CHAPTER 80 —GENERAL RULES
1 Section numbers editorially supplied.
Subchapter A—Application of Internal Revenue Laws
Editorial Notes
Amendments
2019—
1998—
1996—
1988—
1983—
1974—
1966—
§7801. Authority of Department of the Treasury
(a) Powers and duties of Secretary
(1) In general
Except as otherwise expressly provided by law, the administration and enforcement of this title shall be performed by or under the supervision of the Secretary of the Treasury.
(2) Administration and enforcement of certain provisions by Attorney General
(A) In general
The administration and enforcement of the following provisions of this title shall be performed by or under the supervision of the Attorney General; and the term "Secretary" or "Secretary of the Treasury" shall, when applied to those provisions, mean the Attorney General; and the term "internal revenue officer" shall, when applied to those provisions, mean any officer of the Bureau of Alcohol, Tobacco, Firearms, and Explosives so designated by the Attorney General:
(i)
(ii) Chapters 61 through 80, to the extent such chapters relate to the enforcement and administration of the provisions referred to in clause (i).
(B) Use of existing rulings and interpretations
Nothing in the Homeland Security Act of 2002 alters or repeals the rulings and interpretations of the Bureau of Alcohol, Tobacco, and Firearms in effect on the effective date of such Act, which concern the provisions of this title referred to in subparagraph (A). The Attorney General shall consult with the Secretary to achieve uniformity and consistency in administering provisions under
[(b) Repealed. Pub. L. 97–258, §5(b), Sept. 13, 1982, 96 Stat. 1068 , 1078]
(c) Functions of Department of Justice unaffected
Nothing in this section or
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
The Homeland Security Act of 2002, referred to in subsec. (a)(2)(B), is
Amendments
2018—Subsec. (a)(2)(B).
2002—Subsec. (a).
1982—Subsec. (b).
Subsec. (c).
1976—Subsec. (b).
1964—Subsec. (b)(2).
1959—
Statutory Notes and Related Subsidiaries
Effective Date of 2002 Amendment
Amendment by
Effective Date of 1964 Amendment
Amendment by
Effective Date of 1959 Amendment
"(a) Except as otherwise provided in this Act, the amendments made by this Act [amending this section] shall take effect on the date of the enactment of this Act [Sept. 22, 1959].
"(b) The amendments made by section 2 of this Act [amending
Repeals
Savings Provision
Transfer of Functions
For transfer of authorities, functions, personnel, and assets of the Bureau of Alcohol, Tobacco and Firearms, including the related functions of the Secretary of the Treasury, to the Department of Justice, see
Notice From IRS Regarding Closure of Taxpayer Assistance Centers
"(1) make publicly available (including by non-electronic means) a notice which—
"(A) identifies the Taxpayer Assistance Center proposed for closure and the date of such proposed closure; and
"(B) identifies the relevant alternative sources of taxpayer assistance which may be utilized by taxpayers affected by such proposed closure; and
"(2) submit to Congress a written report that includes—
"(A) the information included in the notice described in paragraph (1);
"(B) the reasons for such proposed closure; and
"(C) such other information as the Secretary may determine appropriate."
Customer Service Information
"(1) Information about common tax scams.
"(2) Information on where and how to report tax scams.
"(3) Additional advice on how taxpayers can protect themselves from identity theft and tax scams."
IRS Employees Prohibited From Using Personal Email Accounts for Official Business
IRS Reports on Information Technology Investments
Similar provisions were contained in the following appropriation acts:
Similar provisions were contained in the following appropriation acts:
Elimination of User Fee for Requests to IRS Regarding Pension Plans
Itemized Income Tax Receipt
"(a)
"(b)
"(1) shall only require the input of the taxpayer's total tax payments; and
"(2) shall not require any identifying information relating to the taxpayer.
"(c)
"(1) the tax imposed by subtitle A of the Internal Revenue Code of 1986 for such taxable year (as shown on his return); and
"(2) the tax imposed by section 3101 of such Code on wages received during such taxable year.
"(d)
"(1)
"(A) National defense.
"(B) International affairs.
"(C) Medicaid.
"(D) Medicare.
"(E) Means-tested entitlements.
"(F) Domestic discretionary.
"(G) Social Security.
"(H) Interest payments.
"(I) All other.
"(2) Other items on receipt.—
"(A)
"(B)
"(i) Public schools funding programs.
"(ii) Student loans and college aid.
"(iii) Low-income housing programs.
"(iv) supplemental [sic] nutrition assistance program benefits and welfare programs.
"(v) Law enforcement, including the Federal Bureau of Investigation, law enforcement grants to the States, and other Federal law enforcement personnel.
"(vi) Infrastructure, including roads, bridges, and mass transit.
"(vii) Farm subsidies.
"(viii) Congressional Member and staff salaries.
"(ix) Health research programs.
"(x) Aid to the disabled.
"(xi) Veterans health care and pension programs.
"(xii) Space programs.
"(xiii) Environmental cleanup programs.
"(xiv) United States embassies.
"(xv) Military salaries.
"(xvi) Foreign aid.
"(xvii) Contributions to the North Atlantic Treaty Organization.
"(xviii) Amtrak.
"(xix) United States Postal Service.
"(e)
"(f)
[
Reorganization of Internal Revenue Service
"(a)
"(1) ensure the successful implementation of the priorities specified by Congress in this Act [see Short Title of 2019 Amendment note set out under
"(2) prioritize taxpayer services to ensure that all taxpayers easily and readily receive the assistance that they need;
"(3) streamline the structure of the agency including minimizing the duplication of services and responsibilities within the agency;
"(4) best position the Internal Revenue Service to combat cybersecurity and other threats to the Internal Revenue Service; and
"(5) address whether the Criminal Investigation Division of the Internal Revenue Service should report directly to the Commissioner of Internal Revenue.
"(b)
"(a)
"(1) supersede any organization or reorganization of the Internal Revenue Service based on any statute or reorganization plan applicable on the effective date of this section;
"(2) eliminate or substantially modify the existing organization of the Internal Revenue Service which is based on a national, regional, and district structure;
"(3) establish organizational units serving particular groups of taxpayers with similar needs; and
"(4) ensure an independent appeals function within the Internal Revenue Service, including the prohibition in the plan of ex parte communications between appeals officers and other Internal Revenue Service employees to the extent that such communications appear to compromise the independence of the appeals officers.
"(b)
"(1)
"(2)
"(A) which have been issued, made, granted, or allowed to become effective by the President, any Federal agency or official thereof, or by a court of competent jurisdiction, in the performance of any function transferred or affected by the reorganization of the Internal Revenue Service or any other administrative unit of the Department of the Treasury under this section; and
"(B) which are in effect at the time this section takes effect, or were final before the effective date of this section and are to become effective on or after the effective date of this section,
shall continue in effect according to their terms until modified, terminated, superseded, set aside, or revoked in accordance with law by the President, the Secretary of the Treasury, the Commissioner of Internal Revenue, or other authorized official, a court of competent jurisdiction, or by operation of law.
"(3)
"(4)
"(5)
"(6)
"(c)
[Subsec. (a)(3) of section 1001 of
Internal Revenue Service Mission To Focus on Taxpayers' Needs
Explanation of Joint and Several Liability
"(a)
"(b)
Explanation of Taxpayers' Rights in Interviews With Internal Revenue Service
"(1) to be represented at interviews with the Internal Revenue Service by any person authorized to practice before the Internal Revenue Service; and
"(2) to suspend an interview pursuant to section 7521(b)(2) of the Internal Revenue Code of 1986."
Disclosure of Criteria for Examination Selection
"(a)
"(b)
Disclosure to Taxpayers
Internal Revenue Service Employee Contacts
"(a)
"(1) any manually generated correspondence received by a taxpayer from the Internal Revenue Service shall include in a prominent manner the name, telephone number, and unique identifying number of an Internal Revenue Service employee the taxpayer may contact with respect to the correspondence;
"(2) any other correspondence or notice received by a taxpayer from the Internal Revenue Service shall include in a prominent manner a telephone number that the taxpayer may contact; and
"(3) an Internal Revenue Service employee shall give a taxpayer during a telephone or personal contact the employee's name and unique identifying number.
"(b)
"(c)
"(d)
"(e)
"(1)
"(2)
"(3)
"(4)
Listing of Local Internal Revenue Service Telephone Numbers and Addresses
Study of Noncompliance With Internal Revenue Laws by Taxpayers
Tax Law Complexity Analysis; Commissioner Study
"(1)
"(A) questions frequently asked by taxpayers with respect to return filing;
"(B) common errors made by taxpayers in filling out their returns;
"(C) areas of law which frequently result in disagreements between taxpayers and the Internal Revenue Service;
"(D) major areas of law in which there is no (or incomplete) published guidance or in which the law is uncertain;
"(E) areas in which revenue officers make frequent errors interpreting or applying the law;
"(F) the impact of recent legislation on complexity; and
"(G) forms supplied by the Internal Revenue Service, including the time it takes for taxpayers to complete and review forms, the number of taxpayers who use each form, and how recent legislation has affected the time it takes to complete and review forms.
"(2)
"(A) for reducing the complexity of the administration of Federal tax laws; and
"(B) for repeal or modification of any provision the Commissioner believes adds undue and unnecessary complexity to the administration of the Federal tax laws."
National Commission on Restructuring Internal Revenue Service
"(a)
"(1) While the budget for the Internal Revenue Service (hereafter referred to as the 'IRS') has risen from $2.5 billion in fiscal year 1979 to $7.3 billion in fiscal year 1996, tax returns processing has not become significantly faster, tax collection rates have not significantly increased, and the accuracy and timeliness of taxpayer assistance has not significantly improved.
"(2) To date, the Tax Systems Modernization (TSM) program has cost the taxpayers $2.5 billion, with an estimated cost of $8 billion. Despite this investment, modernization efforts were recently described by the GAO as 'chaotic' and 'ad hoc'.
"(3) While the IRS maintains that TSM will increase efficiency and thus revenues, Congress has had to appropriate additional funds in recent years for compliance initiatives in order to increase tax revenues.
"(4) Because TSM has not been implemented, the IRS continues to rely on paper returns, processing a total of 14 billion pieces of paper every tax season. This results in an extremely inefficient system.
"(5) This lack of efficiency reduces the level of customer service and impedes the ability of the IRS to collect revenue.
"(6) The present status of the IRS shows the need for the establishment of a Commission which will examine the organization of IRS and recommend actions to expedite the implementation of TSM and improve service to taxpayers.
"(b)
"(1)
"(2)
"(A) Five members appointed by the President, two from the executive branch of the Government, two from private life, and one from an organization that represents a substantial number of Internal Revenue Service employees.
"(B) Four members appointed by the Majority Leader of the Senate, one from Members of the Senate and three from private life.
"(C) Two members appointed by the Minority Leader of the Senate, one from Members of the Senate and one from private life.
"(D) Four members appointed by the Speaker of the House of Representatives, one from Members of the House of Representatives and three from private life.
"(E) Two members appointed by the Minority Leader of the House of Representatives, one from Members of the House of Representatives and one from private life.
"The Commissioner of the Internal Revenue Service shall be an ex officio member of the Commission.
"(3)
"(4)
"(5)
"(A)
"(B)
"(c)
"(1)
"(A) to conduct, for a period of not to exceed 15 months from the date of its first meeting, the review described in paragraph (2), and
"(B) to submit to the Congress a final report of the results of the review, including recommendations for restructuring the IRS.
"(2)
"(A) the present practices of the IRS, especially with respect to—
"(i) its organizational structure;
"(ii) its paper processing and return processing activities;
"(iii) its infrastructure; and
"(iv) the collection process;
"(B) requirements for improvement in the following areas:
"(i) making returns processing 'paperless';
"(ii) modernizing IRS operations;
"(iii) improving the collections process without major personnel increases or increased funding;
"(iv) improving taxpayer accounts management;
"(v) improving the accuracy of information requested by taxpayers in order to file their returns; and
"(vi) changing the culture of the IRS to make the organization more efficient, productive, and customer-oriented;
"(C) whether the IRS could be replaced with a quasi-governmental agency with tangible incentives and internally managing its programs and activities and for modernizing its activities, and
"(D) whether the IRS could perform other collection, information, and financial service functions of the Federal Government.
