)(14)(A) · 98 Stat. 494

    Substituted · 26 U.S.C. § 6049(d)(6)(A)

    Pub. L. 98–369, § 42(a)(14)(A), substituted “section 1272” for “section 1232A” in two places

    Source evidence

    Code amendment note
    Subsec. (d)(6)(A). Pub. L. 98–369, § 42(a)(14)(A), substituted “section 1272” for “section 1232A” in two places.

    Enacted provision · exact public law section
    (A) by striking out “section 1232A” each place it appears in subparagraph (A) and inserting in lieu thereof “section 1272”, and

20. 1984

    Tax Reform Act of 1984

    Pub. L. 98–369 § 42(a)(14)(B) · 98 Stat. 494

    Substituted · 26 U.S.C. § 6049(d)(6)(B)

    Pub. L. 98–369, § 42(a)(14)(B), substituted “section 1273(a)” for “section 1232(b)(1)”

    Source evidence

    Code amendment note
    Subsec. (d)(6)(B). Pub. L. 98–369, § 42(a)(14)(B), substituted “section 1273(a)” for “section 1232(b)(1)”.

    Enacted provision · exact public law section
    (B) by striking out “section 1232(b)(1)” and inserting in lieu thereof “section 1273(a)”.

21. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 § 1803(a)(14)(C) · 100 Stat. 2085

    Substituted · 26 U.S.C. § 6049(b)(5)(B)(iii)

    Pub. L. 99–514, § 1803(a)(14)(C), substituted “section 1273(a)” for “section 1232(b)(1)”

    Source evidence

    Code amendment note
    Subsec. (b)(5)(B)(iii). Pub. L. 99–514, § 1803(a)(14)(C), substituted “section 1273(a)” for “section 1232(b)(1)”.

    Enacted provision · exact public law section
    (C) Clause (iii) of section 6049(b)(5)(B) is amended by striking out “section 1232(b)(l) ” and inserting in lieu thereof “section 1273(a)”.

22. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 § 1214(c)(4) · 100 Stat. 2085

    Added · 26 U.S.C. § 6049(b)(5)(B)(iv)

    Pub. L. 99–514, § 1214(c)(4), added cl. (iv)

    Source evidence

    Code amendment note
    Subsec. (b)(5)(B)(iv). Pub. L. 99–514, § 1214(c)(4), added cl. (iv).

23. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 § 1501(c)(5) · 100 Stat. 2085

    1. Changed · 26 U.S.C. § 6049(c)

       Pub. L. 99–514, § 1501(c)(5), in amending subsec. (c) generally

    2. Substituted · 26 U.S.C. § 6049(c)

       Pub. L. 99–514, § 1501(c)(5), in substituted “information is required” for “information is furnished” in subsection heading and, in text

    3. Substituted · 26 U.S.C. § 6049(c)

       Pub. L. 99–514, § 1501(c)(5), in substituted references to persons required to make a return for former references to persons making a return

    4. Struck · 26 U.S.C. § 6049(c)

       Pub. L. 99–514, § 1501(c)(5), in struck out provisions that no statement was required if the aggregate amount of payments to the person shown on the return was less than $10

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 99–514, § 1501(c)(5), in amending subsec. (c) generally, substituted “information is required” for “information is furnished” in subsection heading and, in text, substituted references to persons required to make a return for former references to persons making a return and struck out provisions that no statement was required if the aggregate amount of payments to the person shown on the return was less than $10.

    Enacted provision · exact public law section
    (5) Subsection (c) of section 6049 is amended to read as follows: “(c) Statements To Be Furnished to Persons With Respect To Whom Information Is Required.— “(1) In general.— Every person required to make a return under subsection (a) shall furnish to each person whose name is required to be set forth in such return a written statement showing— “(A) the name and address of the person required to make such return, and “(B) the aggregate amount of payments to, or the aggregate amount includible in the gross income of, the person required to be shown on the return. “(2) Time and form of statement.— The written statement under paragraph (1)— “(A) shall be furnished (either in person or in a statement mailing by first-class mail which includes adequate notice that the statement is enclosed) to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was required to be made, and “(B) shall be in such form as the Secretary may prescribe by regulations.”

24. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 § 674 · 100 Stat. 2085

    Added · 26 U.S.C. § 6049(d)(7)

    Pub. L. 99–514, § 674, added par. (7)

    Source evidence

    Code amendment note
    Subsec. (d)(7). Pub. L. 99–514, § 674, added par. (7).

    Enacted provision · exact public law section
    SEC. 674. COMPLIANCE PROVISIONS. Subsection (d) of section 6049 (relating to returns regarding payments of interest) is amended by adding at the end thereof the following new paragraph: “(7) Interests in remic’s and certain other debt instruments.— “(A) In general.— For purposes of subsection (a), the term ‘interest’ includes amounts includible in gross income with respect to regular interests in REMIC’s. “(B) Reporting to corporations, etc.— Except as otherwise provided in regulations, in the case of any interest described in subparagraph (A) of this paragraph and any other debt instrument to which section 1272(a)(6) applies, subsection (b)(4) of this section shall be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i). “(C) Additional information.— Except as otherwise provided in regulations, any return or statement required to be filed or furnished under this section with respect to interest income described in subparagraph (A) and interest on any other debt instrument to which section 1272(a)(6) applies shall also provide information setting forth the issue price of the interest to which the return or statement relates at the beginning of each accrual period with respect to which interest income is required to be reported on such return or statement and information necessary to compute accrual of market discount. “(D) Regulatory authority.— The Secretary may prescribe such regulations as are necessary or appropriate to carry out the purposes of this paragraph, including regulations which require more frequent or more detailed reporting.”