"(d)
"(1)
"(i) hold such hearings and sit and act at such times and places, take such testimony, receive such evidence, administer such oaths, and
"(ii) require, by subpoena or otherwise, the attendance and testimony of such witnesses and the production of such books, records, correspondence, memoranda, papers, and documents, as the Commission or such designated subcommittee or designated member may deem advisable.
"(B) Subpoenas issued under subparagraph (A)(ii) may be issued under the signature of the Co-Chairs of the Commission, the chairman of any designated subcommittee, or any designated member, and may be served by any person designated by such Co-Chairs, subcommittee chairman, or member. The provisions of sections 102 through 104 of the Revised Statutes of the United States (
"(2)
"(3)
"(4)
"(B) The Administrator of General Services shall provide to the Commission on a nonreimbursable basis such administrative support services as the Commission may request.
"(C) In addition to the assistance set forth in subparagraphs (A) and (B), departments and agencies of the United States are authorized to provide to the Commission such services, funds, facilities, staff, and other support services as they may deem advisable and as may be authorized by law.
"(5)
"(6)
"(e)
"(1)
"(2)
"(f)
"(1)
"(B) Members of the Commission who are officers or employees of the United States or Members of Congress shall receive no additional pay on account of their service on the Commission.
"(2)
"(g)
"(1)
"(2)
"(B) The Commission may use the 60-day period referred to in subparagraph (A) for the purpose of concluding its activities, including providing testimony to committees of Congress concerning its final report and disseminating that report.
"(h)
"(i)
[
[
Fees for Services Rendered
Disclosure of Rights of Taxpayers
"(a)
"(1) the rights of a taxpayer and the obligations of the Internal Revenue Service (hereinafter in this section referred to as the 'Service') during an audit;
"(2) the procedures by which a taxpayer may appeal any adverse decision of the Service (including administrative and judicial appeals);
"(3) the procedures for prosecuting refund claims and filing of taxpayer complaints; and
"(4) the procedures which the Service may use in enforcing the internal revenue laws (including assessment, jeopardy assessment, levy and distraint, and enforcement of liens).
"(b)
"(c)
Fees for Requests for Ruling, Determination, and Similar Letters
Study of Tax Incentives for Expenditures Required by Occupational Safety and Health Administration and Mining Health and Safety Administration
Study of Taxation of Nonresident Alien Real Estate Transactions in the United States
Study and Investigation of Internal Revenue Code Provisions Which Impede or Discourage Recycling of Solid Waste Materials; Presidential and Congressional Report
Executive Documents
Order of Succession
For order of succession during any period when both Secretary and Deputy Secretary of the Treasury are unable to perform functions and duties of office of Secretary, see Ex. Ord. No. 13246, Dec. 18, 2001, 66 F.R. 66270, listed in a table under
Ex. Ord. No. 13051. Internal Revenue Service Management Board
Ex. Ord. No. 13051, June 24, 1997, 62 F.R. 34609, provided:
By the authority vested in me as President by the Constitution and the laws of the United States of America, including
(b) The Board shall consist of:
(1) the Deputy Secretary of the Treasury, who shall serve as Chair of the Board;
(2) the Assistant Secretary of the Treasury (Management) and the Chief Financial Officer, who shall serve as Vice Chairs;
(3) the Assistant Secretary of the Treasury (Tax Policy);
(4) the Under Secretary of the Treasury (Enforcement);
(5) the Deputy Assistant Secretary of the Treasury (Departmental Finance and Management);
(6) the Deputy Assistant Secretary of the Treasury (Information Systems)/Chief Information Officer;
(7) the Assistant Secretary of the Treasury (Legislative Affairs and Public Liaison);
(8) the General Counsel for the Department of the Treasury;
(9) the Director, Office of Security, Department of the Treasury;
(10) the Senior Procurement Executive for the Department of the Treasury;
(11) the Commissioner of Internal Revenue;
(12) the Deputy Commissioner of Internal Revenue;
(13) the Associate Commissioner of Internal Revenue for Modernization/Chief Information Officer of the Internal Revenue Service;
(14) the Deputy Director for Management, Office of Management and Budget;
(15) the Administrator for Federal Procurement Policy, Office of Management and Budget;
(16) a representative of the Office of the Vice President designated by the Vice President;
(17) a representative of the Office of Management and Budget designated by the Director of such office;
(18) a representative of the Office of Personnel Management designated by the Director of such office;
(19) representatives of such other Government agencies as may be determined from time to time by the Secretary of the Treasury, designated by the head of such agency; and
(20) such other officers or employees of the Department of the Treasury as may be designated by the Secretary.
(c) A member of the Board described in paragraphs (16) through (20) of subsection (b) may be removed by the official who designated such member.
(d) The Board may seek the views, consistent with
(1) working through the Deputy Secretary, assisting the Secretary on the full range of high-level management issues and concerns affecting the Internal Revenue Service, particularly those that have a significant impact on operations, modernization, and customer service.
(2) acting through the Executive Committee, serving as the primary review for strategic decisions concerning modernization of the Internal Revenue Service, including modernization direction, strategy, significant reorganization plans, performance metrics, budgetary issues, major capital investments, and compensation of personnel.
(b) The Board shall meet at least monthly and shall prescribe such bylaws or procedures as the Board deems appropriate.
(c) The Board shall prepare semiannual reports to the President and to the Congress, which shall be transmitted by the Secretary of the Treasury.
William J. Clinton.
Ex. Ord. No. 13789. Identifying and Reducing Tax Regulatory Burdens
Ex. Ord. No. 13789, Apr. 21, 2017, 82 F.R. 19317, provided:
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:
(i) impose an undue financial burden on United States taxpayers;
(ii) add undue complexity to the Federal tax laws; or
(iii) exceed the statutory authority of the Internal Revenue Service.
This interim report shall be completed no later than 60 days from the date of this order. In conducting the review required by this subsection, earlier determinations of whether a regulation is significant pursuant to Executive Order 12866 of September 30, 1993, as amended (Regulatory Planning and Review), shall not be controlling.
(b) No later than 150 days from the date of this order, the Secretary shall prepare and submit a report to the President that recommends specific actions to mitigate the burden imposed by regulations identified in the interim report required under subsection (a) of this section. The Secretary shall also publish this report in the Federal Register upon submitting it to the President. The Secretary shall take appropriate steps to cause the effective date of such regulations to be delayed or suspended, to the extent permitted by law, and to modify or rescind such regulations as appropriate and consistent with law, including, if necessary, through notice and comment rulemaking. The Secretary shall submit for publication in the Federal Register a summary of the actions taken in response to the report no later than 10 days following the finalization of such actions. Should all such actions not be finalized within 180 days following the submission of the report to the President, the Secretary shall submit for publication in the Federal Register an initial report summarizing the actions taken to that point.
(c) To ensure that future tax regulations adhere to the policy described in section 1 of this order, the Secretary and the Director of the Office of Management and Budget shall review and, if appropriate, reconsider the scope and implementation of the existing exemption for certain tax regulations from the review process set forth in Executive Order 12866 and any successor order.
(d) The Secretary shall cause section 32.1.5.4.7.5.3 of the Internal Revenue Manual to be revised, if necessary to fulfill the directives in subsection (c) of this section.
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
Donald J. Trump.
§7802. Internal Revenue Service Oversight Board
(a) Establishment
There is established within the Department of the Treasury the Internal Revenue Service Oversight Board (hereafter in this subchapter referred to as the "Oversight Board").
(b) Membership
(1) Composition
The Oversight Board shall be composed of nine members, as follows:
(A) six members shall be individuals who are not otherwise Federal officers or employees and who are appointed by the President, by and with the advice and consent of the Senate.
(B) one member shall be the Secretary of the Treasury or, if the Secretary so designates, the Deputy Secretary of the Treasury.
(C) one member shall be the Commissioner of Internal Revenue.
(D) one member shall be an individual who is a full-time Federal employee or a representative of employees and who is appointed by the President, by and with the advice and consent of the Senate.
(2) Qualifications and terms
(A) Qualifications
Members of the Oversight Board described in paragraph (1)(A) shall be appointed without regard to political affiliation and solely on the basis of their professional experience and expertise in one or more of the following areas:
(i) Management of large service organizations.
(ii) Customer service.
(iii) Federal tax laws, including tax administration and compliance.
(iv) Information technology.
(v) Organization development.
(vi) The needs and concerns of taxpayers.
(vii) The needs and concerns of small businesses.
In the aggregate, the members of the Oversight Board described in paragraph (1)(A) should collectively bring to bear expertise in all of the areas described in the preceding sentence.
(B) Terms
Each member who is described in subparagraph (A) or (D) of paragraph (1) shall be appointed for a term of 5 years, except that of the members first appointed under paragraph (1)(A)—
(i) two members shall be appointed for a term of 3 years,
(ii) two members shall be appointed for a term of 4 years, and
(iii) two members shall be appointed for a term of 5 years.
(C) Reappointment
An individual who is described in subparagraph (A) or (D) of paragraph (1) may be appointed to no more than two 5-year terms on the Oversight Board.
(D) Vacancy
Any vacancy on the Oversight Board shall be filled in the same manner as the original appointment. Any member appointed to fill a vacancy occurring before the expiration of the term for which the member's predecessor was appointed shall be appointed for the remainder of that term.
(3) Ethical considerations
(A) Financial disclosure
During the entire period that an individual appointed under subparagraph (A) or (D) of paragraph (1) is a member of the Oversight Board, such individual shall be treated as serving as an officer or employee referred to in
(B) Restrictions on post-employment
For purposes of
(C) Members who are special Government employees
If an individual appointed under subparagraph (A) or (D) of paragraph (1) is a special Government employee, the following additional rules apply for purposes of
(i) Restriction on representation
In addition to any restriction under
(I) the Oversight Board or the Internal Revenue Service on any matter;
(II) the Department of the Treasury on any matter involving the internal revenue laws or involving the management or operations of the Internal Revenue Service; or
(III) the Department of Justice with respect to litigation involving a matter described in subclause (I) or (II).
(ii) Compensation for services provided by another
For purposes of section 203 of such title—
(I) such individual shall not be subject to the restrictions of subsection (a)(1) thereof for sharing in compensation earned by another for representations on matters covered by such section, and
(II) a person shall not be subject to the restrictions of subsection (a)(2) thereof for sharing such compensation with such individual.
(D) Waiver
The President may, only at the time the President nominates the member of the Oversight Board described in paragraph (1)(D), waive for the term of the member any appropriate provision of
(4) Quorum
Five members of the Oversight Board shall constitute a quorum. A majority of members present and voting shall be required for the Oversight Board to take action.
(5) Removal
(A) In general
Any member of the Oversight Board appointed under subparagraph (A) or (D) of paragraph (1) may be removed at the will of the President.
(B) Secretary and Commissioner
An individual described in subparagraph (B) or (C) of paragraph (1) shall be removed upon termination of service in the office described in such subparagraph.
(6) Claims
(A) In general
Members of the Oversight Board who are described in subparagraph (A) or (D) of paragraph (1) shall have no personal liability under Federal law with respect to any claim arising out of or resulting from an act or omission by such member within the scope of service as a member.
(B) Effect on other law
This paragraph shall not be construed—
(i) to affect any other immunities and protections that may be available to such member under applicable law with respect to such transactions;
(ii) to affect any other right or remedy against the United States under applicable law; or
(iii) to limit or alter in any way the immunities that are available under applicable law for Federal officers and employees.
(c) General responsibilities
(1) Oversight
(A) In general
The Oversight Board shall oversee the Internal Revenue Service in its administration, management, conduct, direction, and supervision of the execution and application of the internal revenue laws or related statutes and tax conventions to which the United States is a party.
(B) Mission of IRS
As part of its oversight functions described in subparagraph (A), the Oversight Board shall ensure that the organization and operation of the Internal Revenue Service allows it to carry out its mission.
(C) Confidentiality
The Oversight Board shall ensure that appropriate confidentiality is maintained in the exercise of its duties.
(2) Exceptions
The Oversight Board shall have no responsibilities or authority with respect to—
(A) the development and formulation of Federal tax policy relating to existing or proposed internal revenue laws, related statutes, and tax conventions,
(B) specific law enforcement activities of the Internal Revenue Service, including specific compliance activities such as examinations, collection activities, and criminal investigations,
(C) specific procurement activities of the Internal Revenue Service, or
(D) except as provided in subsection (d)(3), specific personnel actions.
(d) Specific responsibilities
The Oversight Board shall have the following specific responsibilities:
(1) Strategic plans
To review and approve strategic plans of the Internal Revenue Service, including the establishment of—
(A) mission and objectives, and standards of performance relative to either, and
(B) annual and long-range strategic plans.
(2) Operational plans
To review the operational functions of the Internal Revenue Service, including—
(A) plans for modernization of the tax system,
(B) plans for outsourcing or managed competition, and
(C) plans for training and education.
(3) Management
To—
(A) recommend to the President candidates for appointment as the Commissioner of Internal Revenue and recommend to the President the removal of the Commissioner;
(B) review the Commissioner's selection, evaluation, and compensation of Internal Revenue Service senior executives who have program management responsibility over significant functions of the Internal Revenue Service; and
(C) review and approve the Commissioner's plans for any major reorganization of the Internal Revenue Service.
(4) Budget
To—
(A) review and approve the budget request of the Internal Revenue Service prepared by the Commissioner;
(B) submit such budget request to the Secretary of the Treasury; and
(C) ensure that the budget request supports the annual and long-range strategic plans.
(5) Taxpayer protection
To ensure the proper treatment of taxpayers by the employees of the Internal Revenue Service.
The Secretary shall submit the budget request referred to in paragraph (4)(B) for any fiscal year to the President who shall submit such request, without revision, to Congress together with the President's annual budget request for the Internal Revenue Service for such fiscal year.
(e) Board personnel matters
(1) Compensation of members
(A) In general
Each member of the Oversight Board who—
(i) is described in subsection (b)(1)(A); or
(ii) is described in subsection (b)(1)(D) and is not otherwise a Federal officer or employee,
shall be compensated at a rate of $30,000 per year. All other members shall serve without compensation for such service.
(B) Chairperson
In lieu of the amount specified in subparagraph (A), the Chairperson of the Oversight Board shall be compensated at a rate of $50,000 per year.
(2) Travel expenses
(A) In general
The members of the Oversight Board shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of
(B) Report
The Oversight Board shall include in its annual report under subsection (f)(3)(A) information with respect to the travel expenses allowed for members of the Oversight Board under this paragraph.
(3) Staff
(A) In general
The Chairperson of the Oversight Board may appoint and terminate any personnel that may be necessary to enable the Board to perform its duties.
(B) Detail of Government employees
Upon request of the Chairperson of the Oversight Board, a Federal agency shall detail a Federal Government employee to the Oversight Board without reimbursement. Such detail shall be without interruption or loss of civil service status or privilege.
(4) Procurement of temporary and intermittent services
The Chairperson of the Oversight Board may procure temporary and intermittent services under
(f) Administrative matters
(1) Chair
(A) Term
The members of the Oversight Board shall elect for a 2-year term a chairperson from among the members appointed under subsection (b)(1)(A).
(B) Powers
Except as otherwise provided by a majority vote of the Oversight Board, the powers of the Chairperson shall include—
(i) establishing committees;
(ii) setting meeting places and times;
(iii) establishing meeting agendas; and
(iv) developing rules for the conduct of business.
(2) Meetings
The Oversight Board shall meet at least quarterly and at such other times as the Chairperson determines appropriate.
(3) Reports
(A) Annual
The Oversight Board shall each year report with respect to the conduct of its responsibilities under this title to the President, the Committees on Ways and Means, Government Reform and Oversight, and Appropriations of the House of Representatives and the Committees on Finance, Governmental Affairs, and Appropriations of the Senate.
(B) Additional report
Upon a determination by the Oversight Board under subsection (c)(1)(B) that the organization and operation of the Internal Revenue Service are not allowing it to carry out its mission, the Oversight Board shall report such determination to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2022—Subsec. (b)(3)(A).
2000—Subsec. (b)(2)(B)(ii).
1998—
1996—
Subsec. (d).
1988—Subsec. (c).
1982—Subsec. (b).
1976—Subsec. (a).
Subsec. (b).
1974—
Statutory Notes and Related Subsidiaries
Change of Name
Committee on Governmental Affairs of Senate changed to Committee on Homeland Security and Governmental Affairs of Senate, effective Jan. 4, 2005, by Senate Resolution No. 445, One Hundred Eighth Congress, Oct. 9, 2004.
Committee on Government Reform and Oversight of House of Representatives changed to Committee on Government Reform of House of Representatives by House Resolution No. 5, One Hundred Sixth Congress, Jan. 6, 1999. Committee on Government Reform of House of Representatives changed to Committee on Oversight and Government Reform of House of Representatives by House Resolution No. 6, One Hundred Tenth Congress, Jan. 5, 2007. Committee on Oversight and Government Reform of House of Representatives changed to Committee on Oversight and Reform of House of Representatives by House Resolution No. 6, One Hundred Sixteenth Congress, Jan. 9, 2019. Committee on Oversight and Reform of House of Representatives changed to Committee on Oversight and Accountability of House of Representatives by House Resolution No. 5, One Hundred Eighteenth Congress, Jan. 9, 2023.
Effective Date of 1998 Amendment
"(1)
"(2)
"(3)
Effective Date of 1996 Amendment
Effective Date of 1988 Amendment
Effective Date of 1974 Amendment
§7803. Commissioner of Internal Revenue; other officials
(a) Commissioner of Internal Revenue
(1) Appointment
(A) In general
There shall be in the Department of the Treasury a Commissioner of Internal Revenue who shall be appointed by the President, by and with the advice and consent of the Senate. Such appointment shall be made from individuals who, among other qualifications, have a demonstrated ability in management.
(B) Term
The term of the Commissioner of Internal Revenue shall be a 5-year term, beginning with a term to commence on November 13, 1997. Each subsequent term shall begin on the day after the date on which the previous term expires.
(C) Vacancy
Any individual appointed as Commissioner of Internal Revenue during a term as defined in subparagraph (B) shall be appointed for the remainder of that term.
(D) Removal
The Commissioner may be removed at the will of the President.
(E) Reappointment
The Commissioner may be appointed to serve more than one term.
(2) Duties
The Commissioner shall have such duties and powers as the Secretary may prescribe, including the power to—
(A) administer, manage, conduct, direct, and supervise the execution and application of the internal revenue laws or related statutes and tax conventions to which the United States is a party; and
(B) recommend to the President a candidate for appointment as Chief Counsel for the Internal Revenue Service when a vacancy occurs, and recommend to the President the removal of such Chief Counsel.
If the Secretary determines not to delegate a power specified in subparagraph (A) or (B), such determination may not take effect until 30 days after the Secretary notifies the Committees on Ways and Means, Government Reform and Oversight, and Appropriations of the House of Representatives and the Committees on Finance, Governmental Affairs, and Appropriations of the Senate.
(3) Execution of duties in accord with taxpayer rights
In discharging his duties, the Commissioner shall ensure that employees of the Internal Revenue Service are familiar with and act in accord with taxpayer rights as afforded by other provisions of this title, including—
(A) the right to be informed,
(B) the right to quality service,
(C) the right to pay no more than the correct amount of tax,
(D) the right to challenge the position of the Internal Revenue Service and be heard,
(E) the right to appeal a decision of the Internal Revenue Service in an independent forum,
(F) the right to finality,
(G) the right to privacy,
(H) the right to confidentiality,
(I) the right to retain representation, and
(J) the right to a fair and just tax system.
(4) Consultation with Board
The Commissioner shall consult with the Oversight Board on all matters set forth in paragraphs (2) and (3) (other than paragraph (3)(A)) of section 7802(d).
(b) Chief Counsel for the Internal Revenue Service
(1) Appointment
There shall be in the Department of the Treasury a Chief Counsel for the Internal Revenue Service who shall be appointed by the President, by and with the consent of the Senate.
(2) Duties
The Chief Counsel shall be the chief law officer for the Internal Revenue Service and shall perform such duties as may be prescribed by the Secretary, including the duty—
(A) to be legal advisor to the Commissioner and the Commissioner's officers and employees;
(B) to furnish legal opinions for the preparation and review of rulings and memoranda of technical advice;
(C) to prepare, review, and assist in the preparation of proposed legislation, treaties, regulations, and Executive orders relating to laws which affect the Internal Revenue Service;
(D) to represent the Commissioner in cases before the Tax Court; and
(E) to determine which civil actions should be litigated under the laws relating to the Internal Revenue Service and prepare recommendations for the Department of Justice regarding the commencement of such actions.
If the Secretary determines not to delegate a power specified in subparagraph (A), (B), (C), (D), or (E), such determination may not take effect until 30 days after the Secretary notifies the Committees on Ways and Means, Government Reform and Oversight, and Appropriations of the House of Representatives and the Committees on Finance, Governmental Affairs, and Appropriations of the Senate.
(3) Persons to whom Chief Counsel reports
The Chief Counsel shall report directly to the Commissioner of Internal Revenue, except that—
(A) the Chief Counsel shall report to both the Commissioner and the General Counsel for the Department of the Treasury with respect to—
(i) legal advice or interpretation of the tax law not relating solely to tax policy;
(ii) tax litigation; and
(B) the Chief Counsel shall report to the General Counsel with respect to legal advice or interpretation of the tax law relating solely to tax policy.
If there is any disagreement between the Commissioner and the General Counsel with respect to any matter jointly referred to them under subparagraph (A), such matter shall be submitted to the Secretary or Deputy Secretary for resolution.
(4) Chief Counsel personnel
All personnel in the Office of Chief Counsel shall report to the Chief Counsel.
(c) Office of the Taxpayer Advocate
(1) Establishment
(A) In general
There is established in the Internal Revenue Service an office to be known as the "Office of the Taxpayer Advocate".
(B) National Taxpayer Advocate
(i) In general
The Office of the Taxpayer Advocate shall be under the supervision and direction of an official to be known as the "National Taxpayer Advocate". The National Taxpayer Advocate shall report directly to the Commissioner of Internal Revenue and shall be entitled to compensation at the same rate as the highest rate of basic pay established for the Senior Executive Service under
(ii) Appointment
The National Taxpayer Advocate shall be appointed by the Secretary of the Treasury after consultation with the Commissioner of Internal Revenue and the Oversight Board and without regard to the provisions of
(iii) Qualifications
An individual appointed under clause (ii) shall have—
(I) a background in customer service as well as tax law; and
(II) experience in representing individual taxpayers.
(iv) Restriction on employment
An individual may be appointed as the National Taxpayer Advocate only if such individual was not an officer or employee of the Internal Revenue Service during the 2-year period ending with such appointment and such individual agrees not to accept any employment with the Internal Revenue Service for at least 5 years after ceasing to be the National Taxpayer Advocate. Service as an officer or employee of the Office of the Taxpayer Advocate shall not be taken into account in applying this clause.
(2) Functions of office
(A) In general
It shall be the function of the Office of the Taxpayer Advocate to—
(i) assist taxpayers in resolving problems with the Internal Revenue Service;
(ii) identify areas in which taxpayers have problems in dealings with the Internal Revenue Service;
(iii) to the extent possible, propose changes in the administrative practices of the Internal Revenue Service to mitigate problems identified under clause (ii); and
(iv) identify potential legislative changes which may be appropriate to mitigate such problems.
(B) Annual reports
(i) Objectives
Not later than June 30 of each calendar year, the National Taxpayer Advocate shall report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate on the objectives of the Office of the Taxpayer Advocate for the fiscal year beginning in such calendar year. Any such report shall contain full and substantive analysis, in addition to statistical information.