25. 1988

    Technical and Miscellaneous Revenue Act of 1988

    Pub. L. 100–647 § 1006(v) · 102 Stat. 3342

    Inserted · 26 U.S.C. § 6049(d)(7)(A)

    Pub. L. 100–647, § 1006(v), inserted parenthetical phrase relating to amounts treated as paid when includible in gross income under section 860B(b)

    Source evidence

    Code amendment note
    Subsec. (d)(7)(A). Pub. L. 100–647, § 1006(v), inserted parenthetical phrase relating to amounts treated as paid when includible in gross income under section 860B(b).

    Enacted provision · exact public law section
    (v) Amendment Related to Section 674 of the Reform Act — Subparagraph (A) of section 6049(d)(7) of the 1986 Code is amended by inserting “(and such amounts shall be treated as paid when includible in gross income under section 860B(b))” before the period at the end thereof.

26. 1988

    Technical and Miscellaneous Revenue Act of 1988

    Pub. L. 100–647 § 1006(t)(24) · 102 Stat. 3342

    Substituted · 26 U.S.C. § 6049(d)(7)(C)

    Pub. L. 100–647, § 1006(t)(24), substituted “the adjusted issue price” for “the issue price”

    Source evidence

    Code amendment note
    Subsec. (d)(7)(C). Pub. L. 100–647, § 1006(t)(24), substituted “the adjusted issue price” for “the issue price”.

    Enacted provision · exact public law section
    (24) Subparagraph (C) of section 6049(d)(7) of the 1986 Code is amended by striking out “the issue price” and inserting in lieu thereof “the adjusted issue price”.

27. 1996

    Taxpayer Bill of Rights 2

    Pub. L. 104–168 title XII § 1201(a)(6) · 110 Stat. 1452

    Substituted · 26 U.S.C. § 6049(c)(1)(A)

    Pub. L. 104–168 substituted “name, address, and phone number of the information contact” for “name and address”

    Source evidence

    Code amendment note
    Subsec. (c)(1)(A). Pub. L. 104–168 substituted “name, address, and phone number of the information contact” for “name and address”.

    Enacted provision · exact public law section
    (6) Section 6049(c)(1)(A).

28. 2005

    Energy Tax Incentives Act of 2005

    Pub. L. 109–58 title XIII § 1303(b) · 119 Stat. 594

    Added · 26 U.S.C. § 6049(d)(8)

    Pub. L. 109–58 added par. (8)

    Source evidence

    Code amendment note
    Subsec. (d)(8). Pub. L. 109–58 added par. (8).

    Enacted provision · exact public law section
    (b) Reporting.— Subsection (d) of section 6049 (relating to returns regarding payments of interest) is amended by adding at the end the following new paragraph: “(8) Reporting of credit on clean renewable energy bonds.— “(A) In general.— For purposes of subsection (a), the term ‘interest’ includes amounts includible in gross income under section 54(g) and such amounts shall be treated as paid on the credit allowance date (as defined in section 54(b)(4)). “(B) Reporting to corporations, etc.— Except as otherwise provided in regulations, in the case of any interest described in subparagraph (A), subsection (b)(4) shall be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i) of such subsection. “(C) Regulatory authority.— The Secretary may prescribe such regulations as are necessary or appropriate to carry out the purposes of this paragraph, including regulations which require more frequent or more detailed reporting.” .

29. 2005

    Pub. L. 109–135 title I § 101(b)(2) · 119 Stat. 2577

    Inserted · 26 U.S.C. § 6049(d)(8)(A)

    Pub. L. 109–135 inserted “or 1400N(l)(6)” after “section 54(g)” and “or 1400N(l)(2)(D), as the case may be” after “section 54(b)(4)”

    Source evidence

    Code amendment note
    Subsec. (d)(8)(A). Pub. L. 109–135 inserted “or 1400N(l)(6)” after “section 54(g)” and “or 1400N(l)(2)(D), as the case may be” after “section 54(b)(4)”.

    Enacted provision · exact public law section
    (2) Subparagraph (A) of section 6049(d)(8) is amended— (A) by inserting “or 1400N(l)(6)” after “section 54(g)”, and (B) by inserting “or 1400N(l)(2)(D), as the case may be” after “section 54(b)(4)”.