(ii) Activities
Not later than December 31 of each calendar year, the National Taxpayer Advocate shall report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate on the activities of the Office of the Taxpayer Advocate during the fiscal year ending during such calendar year. Any such report shall contain full and substantive analysis, in addition to statistical information, and shall—
(I) identify the initiatives the Office of the Taxpayer Advocate has taken on improving taxpayer services and Internal Revenue Service responsiveness;
(II) contain recommendations received from individuals with the authority to issue Taxpayer Assistance Orders under section 7811;
(III) contain a summary of the 10 most serious problems encountered by taxpayers, including a description of the nature of such problems;
(IV) contain an inventory of the items described in subclauses (I), (II), and (III) for which action has been taken and the result of such action;
(V) contain an inventory of the items described in subclauses (I), (II), and (III) for which action remains to be completed and the period during which each item has remained on such inventory;
(VI) contain an inventory of the items described in subclauses (I), (II), and (III) for which no action has been taken, the period during which each item has remained on such inventory, the reasons for the inaction, and identify any Internal Revenue Service official who is responsible for such inaction;
(VII) identify any Taxpayer Assistance Order which was not honored by the Internal Revenue Service in a timely manner, as specified under section 7811(b);
(VIII) identify any Taxpayer Advocate Directive which was not honored by the Internal Revenue Service in a timely manner, as specified under paragraph (5);
(IX) contain recommendations for such administrative and legislative action as may be appropriate to resolve problems encountered by taxpayers;
(X) identify areas of the tax law that impose significant compliance burdens on taxpayers or the Internal Revenue Service, including specific recommendations for remedying these problems;
(XI) identify the 10 most litigated issues for each category of taxpayers, including recommendations for mitigating such disputes;
(XII) with respect to any statistical information included in such report, include a statement of whether such statistical information was reviewed or provided by the Secretary under section 6108(d) and, if so, whether the Secretary determined such information to be statistically valid and based on sound statistical methodology; and
(XIII) include such other information as the National Taxpayer Advocate may deem advisable.
(iii) Report to be submitted directly
Each report required under this subparagraph shall be provided directly to the committees described in clause (i) without any prior review or comment from the Commissioner, the Secretary of the Treasury, the Oversight Board, any other officer or employee of the Department of the Treasury, or the Office of Management and Budget. The preceding sentence shall not apply with respect to statistical information provided to the Secretary for review, or received from the Secretary, under section 6108(d).
(iv) Coordination with report of Treasury Inspector General for Tax Administration
To the extent that information required to be reported under clause (ii) is also required to be reported under paragraph (1) or (2) of subsection (d) by the Treasury Inspector General for Tax Administration, the National Taxpayer Advocate shall not contain such information in the report submitted under such clause.
(C) Other responsibilities
The National Taxpayer Advocate shall—
(i) monitor the coverage and geographic allocation of local offices of taxpayer advocates;
(ii) develop guidance to be distributed to all Internal Revenue Service officers and employees outlining the criteria for referral of taxpayer inquiries to local offices of taxpayer advocates;
(iii) ensure that the local telephone number for each local office of the taxpayer advocate is published and available to taxpayers served by the office; and
(iv) in conjunction with the Commissioner, develop career paths for local taxpayer advocates choosing to make a career in the Office of the Taxpayer Advocate.
(D) Personnel actions
(i) In general
The National Taxpayer Advocate shall have the responsibility and authority to—
(I) appoint local taxpayer advocates and make available at least 1 such advocate for each State; and
(II) evaluate and take personnel actions (including dismissal) with respect to any employee of any local office of a taxpayer advocate described in subclause (I).
(ii) Consultation
The National Taxpayer Advocate may consult with the appropriate supervisory personnel of the Internal Revenue Service in carrying out the National Taxpayer Advocate's responsibilities under this subparagraph.
(E) Coordination with Treasury Inspector General for Tax Administration
Before beginning any research or study, the National Taxpayer Advocate shall coordinate with the Treasury Inspector General for Tax Administration to ensure that the National Taxpayer Advocate does not duplicate any action that the Treasury Inspector General for Tax Administration has already undertaken or has a plan to undertake.
(3) Responsibilities of Commissioner
The Commissioner shall establish procedures requiring a formal response to all recommendations submitted to the Commissioner by the National Taxpayer Advocate within 3 months after submission to the Commissioner.
(4) Operation of local offices
(A) In general
Each local taxpayer advocate—
(i) shall report to the National Taxpayer Advocate or delegate thereof;
(ii) may consult with the appropriate supervisory personnel of the Internal Revenue Service regarding the daily operation of the local office of the taxpayer advocate;
(iii) shall, at the initial meeting with any taxpayer seeking the assistance of a local office of the taxpayer advocate, notify such taxpayer that the taxpayer advocate offices operate independently of any other Internal Revenue Service office and report directly to Congress through the National Taxpayer Advocate; and
(iv) may, at the taxpayer advocate's discretion, not disclose to the Internal Revenue Service contact with, or information provided by, such taxpayer.
(B) Maintenance of independent communications
Each local office of the taxpayer advocate shall maintain a separate phone, facsimile, and other electronic communication access, and a separate post office address.
(5) Taxpayer Advocate Directives
In the case of any Taxpayer Advocate Directive issued by the National Taxpayer Advocate pursuant to a delegation of authority from the Commissioner of Internal Revenue—
(A) the Commissioner or a Deputy Commissioner shall modify, rescind, or ensure compliance with such directive not later than 90 days after the issuance of such directive, and
(B) in the case of any directive which is modified or rescinded by a Deputy Commissioner, the National Taxpayer Advocate may (not later than 90 days after such modification or rescission) appeal to the Commissioner, and the Commissioner shall (not later than 90 days after such appeal is made) ensure compliance with such directive as issued by the National Taxpayer Advocate or provide the National Taxpayer Advocate with the reasons for any modification or rescission made or upheld by the Commissioner pursuant to such appeal.
(d) Additional duties of the Treasury Inspector General for Tax Administration
(1) Annual reporting
The Treasury Inspector General for Tax Administration shall include in one of the semiannual reports under
(A) an evaluation of the compliance of the Internal Revenue Service with—
(i) restrictions under section 1204 of the Internal Revenue Service Restructuring and Reform Act of 1998 on the use of enforcement statistics to evaluate Internal Revenue Service employees;
(ii) restrictions under section 7521 on directly contacting taxpayers who have indicated that they prefer their representatives be contacted;
(iii) required procedures under section 6320 upon the filing of a notice of a lien;
(iv) required procedures under subchapter D of
(v) restrictions under section 3707 of the Internal Revenue Service Restructuring and Reform Act of 1998 on designation of taxpayers;
(B) a review and a certification of whether or not the Secretary is complying with the requirements of section 6103(e)(8) to disclose information to an individual filing a joint return on collection activity involving the other individual filing the return;
(C) information regarding extensions of the statute of limitations for assessment and collection of tax under section 6501 and the provision of notice to taxpayers regarding requests for such extension;
(D) an evaluation of the adequacy and security of the technology of the Internal Revenue Service;
(E) any termination or mitigation under section 1203 of the Internal Revenue Service Restructuring and Reform Act of 1998;
(F) information regarding improper denial of requests for information from the Internal Revenue Service identified under paragraph (3)(A); and
(G) information regarding any administrative or civil actions with respect to violations of the fair debt collection provisions of section 6304, including—
(i) a summary of such actions initiated since the date of the last report; and
(ii) a summary of any judgments or awards granted as a result of such actions.
(2) Semiannual reports
(A)
(i) the number of taxpayer complaints during the reporting period;
(ii) the number of employee misconduct and taxpayer abuse allegations received by the Internal Revenue Service or the Inspector General during the period from taxpayers, Internal Revenue Service employees, and other sources;
(iii) a summary of the status of such complaints and allegations; and
(iv) a summary of the disposition of such complaints and allegations, including the outcome of any Department of Justice action and any monies paid as a settlement of such complaints and allegations.
(B) Clauses (iii) and (iv) of subparagraph (A) shall only apply to complaints and allegations of serious employee misconduct.
(3) Other responsibilities
The Treasury Inspector General for Tax Administration shall—
(A) conduct periodic audits of a statistically valid sample of the total number of determinations made by the Internal Revenue Service to deny written requests to disclose information to taxpayers on the basis of
(B) establish and maintain a toll-free telephone number for taxpayers to use to confidentially register complaints of misconduct by Internal Revenue Service employees and incorporate the telephone number in the statement required by section 6227 of the Omnibus Taxpayer Bill of Rights (Internal Revenue Service Publication No. 1); and
(C) not later than December 31, 2010, submit a written report to Congress on the implementation of section 6103(k)(10).
(e) Independent Office of Appeals
(1) Establishment
There is established in the Internal Revenue Service an office to be known as the "Internal Revenue Service Independent Office of Appeals".
(2) Chief of Appeals
(A) In general
The Internal Revenue Service Independent Office of Appeals shall be under the supervision and direction of an official to be known as the "Chief of Appeals". The Chief of Appeals shall report directly to the Commissioner of Internal Revenue and shall be entitled to compensation at the same rate as the highest rate of basic pay established for the Senior Executive Service under
(B) Appointment
The Chief of Appeals shall be appointed by the Commissioner of Internal Revenue without regard to the provisions of
(C) Qualifications
An individual appointed under subparagraph (B) shall have experience and expertise in—
(i) administration of, and compliance with, Federal tax laws,
(ii) a broad range of compliance cases, and
(iii) management of large service organizations.
(3) Purposes and duties of office
It shall be the function of the Internal Revenue Service Independent Office of Appeals to resolve Federal tax controversies without litigation on a basis which—
(A) is fair and impartial to both the Government and the taxpayer,
(B) promotes a consistent application and interpretation of, and voluntary compliance with, the Federal tax laws, and
(C) enhances public confidence in the integrity and efficiency of the Internal Revenue Service.
(4) Right of appeal
The resolution process described in paragraph (3) shall be generally available to all taxpayers.
(5) Limitation on designation of cases as not eligible for referral to Independent Office of Appeals
(A) In general
If any taxpayer which is in receipt of a notice of deficiency authorized under section 6212 requests referral to the Internal Revenue Service Independent Office of Appeals and such request is denied, the Commissioner of Internal Revenue shall provide such taxpayer a written notice which—
(i) provides a detailed description of the facts involved, the basis for the decision to deny the request, and a detailed explanation of how the basis of such decision applies to such facts, and
(ii) describes the procedures prescribed under subparagraph (C) for protesting the decision to deny the request.
(B) Report to Congress
The Commissioner of Internal Revenue shall submit a written report to Congress on an annual basis which includes the number of requests described in subparagraph (A) which were denied and the reasons (described by category) that such requests were denied.
(C) Procedures for protesting denial of request
The Commissioner of Internal Revenue shall prescribe procedures for protesting to the Commissioner of Internal Revenue a denial of a request described in subparagraph (A).
(D) Not applicable to frivolous positions
This paragraph shall not apply to a request for referral to the Internal Revenue Service Independent Office of Appeals which is denied on the basis that the issue involved is a frivolous position (within the meaning of section 6702(c)).
(6) Staff
(A) In general
All personnel in the Internal Revenue Service Independent Office of Appeals shall report to the Chief of Appeals.
(B) Access to staff of Office of the Chief Counsel
The Chief of Appeals shall have authority to obtain legal assistance and advice from the staff of the Office of the Chief Counsel. The Chief Counsel shall ensure, to the extent practicable, that such assistance and advice is provided by staff of the Office of the Chief Counsel who were not involved in the case with respect to which such assistance and advice is sought and who are not involved in preparing such case for litigation.
(7) 1 Access to case files
(A) In general
In any case in which a conference with the Internal Revenue Service Independent Office of Appeals has been scheduled upon request of a specified taxpayer, the Chief of Appeals shall ensure that such taxpayer is provided access to the nonprivileged portions of the case file on record regarding the disputed issues (other than documents provided by the taxpayer to the Internal Revenue Service) not later than 10 days before the date of such conference.
(B) Taxpayer election to expedite conference
If the taxpayer so elects, subparagraph (A) shall be applied by substituting "the date of such conference" for "10 days before the date of such conference".
(C) Specified taxpayer
For purposes of this paragraph—
(i) In general
The term "specified taxpayer" means—
(I) in the case of any taxpayer who is a natural person, a taxpayer whose adjusted gross income does not exceed $400,000 for the taxable year to which the dispute relates, and
(II) in the case of any other taxpayer, a taxpayer whose gross receipts do not exceed $5 million for the taxable year to which the dispute relates.
(ii) Aggregation rule
Rules similar to the rules of section 448(c)(2) shall apply for purposes of clause (i)(II).
(f) Internal Revenue Service Chief Information Officer
(1) In general
There shall be in the Internal Revenue Service an Internal Revenue Service Chief Information Officer (hereafter referred to in this subsection as the "IRS CIO") who shall be appointed by the Commissioner of Internal Revenue.
(2) Centralized responsibility for Internal Revenue Service information technology
The Commissioner of Internal Revenue (and the Secretary) shall act through the IRS CIO with respect to all development, implementation, and maintenance of information technology for the Internal Revenue Service. Any reference in this subsection to the IRS CIO which directs the IRS CIO to take any action, or to assume any responsibility, shall be treated as a reference to the Commissioner of Internal Revenue acting through the IRS CIO.
(3) General duties and responsibilities
The IRS CIO shall—
(A) be responsible for the development, implementation, and maintenance of information technology for the Internal Revenue Service,
(B) ensure that the information technology of the Internal Revenue Service is secure and integrated,
(C) maintain operational control of all information technology for the Internal Revenue Service,
(D) be the principal advocate for the information technology needs of the Internal Revenue Service, and
(E) consult with the Chief Procurement Officer of the Internal Revenue Service to ensure that the information technology acquired for the Internal Revenue Service is consistent with—
(i) the goals and requirements specified in subparagraphs (A) through (D), and
(ii) the strategic plan developed under paragraph (4).
(4) Strategic plan
(A) In general
The IRS CIO shall develop and implement a multiyear strategic plan for the information technology needs of the Internal Revenue Service. Such plan shall—
(i) include performance measurements of such technology and of the implementation of such plan,
(ii) include a plan for an integrated enterprise architecture of the information technology of the Internal Revenue Service,
(iii) include and take into account the resources needed to accomplish such plan,
(iv) take into account planned major acquisitions of information technology by the Internal Revenue Service, and
(v) align with the needs and strategic plan of the Internal Revenue Service.
(B) Plan updates
The IRS CIO shall, not less frequently than annually, review and update the strategic plan under subparagraph (A) (including the plan for an integrated enterprise architecture described in subparagraph (A)(ii)) to take into account the development of new information technology and the needs of the Internal Revenue Service.
(5) Scope of authority
(A) Information technology
For purposes of this subsection, the term "information technology" has the meaning given such term by
(B) Internal Revenue Service
Any reference in this subsection to the Internal Revenue Service includes a reference to all components of the Internal Revenue Service, including—
(i) the Office of the Taxpayer Advocate,
(ii) the Criminal Investigation Division of the Internal Revenue Service, and
(iii) except as otherwise provided by the Secretary with respect to information technology related to matters described in subsection (b)(3)(B), the Office of the Chief Counsel.
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
The provisions of title 5 relating to appointments in the competitive service and the Senior Executive Service, referred to in subsec. (c)(1)(B)(ii), are classified generally to
Sections 1203, 1204, and 3707 of the Internal Revenue Service Restructuring and Reform Act of 1998, referred to in subsec. (d)(1)(A)(i), (v), (E), are sections 1203, 1204, and 3707 of
Section 6227 of the Omnibus Taxpayer Bill of Rights, referred to in subsec. (d)(3)(B), is section 6227 of
Amendments
2022—Subsec. (d)(1).
Subsec. (d)(2)(A).
2019—Subsec. (c)(1)(B)(i).
Subsec. (c)(2)(B)(ii)(III).
Subsec. (c)(2)(B)(ii)(VIII) to (XIII).
Subsec. (c)(2)(B)(iii).
Subsec. (c)(2)(E).
Subsec. (c)(5).
Subsec. (e).
Subsec. (f).
2015—Subsec. (a)(3), (4).
2008—Subsec. (a)(1).
Subsec. (d)(3)(C).
1998—
1976—Subsecs. (a), (b), (c).
Subsecs. (c), (d).
1972—Subsec. (c).
Statutory Notes and Related Subsidiaries
Change of Name
Committee on Government Reform and Oversight of House of Representatives changed to Committee on Government Reform of House of Representatives by House Resolution No. 5, One Hundred Sixth Congress, Jan. 6, 1999. Committee on Government Reform of House of Representatives changed to Committee on Oversight and Government Reform of House of Representatives by House Resolution No. 6, One Hundred Tenth Congress, Jan. 5, 2007. Committee on Oversight and Government Reform of House of Representatives changed to Committee on Oversight and Reform of House of Representatives by House Resolution No. 6, One Hundred Sixteenth Congress, Jan. 9, 2019. Committee on Oversight and Reform of House of Representatives changed to Committee on Oversight and Accountability of House of Representatives by House Resolution No. 5, One Hundred Eighteenth Congress, Jan. 9, 2023.
Committee on Governmental Affairs of Senate changed to Committee on Homeland Security and Governmental Affairs of Senate, effective Jan. 4, 2005, by Senate Resolution No. 445, One Hundred Eighth Congress, Oct. 9, 2004.
Effective Date of 2019 Amendment
"(1)
"(2)
Amendment by section 1301(a)–(b)(2), (3)(B)–(c) of
Effective Date of 2015 Amendment
Effective Date of 2008 Amendment
Amendment by
Effective Date of 1998 Amendment
"(1)
"(2)
"(3)
"(A) shall not appoint any individual who was an officer or employee of the Internal Revenue Service at any time during the 2-year period ending on the date of appointment; and
"(B) need not consult with the Internal Revenue Service Oversight Board if the Oversight Board has not been appointed.
"(4)
"(A) In the case of an individual serving as Commissioner of Internal Revenue on the date of the enactment of this Act who was appointed to such position before such date, the 5-year term required by section 7803(a)(1) of such Code, as added by this section, shall begin as of the date of such appointment.
"(B) Clauses (ii), (iii), and (iv) of section 7803(c)(1)(B) of such Code, as added by this section, shall not apply to the individual serving as Taxpayer Advocate on the date of the enactment of this Act."
Savings Provisions
Coordination of IRS CIO and Chief Procurement Officer of the Internal Revenue Service
"(1)
"(A) identify all significant IRS information technology acquisitions and provide written notification to the Internal Revenue Service Chief Information Officer (hereafter referred to in this subsection as the 'IRS CIO') of each such acquisition in advance of such acquisition, and
"(B) regularly consult with the IRS CIO regarding acquisitions of information technology for the Internal Revenue Service, including meeting with the IRS CIO regarding such acquisitions upon request.
"(2)
"(A) any acquisition of information technology for the Internal Revenue Service in excess of $1 million; and
"(B) such other acquisitions of information technology for the Internal Revenue Service (or categories of such acquisitions) as the IRS CIO, in consultation with the Chief Procurement Officer of the Internal Revenue Service, may identify.
"(3)
1 See Effective Date of 2019 Amendment note below.
§7804. Other personnel
(a) Appointment and supervision
Unless otherwise prescribed by the Secretary, the Commissioner of Internal Revenue is authorized to employ such number of persons as the Commissioner deems proper for the administration and enforcement of the internal revenue laws, and the Commissioner shall issue all necessary directions, instructions, orders, and rules applicable to such persons.
(b) Posts of duty of employees in field service or traveling
Unless otherwise prescribed by the Secretary—
(1) Designation of post of duty
The Commissioner shall determine and designate the posts of duty of all such persons engaged in field work or traveling on official business outside of the District of Columbia.
(2) Detail of personnel from field service
The Commissioner may order any such person engaged in field work to duty in the District of Columbia, for such periods as the Commissioner may prescribe, and to any designated post of duty outside the District of Columbia upon the completion of such duty.
(c) Delinquent Internal Revenue officers and employees
If any officer or employee of the Treasury Department acting in connection with the internal revenue laws fails to account for and pay over any amount of money or property collected or received by him in connection with the internal revenue laws, the Secretary shall issue notice and demand to such officer or employee for payment of the amount which he failed to account for and pay over, and, upon failure to pay the amount demanded within the time specified in such notice, the amount so demanded shall be deemed imposed upon such officer or employee and assessed upon the date of such notice and demand, and the provisions of
(d) Prohibition on rehiring employees involuntarily separated
The Commissioner may not hire any individual previously employed by the Commissioner who was removed for misconduct under this subchapter or
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
Section 1203 of the Internal Revenue Service Restructuring and Reform Act of 1998, referred to in subsec. (d), is section 1203 of
Amendments
2019—Subsec. (d).
1998—
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 2019 Amendment
Effective Date of 1998 Amendment
Comprehensive Customer Service Strategy
"(a)
"(1) a plan to provide assistance to taxpayers that is secure, designed to meet reasonable taxpayer expectations, and adopts appropriate best practices of customer service provided in the private sector, including online services, telephone call back services, and training of employees providing customer services;
"(2) a thorough assessment of the services that the Internal Revenue Service can co-locate with other Federal services or offer as self-service options;
"(3) proposals to improve Internal Revenue Service customer service in the short term (the current and following fiscal year), medium term (approximately 3 to 5 fiscal years), and long term (approximately 10 fiscal years);
"(4) a plan to update guidance and training materials for customer service employees of the Internal Revenue Service, including the Internal Revenue Manual, to reflect such strategy; and
"(5) identified metrics and benchmarks for quantitatively measuring the progress of the Internal Revenue Service in implementing such strategy.
"(b)
Termination of Employment for Misconduct
"(a)
"(b)
"(1) willful failure to obtain the required approval signatures on documents authorizing the seizure of a taxpayer's home, personal belongings, or business assets;
"(2) providing a false statement under oath with respect to a material matter involving a taxpayer or taxpayer representative;
"(3) with respect to a taxpayer, taxpayer representative, or other employee of the Internal Revenue Service, the violation of—
"(A) any right under the Constitution of the United States; or
"(B) any civil right established under—
"(i) title VI or VII of the Civil Rights Act of 1964 [
"(ii) title IX of the Education Amendments of 1972 [
"(iii) the Age Discrimination in Employment Act of 1967 [
"(iv) the Age Discrimination Act of 1975 [
"(v) section 501 or 504 of the Rehabilitation Act of 1973 [
"(vi) title I of the Americans with Disabilities Act of 1990 [
"(4) falsifying or destroying documents to conceal mistakes made by any employee with respect to a matter involving a taxpayer or taxpayer representative;
"(5) assault or battery on a taxpayer, taxpayer representative, or other employee of the Internal Revenue Service, but only if there is a criminal conviction, or a final judgment by a court in a civil case, with respect to the assault or battery;
"(6) violations of the Internal Revenue Code of 1986, Department of Treasury regulations, or policies of the Internal Revenue Service (including the Internal Revenue Manual) for the purpose of retaliating against, or harassing, a taxpayer, taxpayer representative, or other employee of the Internal Revenue Service;
"(7) willful misuse of the provisions of section 6103 of the Internal Revenue Code of 1986 for the purpose of concealing information from a congressional inquiry;
"(8) willful failure to file any return of tax required under the Internal Revenue Code of 1986 on or before the date prescribed therefor (including any extensions), unless such failure is due to reasonable cause and not to willful neglect;
"(9) willful understatement of Federal tax liability, unless such understatement is due to reasonable cause and not to willful neglect; and
"(10) performing, delaying, or failing to perform (or threatening to perform, delay, or fail to perform) any official action (including any audit) with respect to a taxpayer for purpose of extracting personal gain or benefit or for a political purpose.
"(c)
"(1)
"(2)
"(3)
"(d)
"(e)
[
Employee Training Program
"(a)
"(b)
"(1) detail a comprehensive employee training program to ensure adequate customer service training;
"(2) detail a schedule for training and the fiscal years during which the training will occur;
"(3) detail the funding of the program and relevant information to demonstrate the priority and commitment of resources to the plan;
"(4) review the organizational design of customer service;
"(5) provide for the implementation of a performance development system; and
"(6) provide for at least 16 hours of conflict management training during fiscal year 1999 for employees conducting collection activities."
Cataloging Complaints
Use of Pseudonyms by Internal Revenue Service Employees
"(a)
"(1) adequate justification for the use of a pseudonym is provided by the employee, including protection of personal safety; and
"(2) such use is approved by the employee's supervisor before the pseudonym is used.
"(b)
Reports on Misconduct of IRS Employees
"(1) all categories of instances involving the misconduct of employees of the Internal Revenue Service during the preceding calendar year, and
"(2) the disposition during the preceding calendar year of any such instances (without regard to the year of the misconduct)."