30. 2006

    Pub. L. 109–222 § 502(a) · 120 Stat. 345

    1. Redesignated · 26 U.S.C. § 6049(b)(2)(B)

       Pub. L. 109–222, § 502(a), redesignated subpar. (C) as (B)

    2. Struck · 26 U.S.C. § 6049(b)(2)(B)

       Pub. L. 109–222, § 502(a), struck out former subpar. (B) which read as follows: “interest on any obligation if such interest is exempt from tax under section 103(a) or if such interest is exempt from tax (without regard to the identity of the holder) under any other provision of this title,”

    Source evidence

    Code amendment note
    Subsec. (b)(2)(B). Pub. L. 109–222, § 502(a), redesignated subpar. (C) as (B) and struck out former subpar. (B) which read as follows: “interest on any obligation if such interest is exempt from tax under section 103(a) or if such interest is exempt from tax (without regard to the identity of the holder) under any other provision of this title,”.

    Enacted provision · exact public law section
    (a) In General.— Section 6049(b)(2) (relating to exceptions) is amended by striking subparagraph (B) and by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively.

31. 2006

    Pub. L. 109–222 title V § 502(a) · 120 Stat. 345

    1. Redesignated · 26 U.S.C. § 6049(b)(2)(C)

       Pub. L. 109–222 redesignated subpar. (D) as (C)

    2. Substituted · 26 U.S.C. § 6049(b)(2)(C)

       Pub. L. 109–222 substituted “subparagraph (B)” for “subparagraph (C)”

    Source evidence

    Code amendment note
    Subsec. (b)(2)(C). Pub. L. 109–222 redesignated subpar. (D) as (C) and substituted “subparagraph (B)” for “subparagraph (C)”.

    Enacted provision · exact public law section
    (a) In General.— Section 6049(b)(2) (relating to exceptions) is amended by striking subparagraph (B) and by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively.

32. 2006

    Pub. L. 109–222 § 502(a) · 120 Stat. 345

    Redesignated · 26 U.S.C. § 6049(b)(2)(D)

    Pub. L. 109–222, § 502(a), redesignated subpar. (D) as (C)

    Source evidence

    Code amendment note
    Subsec. (b)(2)(D). Pub. L. 109–222, § 502(a), redesignated subpar. (D) as (C).

    Enacted provision · exact public law section
    (a) In General.— Section 6049(b)(2) (relating to exceptions) is amended by striking subparagraph (B) and by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively.

33. 2008

    Heartland, Habitat, Harvest, and Horticulture Act of 2008

    Pub. L. 110–246 § 15316(b) · 122 Stat. 1651

    Added · 26 U.S.C. § 6049(d)(9)

    Pub. L. 110–246, § 15316(b), added par. (9)

    Source evidence

    Code amendment note
    Subsec. (d)(9). Pub. L. 110–246, § 15316(b), added par. (9).

    Enacted provision · exact public law section
    (b) Reporting.— Subsection (d) of section 6049 26 USC 6049. (relating to returns regarding payments of interest) is amended by adding at the end the following new paragraph: “(9) Reporting of credit on qualified tax credit bonds.— “(A) In general.— For purposes of subsection (a), the term ‘interest’ includes amounts includible in gross income under section 54A and such amounts shall be treated as paid on the credit allowance date (as defined in section 54A(e)(1)). “(B) Reporting to corporations, etc.— Except as otherwise provided in regulations, in the case of any interest described in subparagraph (A) of this paragraph, subsection (b)(4) of this section shall be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i). “(C) Regulatory authority.— The Secretary may prescribe such regulations as are necessary or appropriate to carry out the purposes of this paragraph, including regulations which require more frequent or more detailed reporting.” .

    Effective date note
    Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, except as otherwise provided, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of Title 7, Agriculture. Pub. L. 110–234, title XV, § 15316(d), May 22, 2008, 122 Stat. 1512, and Pub. L. 110–246, § 4(a), title XV, § 15316(d), June 18, 2008, 122 Stat. 1664, 2274, provided that: “The amendments made by this section [enacting subpart I (§ 54A et seq.) of part IV of subchapter A of this chapter and amending this section, sections 54, 1397E, 1400N, and 6401 of this title, and section 1324 of Title 31, Money and Finance] shall apply to obligations issued after the date of the enactment of this Act [June 18, 2008].”

34. 2018

    Energy and Water Development and Related Agencies Appropriations Act, 2018

    Pub. L. 115–141 div. U title IV § 401(d)(6)(B)(vi) · 132 Stat. 348

    Struck · 26 U.S.C. § 6049(d)(8)(A)

    Pub. L. 115–141 struck out “or 1400N(l)(6)” after “section 54(g)” and “or 1400N(l)(2)(D), as the case may be” after “section 54(b)(4)”

    Source evidence

    Code amendment note
    Subsec. (d)(8)(A). Pub. L. 115–141 struck out “or 1400N(l)(6)” after “section 54(g)” and “or 1400N(l)(2)(D), as the case may be” after “section 54(b)(4)”.

    Enacted provision · exact public law section
    Sec. 401. The Nuclear Regulatory Commission shall comply with the July 5, 2011, version of Chapter VI of its Internal Commission Procedures when responding to Congressional requests for information.

60 of 66 references resolved to an enrolled provision · 6 partial