Taxpayers' Rights, Courtesy and Cross-Cultural Relations Training
Basis for Evaluation of Internal Revenue Service Employees
"(a)
"(1) to evaluate employees; or
"(2) to impose or suggest production quotas or goals with respect to such employees.
"(b)
"(c)
"(d)
"(e)
Sense of Congress as to Increased Internal Revenue Service Funding for Taxpayer Assistance and Enforcement
"(a)
"(1) the Internal Revenue Service estimates that the amount of taxes owed for 1986 will exceed the amount of taxes collected for such year by $100 billion;
"(2) the current taxpayer compliance rate stands at 81.5 percent;
"(3) the tax gap can be significantly reduced by enhancing taxpayer assistance services and enforcement; and
"(4) the Appropriations Committee of the House of Representatives, in its fiscal year 1988 Internal Revenue Service appropriation, took a step in the direction of providing additional funding for taxpayer assistance and enforcement efforts.
"(b) It is the sense of the Congress that:
"(1) The Congress increase outlays for the Internal Revenue Service in fiscal year 1989 and fiscal year 1990 in the areas of taxpayer assistance and enforcement by $.7 billion in fiscal year 1989 for a revenue total of $3.2 billion and by $.8 billion in fiscal year 1990 for a revenue total of $4.4 billion. The net revenue increase would be $2.5 billion in fiscal year 1989 and $3.6 billion in fiscal year 1990, or a net revenue increase over the House Appropriations Committee recommendations of $.4 billion in fiscal year 1989 and $1.3 billion in fiscal year 1990.
"(2) The Internal Revenue Service offer improved taxpayer assistance and enforcement efforts by using the aforementioned outlays in areas recommended by, or consistent with the recommendations of, the 'Dorgan Task Force Report'. Taxpayer assistance efforts would include providing expanded taxpayer education programs, instituting pilot programs of taxmobiles in rural areas, and upgrading the quality of telephone assistance. Taxpayer enforcement efforts would include raising the audit rate from 1.1 percent toward 2.5 percent, restoring resources to criminal investigations, and the collection of delinquent accounts.
"(3) The Congress should undertake an experimental multiyear authorization and 2-year appropriation for the Internal Revenue Service consistent with the recommendations in
"(4) Increased funding should be provided for compilation and analysis of statistics of income and research.
The Internal Revenue Service must issue a report on the extent of the tax gap and the measures that could be undertaken to decrease the tax gap. The report must utilize more current data than has been utilized recently. The report must be issued by April 15, 1989. The Internal Revenue Service must also report annually on the improvements being made in the audit rate, taxpayer assistance, and enforcement efforts."
Tax Counseling for the Elderly
"(a)
"(1)
"(2)
"(A) preferential access to Internal Revenue Service taxpayer service representatives for the purpose of making available technical information needed during the course of the volunteers' work;
"(B) material to be used in making elderly persons aware of the availability of assistance under volunteer taxpayer assistance programs under this section; and
"(C) technical materials and publications to be used by such volunteers.
"(b)
"(1) to provide assistance to organizations which demonstrate, to the satisfaction of the Secretary, that their volunteers are adequately trained and competent to render effective tax counseling to the elderly;
"(2) to provide for the training of such volunteers, and to assist in such training, to insure that such volunteers are qualified to provide tax counseling assistance to elderly individuals;
"(3) to provide reimbursement to volunteers through such organizations for transportation, meals, and other expenses incurred by them in training or providing tax counseling assistance under this section, and such other support and assistance as he determines to be appropriate in carrying out the provisions of this section;
"(4) to provide for the use of services, personnel, and facilities of Federal executive agencies and of State and local public agencies with their consent, with or without reimbursement therefor; and
"(5) to prescribe such rules and regulations as he deems necessary to carry out the provisions of this section.
"(c)
"(1)
"(2)
"(d)
"(e)
"(1) The term 'Secretary' means the Secretary of the Treasury or his delegate.
"(2) The term 'elderly individual' means an individual who has attained the age of 60 years as of the close of his taxable year.
"(3) The term 'Federal income tax return' means any return required under
"(f)
§7805. Rules and regulations
(a) Authorization
Except where such authority is expressly given by this title to any person other than an officer or employee of the Treasury Department, the Secretary shall prescribe all needful rules and regulations for the enforcement of this title, including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue.
(b) Retroactivity of regulations
(1) In general
Except as otherwise provided in this subsection, no temporary, proposed, or final regulation relating to the internal revenue laws shall apply to any taxable period ending before the earliest of the following dates:
(A) The date on which such regulation is filed with the Federal Register.
(B) In the case of any final regulation, the date on which any proposed or temporary regulation to which such final regulation relates was filed with the Federal Register.
(C) The date on which any notice substantially describing the expected contents of any temporary, proposed, or final regulation is issued to the public.
(2) Exception for promptly issued regulations
Paragraph (1) shall not apply to regulations filed or issued within 18 months of the date of the enactment of the statutory provision to which the regulation relates.
(3) Prevention of abuse
The Secretary may provide that any regulation may take effect or apply retroactively to prevent abuse.
(4) Correction of procedural defects
The Secretary may provide that any regulation may apply retroactively to correct a procedural defect in the issuance of any prior regulation.
(5) Internal regulations
The limitation of paragraph (1) shall not apply to any regulation relating to internal Treasury Department policies, practices, or procedures.
(6) Congressional authorization
The limitation of paragraph (1) may be superseded by a legislative grant from Congress authorizing the Secretary to prescribe the effective date with respect to any regulation.
(7) Election to apply retroactively
The Secretary may provide for any taxpayer to elect to apply any regulation before the dates specified in paragraph (1).
(8) Application to rulings
The Secretary may prescribe the extent, if any, to which any ruling (including any judicial decision or any administrative determination other than by regulation) relating to the internal revenue laws shall be applied without retroactive effect.
(c) Preparation and distribution of regulations, forms, stamps, and other matters
The Secretary shall prepare and distribute all the instructions, regulations, directions, forms, blanks, stamps, and other matters pertaining to the assessment and collection of internal revenue.
(d) Manner of making elections prescribed by Secretary
Except to the extent otherwise provided by this title, any election under this title shall be made at such time and in such manner as the Secretary shall prescribe.
(e) Temporary regulations
(1) Issuance
Any temporary regulation issued by the Secretary shall also be issued as a proposed regulation.
(2) 3-year duration
Any temporary regulation shall expire within 3 years after the date of issuance of such regulation.
(f) Review of impact of regulations on small business
(1) Submissions to Small Business Administration
After publication of any proposed or temporary regulation by the Secretary, the Secretary shall submit such regulation to the Chief Counsel for Advocacy of the Small Business Administration for comment on the impact of such regulation on small business. Not later than the date 4 weeks after the date of such submission, the Chief Counsel for Advocacy shall submit comments on such regulation to the Secretary.
(2) Consideration of comments
In prescribing any final regulation which supersedes a proposed or temporary regulation which had been submitted under this subsection to the Chief Counsel for Advocacy of the Small Business Administration—
(A) the Secretary shall consider the comments of the Chief Counsel for Advocacy on such proposed or temporary regulation, and
(B) the Secretary shall discuss any response to such comments in the preamble of such final regulation.
(3) Submission of certain final regulations
In the case of the promulgation by the Secretary of any final regulation (other than a temporary regulation) which does not supersede a proposed regulation, the requirements of paragraphs (1) and (2) shall apply; except that—
(A) the submission under paragraph (1) shall be made at least 4 weeks before the date of such promulgation, and
(B) the consideration (and discussion) required under paragraph (2) shall be made in connection with the promulgation of such final regulation.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1998—Subsec. (d).
1996—Subsec. (b).
1990—Subsec. (f).
1988—Subsecs. (e), (f).
1984—
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 1996 Amendment
Effective Date of 1990 Amendment
Effective Date of 1988 Amendment
Effective Date of 1984 Amendment
Amendment by
Form 1040SR for Seniors
"(a)
"(1) the form shall be available only to individuals who have attained age 65 as of the close of the taxable year,
"(2) the form may be used even if income for the taxable year includes—
"(A) social security benefits (as defined in section 86(d) of the Internal Revenue Code of 1986),
"(B) distributions from qualified retirement plans (as defined in section 4974(c) of such Code), annuities or other such deferred payment arrangements,
"(C) interest and dividends, or
"(D) capital gains and losses taken into account in determining adjusted net capital gain (as defined in section 1(h)(3) of such Code), and
"(3) the form shall be available without regard to the amount of any item of taxable income or the total amount of taxable income for the taxable year.
"(b)
Internet Availability
§7806. Construction of title
(a) Cross references
The cross references in this title to other portions of the title, or other provisions of law, where the word "see" is used, are made only for convenience, and shall be given no legal effect.
(b) Arrangement and classification
No inference, implication, or presumption of legislative construction shall be drawn or made by reason of the location or grouping of any particular section or provision or portion of this title, nor shall any table of contents, table of cross references, or similar outline, analysis, or descriptive matter relating to the contents of this title be given any legal effect. The preceding sentence also applies to the sidenotes and ancillary tables contained in the various prints of this Act before its enactment into law.
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
This Act, referred to in subsec. (b), is act Aug. 16, 1954.
§7807. Rules in effect upon enactment of this title
(a) Interim provision for administration of title
Until regulations are promulgated under any provision of this title which depends for its application upon the promulgation of regulations (or which is to be applied in such manner as may be prescribed by regulations) all instructions, rules or regulations which are in effect immediately prior to the enactment of this title shall, to the extent such instructions, rules, or regulations could be prescribed as regulations under authority of such provision, be applied as if promulgated as regulations under such provision.
(b) Provisions of this title corresponding to prior internal revenue laws
(1) Reference to law applicable to prior period
Any provision of this title which refers to the application of any portion of this title to a prior period (or which depends upon the application to a prior period of any portion of this title) shall, when appropriate and consistent with the purpose of such provision, be deemed to refer to (or depend upon the application of) the corresponding provision of the Internal Revenue Code of 1939 or of such other internal revenue laws as were applicable to the prior period.
(2) Elections or other acts
If an election or other act under the provisions of the Internal Revenue Code of 1939 would, if this title had not been enacted, be given effect for a period subsequent to the date of enactment of this title, and if corresponding provisions are contained in this title, such election or other act shall be given effect under the corresponding provisions of this title.
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
The Internal Revenue Code of 1939, referred to in subsec. (b), is act Feb. 10, 1939, ch. 2,
§7808. Depositaries for collections
The Secretary is authorized to designate one or more depositaries in each State for the deposit and safe-keeping of the money collected by virtue of the internal revenue laws; and the receipt of the proper officer of such depositary to the proper officer or employee of the Treasury Department for the money deposited by him shall be a sufficient voucher for such Treasury officer or employee in the settlement of his accounts.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1976—
§7809. Deposit of collections
(a) General rule
Except as provided in subsections (b) and (c) and in sections 6306, 7651, 7652, 7654, and 7810, the gross amount of all taxes and revenues received under the provisions of this title, and collections of whatever nature received or collected by authority of any internal revenue law, shall be paid daily into the Treasury of the United States under instructions of the Secretary as internal revenue collections, by the officer or employee receiving or collecting the same, without any abatement or deduction on account of salary, compensation, fees, costs, charges, expenses, or claims of any description. A certificate of such payment, stating the name of the depositor and the specific account on which the deposit was made, signed by the Treasurer of the United States, designated depositary, or proper officer of a deposit bank, shall be transmitted to the Secretary.
(b) Deposit funds
In accordance with instructions of the Secretary, there shall be deposited with the Treasurer of the United States in a deposit fund account—
(1) Sums offered in compromise
Sums offered in compromise under the provisions of section 7122;
(2) Sums offered for purchase of real estate
Sums offered for the purchase of real estate under the provisions of section 7506;
(3) Surplus proceeds in sales under levy
Surplus proceeds in any sale under levy, after making allowance for the amount of the tax, interest, penalties, and additions thereto, and for costs and charges of the levy and sale; and
(4) Surplus proceeds in sales of redeemed property
Surplus proceeds in any sale under section 7506 of real property redeemed by the United States, after making allowance for the amount of the tax, interest, penalties, and additions thereto, and for the costs of sale.
Upon the acceptance of such offer in compromise or offer for the purchase of such real estate, the amount so accepted shall be withdrawn from such deposit fund account and deposited in the Treasury of the United States as internal revenue collections. Upon the rejection of any such offer, the Secretary shall refund to the maker of such offer the amount thereof.
(c) Deposit of certain receipts
Moneys received in payment for—
(1) work or services performed pursuant to section 6103(p) (relating to furnishing of copies of returns or of return information), and section 6108(b) (relating to special statistical studies and compilations);
(2) work or services performed (including materials supplied) pursuant to section 7516 (relating to the supplying of training and training aids on request);
(3) other work or services performed for a State or a department or agency of the Federal Government (subject to all provisions of law and regulations governing disclosure of information) in supplying copies of, or data from, returns, statements, or other documents filed under authority of this title or records maintained in connection with the administration and enforcement of this title; and
(4) work or services performed (including materials supplied) pursuant to section 6110 (relating to public inspection of written determinations),
shall be deposited in a separate account which may be used to reimburse appropriations which bore all or part of the costs of such work or services, or to refund excess sums when necessary.
(d) Deposit of funds for law enforcement agency account
(1) In general
In the case of any amounts recovered as the result of information provided to the Internal Revenue Service by State and local law enforcement agencies which substantially contributed to such recovery, an amount equal to 10 percent of such amounts shall be deposited in a separate account which shall be used to make the reimbursements required under section 7624.
(2) Deposit in Treasury as internal revenue collections
If any amounts remain in such account after payment of any qualified costs incurred under section 7624, such amounts shall be withdrawn from such account and deposited in the Treasury of the United States as internal revenue collections.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2018—Subsec. (c)(1).
2004—Subsec. (a).
1988—Subsec. (d).
1976—Subsec. (a).
Subsec. (b).
Subsec. (c)(1).
Subsec. (c)(4).
1966—Subsecs. (a), (b)(4).
1962—Subsec. (a).
Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1976 Amendments
Amendment by section 1202(h)(5) of
Effective Date of 1966 Amendment
Amendment by
Authorization of Appropriations
§7810. Revolving fund for redemption of real property
(a) Establishment of fund
There is established a revolving fund, under the control of the Secretary, which shall be available without fiscal year limitation for all expenses necessary for the redemption (by the Secretary) of real property as provided in section 7425(d) and
(b) Reimbursement of fund
The fund shall be reimbursed from the proceeds of a subsequent sale of real property redeemed by the United States in an amount equal to the amount expended out of such fund for such redemption.
(c) System of accounts
The Secretary shall maintain an adequate system of accounts for such fund and prepare annual reports on the basis of such accounts.
(Added
Editorial Notes
Amendments
1984—Subsec. (a).
1976—
Statutory Notes and Related Subsidiaries
Effective Date
Section applicable after Nov. 2, 1966, regardless of when title or lien of United States arose or when lien or interest of another person was acquired, with certain exceptions, see section 114(a)–(c) of
§7811. Taxpayer Assistance Orders
(a) Authority to issue
(1) In general
Upon application filed by a taxpayer with the Office of the Taxpayer Advocate (in such form, manner, and at such time as the Secretary shall by regulations prescribe), the National Taxpayer Advocate may issue a Taxpayer Assistance Order if—
(A) the National Taxpayer Advocate determines the taxpayer is suffering or about to suffer a significant hardship as a result of the manner in which the internal revenue laws are being administered by the Secretary; or
(B) the taxpayer meets such other requirements as are set forth in regulations prescribed by the Secretary.
(2) Determination of hardship
For purposes of paragraph (1), a significant hardship shall include—
(A) an immediate threat of adverse action;
(B) a delay of more than 30 days in resolving taxpayer account problems;
(C) the incurring by the taxpayer of significant costs (including fees for professional representation) if relief is not granted; or
(D) irreparable injury to, or a long-term adverse impact on, the taxpayer if relief is not granted.
(3) Standard where administrative guidance not followed
In cases where any Internal Revenue Service employee is not following applicable published administrative guidance (including the Internal Revenue Manual), the National Taxpayer Advocate shall construe the factors taken into account in determining whether to issue a Taxpayer Assistance Order in the manner most favorable to the taxpayer.
(b) Terms of a Taxpayer Assistance Order
The terms of a Taxpayer Assistance Order may require the Secretary within a specified time period—
(1) to release property of the taxpayer levied upon, or
(2) to cease any action, take any action as permitted by law, or refrain from taking any action, with respect to the taxpayer under—
(A)
(B) subchapter B of
(C)
(D) any other provision of law which is specifically described by the National Taxpayer Advocate in such order.
(c) Authority to modify or rescind
Any Taxpayer Assistance Order issued by the National Taxpayer Advocate under this section may be modified or rescinded—
(1) only by the National Taxpayer Advocate, the Commissioner of Internal Revenue, or the Deputy Commissioner of Internal Revenue, and
(2) only if a written explanation of the reasons for the modification or rescission is provided to the National Taxpayer Advocate.
(d) Suspension of running of period of limitation
The running of any period of limitation with respect to any action described in subsection (b) shall be suspended for—
(1) the period beginning on the date of the taxpayer's application under subsection (a) and ending on the date of the National Taxpayer Advocate's decision with respect to such application, and
(2) any period specified by the National Taxpayer Advocate in a Taxpayer Assistance Order issued pursuant to such application.
(e) Independent action of National Taxpayer Advocate
Nothing in this section shall prevent the National Taxpayer Advocate from taking any action in the absence of an application under subsection (a).
(f) National Taxpayer Advocate
For purposes of this section, the term "National Taxpayer Advocate" includes any designee of the National Taxpayer Advocate.
(g) Application to persons performing services under a qualified tax collection contract
Any order issued or action taken by the National Taxpayer Advocate pursuant to this section shall apply to persons performing services under a qualified tax collection contract (as defined in section 6306(b)) to the same extent and in the same manner as such order or action applies to the Secretary.
(Added
Editorial Notes
Amendments
2004—Subsec. (g).
2000—Subsec. (a)(3).
Subsec. (d)(1).
1998—Subsec. (a).
Subsec. (b)(2)(D).
Subsec. (c).
Subsec. (d)(1).
Subsec. (d)(2).
Subsec. (e).
Subsec. (f).
1996—Subsec. (a).
Subsec. (b).
Subsec. (b)(2).
Subsec. (b)(2)(D).
Subsec. (c).
Subsecs. (d)(2) to (f).
Statutory Notes and Related Subsidiaries
Effective Date of 1996 Amendment
Amendment by section 101(b)(1) of
Effective Date
Regulations
§7812. Streamlined critical pay authority for information technology positions
In the case of any position which is critical to the functionality of the information technology operations of the Internal Revenue Service—
(1)
(A) by substituting "during the period beginning on the date of the enactment of section 7812 of the Internal Revenue Code of 1986, and ending on September 30, 2025" for "Before September 30, 2013 in subsection (a)" 1,
(B) without regard to subparagraph (B) of subsection (a)(1), and
(C) by substituting "the date of the enactment of the Taxpayer First Act" for "June 1, 1998" in subsection (a)(6),
(2) section 9504 of such title 5 shall be applied by substituting "During the period beginning on the date of the enactment of section 7812 of the Internal Revenue Code of 1986, and ending on September 30, 2025" for "Before September 30, 2013" each place it appears in subsections (a) and (b), and
(3) section 9505 of such title shall be applied—
(A) by substituting "During the period beginning on the date of the enactment of section 7812 of the Internal Revenue Code of 1986, and ending on September 30, 2025" for "Before September 30, 2013" in subsection (a), and
(B) by substituting "the information technology operations" for "significant functions" in subsection (a).
(Added
Editorial Notes
References in Text
The date of the enactment of section 7812 of the Internal Revenue Code of 1986, referred to in text, is the date of enactment of
The date of the enactment of the Taxpayer First Act, referred to in par. (1)(C), is the date of enactment of
Subchapter B—Effective Date and Related Provisions
§7851. Applicability of revenue laws
(a) General rules
Except as otherwise provided in any section of this title—
(1) Subtitle A
(A) Chapters 1, 2, and 6 of this title shall apply only with respect to taxable years beginning after December 31, 1953, and ending after the date of enactment of this title, and with respect to such taxable years, chapters 1 (except sections 143 and 144) and 2, and section 3801, of the Internal Revenue Code of 1939 are hereby repealed.
(B)
(C) Any provision of subtitle A of this title the applicability of which is stated in terms of a specific date (occurring after December 31, 1953), or in terms of taxable years ending after a specific date (occurring after December 31, 1953), shall apply to taxable years ending after such specific date. Each such provision shall, in the case of a taxable year subject to the Internal Revenue Code of 1939, be deemed to be included in the Internal Revenue Code of 1939, but shall be applicable only to taxable years ending after such specific date. The provisions of the Internal Revenue Code of 1939 superseded by provisions of subtitle A of this title the applicability of which is stated in terms of a specific date (occurring after December 31, 1953) shall be deemed to be included in subtitle A of this title, but shall be applicable only to the period prior to the taking effect of the corresponding provision of subtitle A.
(D) Effective with respect to taxable years ending after March 31, 1954, and subject to tax under
(i) Sections 13(b)(3), 26(b)(2)(C), 26(h) (1)(C) (including the comma and the word "and" immediately preceding such section), 26(i)(3), 108(k), 207(a)(1)(C), 207(a)(3)(C), and the last sentence of section 362(b)(3) of such Code are hereby repealed; and
(ii) Sections 13(b)(2), 26(b)(2)(B), 26(h) (1)(B), 26(i)(2), 207(a)(1)(B), 207(a)(3)(B), 421(a)(1)(B), and the second sentence of section 362(b)(3) of such Code are hereby amended by striking out "and before April 1, 1954" (and any accompanying punctuation) wherever appearing therein.
(2) Subtitle B
(A)
(B)
(3) Subtitle C
Subtitle C of this title shall apply only with respect to remuneration paid after December 31, 1954, except that
(4) Subtitle D
Subtitle D of this title shall take effect on January 1, 1955. Subtitles B and C of the Internal Revenue Code of 1939 (except chapters 7, 9, 15, 26, and 28, subchapter B of
(5) Subtitle E
Subtitle E shall take effect on January 1, 1955, except that the provisions in section 5411 permitting the use of a brewery under regulations prescribed by the Secretary for the purpose of producing and bottling soft drinks, section 5554, and
(6) Subtitle F
(A) General rule
The provisions of subtitle F shall take effect on the day after the date of enactment of this title and shall be applicable with respect to any tax imposed by this title. The provisions of subtitle F shall apply with respect to any tax imposed by the Internal Revenue Code of 1939 only to the extent provided in subparagraphs (B) and (C) of this paragraph.
(B) Assessment, collection, and refunds
Notwithstanding the provisions of subparagraph (A), and notwithstanding any contrary provision of subchapter A of
(C) Taxes imposed under the 1939 Code
After the date of enactment of this title, the following provisions of subtitle F shall apply to the taxes imposed by the Internal Revenue Code of 1939, notwithstanding any contrary provisions of such code:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(D) Chapter 28 and subtitle D of 1939 Code
Except as otherwise provided in subparagraphs (B) and (C), the provisions of
(7) Other provisions
If the effective date of any provision of the Internal Revenue Code of 1986 is not otherwise provided in this section or in any other section of this title, such provision shall take effect on the day after the date of enactment of this title. If the repeal of any provision of the Internal Revenue Code of 1939 is not otherwise provided by this section or by any other section of this title, such provision is hereby repealed effective on the day after the date of enactment of this title.
(b) Effect of repeal of Internal Revenue Code of 1939
(1) Existing rights and liabilities
The repeal of any provision of the Internal Revenue Code of 1939 shall not affect any act done or any right accruing or accrued, or any suit or proceeding had or commenced in any civil cause, before such repeal; but all rights and liabilities under such code shall continue, and may be enforced in the same manner, as if such repeal had not been made.
(2) Existing offices
The repeal of any provision of the Internal Revenue Code of 1939 shall not abolish, terminate, or otherwise change—
(A) any internal revenue district,
(B) any office, position, board, or committee, or
(C) the appointment or employment of any officer or employee,
existing immediately preceding the enactment of this title, the continuance of which is not manifestly inconsistent with any provision of this title, but the same shall continue unless and until changed by lawful authority.
(3) Existing delegations of authority
Any delegation of authority made pursuant to the provisions of Reorganization Plan Numbered 26 of 1950 or Reorganization Plan Numbered 1 of 1952, including any redelegation of authority made pursuant to any such delegation of authority, and in effect under the Internal Revenue Code of 1939 immediately preceding the enactment of this title shall, notwithstanding the repeal of such code, remain in effect for purposes of this title, unless distinctly inconsistent or manifestly incompatible with the provisions of this title. The preceding sentence shall not be construed as limiting in any manner the power to amend, modify, or revoke any such delegation or redelegation of authority.
(c) Crimes and forfeitures
All offenses committed, and all penalties or forfeitures incurred, under any provision of law hereby repealed, may be prosecuted and punished in the same manner and with the same effect as if this title had not been enacted.
(d) Periods of limitation
All periods of limitation, whether applicable to civil causes and proceedings, or to the prosecution of offenses, or for the recovery of penalties or forfeitures, hereby repealed shall not be affected thereby, but all suits, proceedings, or prosecutions, whether civil or criminal, for causes arising, or acts done or committed, prior to said repeal, may be commenced and prosecuted within the same time as if this title had not been enacted.
(e) Reference to other provisions
For the purpose of applying the Internal Revenue Code of 1939 or the Internal Revenue Code of 1986 to any period, any reference in either such code to another provision of the Internal Revenue Code of 1939 or the Internal Revenue Code of 1986 which is not then applicable to such period shall be deemed a reference to the corresponding provision of the other code which is then applicable to such period.
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
The date of enactment of this title, referred to in subsecs. (a)(1)(A), (5), (6)(A) to (C), (7), (b)(2), (3), is Aug. 16, 1954.
Various provisions of the Internal Revenue Code of 1939, referred to in text and described below, have corresponding provisions appearing in the Internal Revenue Code of 1986 [formerly I.R.C. 1954]. For table of comparisons of the 1939 Code to the 1986 Code, see Table I preceding
Sections 143 and 144 of the Internal Revenue Code of 1939, referred to in subsec. (a)(1)(A), (B), were classified to sections 143 and 144 of former Title 26, Internal Revenue Code.
Section 3801 of the Internal Revenue Code of 1939, referred to in subsec. (a)(1)(A), was classified to section 3801 of former Title 26, Internal Revenue Code. Section 3801 was repealed by subsec. (a)(1)(A) of this section.
The Internal Revenue Code of 1939, referred to in subsecs. (a)(1)(C), (4), (6)(A) to (C), (C)(iii), (D), (7), (b)(1) to (3), (e), is act Feb. 10, 1939, ch. 2,
Sections 13(b)(3), 26(b)(2)(C), 26(h)(1)(C), 26(i)(3), 108(k), 207(a)(1)(C), 207(a)(3)(C), and the last sentence of section 362(b)(3), referred to in subsec. (a)(1)(D)(i), were classified to former sections 13(b)(3), 26(b)(2)(C), (h)(1)(C), (i)(3), 108(k), 207(a)(1)(C), (3)(C), and 362(b)(3) of former Title 26, Internal Revenue Code. Sections 13(b)(3), 26(b)(2)(C), (h)(1)(C), (i)(3), 108(k), 207(a)(1)(C), (3)(C), and 362(b)(3) were repealed by subsec. (a)(1)(d)(i) of this section.
Sections 13(b)(2), 26(b)(2)(B), 26(h)(1)(B), 26(i)(2), 207(a)(1)(B), 207(a)(3)(B), 421(a)(1)(B), and the second sentence of section 362(b)(3), referred to in subsec. (a)(1)(D)(ii), were classified to sections 13(b)(2), 26(b)(2)(B), (h)(1)(B), (i)(2), 207(a)(1)(B), (3)(B), 421(a)(1)(B), and 362(b)(3) of former Title 26, Internal Revenue Code.
Subtitles B and C of the Internal Revenue Code of 1939, referred to in subsec. (a)(4), were comprised of chapters 6 to 28, sections 1200 to 3361, and chapters 29 to 33A, sections 3400 to 3540, respectively, of former Title 26, Internal Revenue Code. Sections 1200 to 1207 of former Title 26 were repealed by act Nov. 8, 1945, ch. 453, title II, §201,
Subchapter B of
Parts VII and VIII of subchapter A of
Section 6416(b)(2)(H), referred to in subsec. (a)(4), was repealed by
Section 4082, referred to in subsec. (a)(4), was amended generally by
Section 2450(a) of the Internal Revenue Code of 1939, referred to in subsec. (a)(4), was classified to section 2450 of former Title 26, Internal Revenue Code. Section 2450 was repealed by subsec. (a)(4) of this section.
The Excise Tax Reduction Act of 1954, referred to in subsec. (a)(4), is act Mar. 31, 1954, ch. 126,
Subtitle D of the Internal Revenue Code of 1939, referred to in subsec. (a)(6)(B), (D), was comprised of chapters 34 to 38, sections 3600 to 3781 of former Title 26, Internal Revenue Code. Chapters 35, 36, and 37 of subtitle D of the Internal Revenue Code of 1939 were comprised of sections 3640 to 3647, 3650 to 3762, and 3770 to 3781, respectively, of former Title 26.
Section 3777 of the Internal Revenue Code of 1939, referred to in subsec. (a)(6)(B), was classified to section 3777 of former Title 26, Internal Revenue Code. Section 3777 was repealed by subsec. (a)(6)(B) of this section.
Reorganization Plan Numbered 26 of 1950, referred to in subsec. (b)(3), is Reorg. Plan No. 26 of 1950, eff. July 31, 1950, 15 F.R. 4935,
Reorganization Plan Numbered 1 of 1952, referred to in subsec. (b)(3), is Reorg. Plan No. 1 of 1952, eff. Mar. 14, 1952, 17 F.R. 2243,
Amendments
2018—Subsec. (a)(1)(A).
Subsec. (a)(1)(B).
1986—Subsecs. (a)(7), (e).
1976—Subsec. (a)(5).
1 See References in Text note below.
§7852. Other applicable rules
(a) Separability clause
If any provision of this title, or the application thereof to any person or circumstances, is held invalid, the remainder of the title, and the application of such provision to other persons or circumstances, shall not be affected thereby.
(b) Reference in other laws to Internal Revenue Code of 1939
Any reference in any other law of the United States or in any Executive order to any provision of the Internal Revenue Code of 1939 shall, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof, be deemed also to refer to the corresponding provision of this title.
(c) Items not to be twice included in income or deducted therefrom
Except as otherwise distinctly expressed or manifestly intended, the same item (whether of income, deduction, credit, or otherwise) shall not be taken into account both in computing a tax under subtitle A of this title and a tax under
(d) Treaty obligations
(1) In general
For purposes of determining the relationship between a provision of a treaty and any law of the United States affecting revenue, neither the treaty nor the law shall have preferential status by reason of its being a treaty or law.
(2) Savings clause for 1954 treaties
No provision of this title (as in effect without regard to any amendment thereto enacted after August 16, 1954) shall apply in any case where its application would be contrary to any treaty obligation of the United States in effect on August 16, 1954.
(e) Privacy Act of 1974
The provisions of subsections (d)(2), (3), and (4), and (g) of
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
The Internal Revenue Code of 1939, referred to in subsec. (b), is act Feb. 10, 1939, ch. 2,
Chapters 1 and 2 of the Internal Revenue Code of 1939, referred to in subsec. (c), are chapters 1 and 2 of former Title 26, Internal Revenue Code. For history of such chapters, see References in Text note set out under
The Privacy Act of 1974, referred to in subsec. (e), is
Amendments
1988—Subsec. (d).
1976—Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by
Application of Subsec. (d) to Pub. L. 87–834
Subchapter C—Provisions Affecting More Than One Subtitle
Editorial Notes
Amendments
2004—
1988—
1984—
§7871. Indian tribal governments treated as States for certain purposes
(a) General rule
An Indian tribal government shall be treated as a State—
(1) for purposes of determining whether and in what amount any contribution or transfer to or for the use of such government (or a political subdivision thereof) is deductible under—
(A) section 170 (relating to income tax deduction for charitable, etc., contributions and gifts),
(B) sections 2055 and 2106(a)(2) (relating to estate tax deduction for transfers of public, charitable, and religious uses), or
(C) section 2522 (relating to gift tax deduction for charitable and similar gifts);
(2) subject to subsection (b), for purposes of any exemption from, credit or refund of, or payment with respect to, an excise tax imposed by—
(A)
(B)
(C) subchapter B of
(D) subchapter D of
(3) for purposes of section 164 (relating to deduction for taxes);
(4) subject to subsection (c), for purposes of section 103 (relating to State and local bonds);
(5) for purposes of section 511(a)(2)(B) (relating to the taxation of colleges and universities which are agencies or instrumentalities of governments or their political subdivisions);
(6) for purposes of—
(A) section 105(e) (relating to accident and health plans),
(B) section 403(b)(1)(A)(ii) (relating to the taxation of contributions of certain employers for employee annuities), and
(C) section 454(b)(2) (relating to discount obligations); and
(7) for purposes of—
(A)
(B) subchapter A of
(b) Additional requirements for excise tax exemptions
Paragraph (2) of subsection (a) shall apply with respect to any transaction only if, in addition to any other requirement of this title applicable to similar transactions involving a State or political subdivision thereof, the transaction involves the exercise of an essential governmental function of the Indian tribal government.
(c) Additional requirements for tax-exempt bonds
(1) In general
Subsection (a) of section 103 shall apply to any obligation (not described in paragraph (2)) issued by an Indian tribal government (or subdivision thereof) only if such obligation is part of an issue substantially all of the proceeds of which are to be used in the exercise of any essential governmental function.
(2) No exemption for private activity bonds
Except as provided in paragraph (3), subsection (a) of section 103 shall not apply to any private activity bond (as defined in section 141(a)) issued by an Indian tribal government (or subdivision thereof).
(3) Exception for certain private activity bonds
(A) In general
In the case of an obligation to which this paragraph applies—
(i) paragraph (2) shall not apply,
(ii) such obligation shall be treated for purposes of this title as a qualified small issue bond, and
(iii) section 146 shall not apply.
(B) Obligations to which paragraph applies
This paragraph shall apply to any obligation issued as part of an issue if—
(i) 95 percent or more of the net proceeds of the issue are to be used for the acquisition, construction, reconstruction, or improvement of property which is of a character subject to the allowance for depreciation and which is part of a manufacturing facility (as defined in section 144(a)(12)(C)),
(ii) such issue is issued by an Indian tribal government or a subdivision thereof,
(iii) 95 percent or more of the net proceeds of the issue are to be used to finance property which—
(I) is to be located on land which, throughout the 5-year period ending on the date of issuance of such issue, is part of the qualified Indian lands of the issuer, and
(II) is to be owned and operated by such issuer,
(iv) such obligation would not be a private activity bond without regard to subparagraph (C),
(v) it is reasonably expected (at the time of issuance of the issue) that the employment requirement of subparagraph (D)(i) will be met with respect to the facility to be financed by the net proceeds of the issue, and
(vi) no principal user of such facility will be a person (or group of persons) described in section 144(a)(6)(B).
For purposes of clause (iii), section 150(a)(5) shall apply.
(C) Private activity bond rules to apply
An obligation to which this paragraph applies (other than an obligation described in paragraph (1)) shall be treated for purposes of this title as a private activity bond.
(D) Employment requirements
(i) In general
The employment requirements of this subparagraph are met with respect to a facility financed by the net proceeds of an issue if, as of the close of each calendar year in the testing period, the aggregate face amount of all outstanding tax-exempt private activity bonds issued to provide financing for the establishment which includes such facility is not more than 20 times greater than the aggregate wages (as defined by section 3121(a)) paid during the preceding calendar year to individuals (who are enrolled members of the Indian tribe of the issuer or the spouse of any such member) for services rendered at such establishment.
(ii) Failure to meet requirements
(I) In general
If, as of the close of any calendar year in the testing period, the requirements of this subparagraph are not met with respect to an establishment, section 103 shall cease to apply to interest received or accrued (on all private activity bonds issued to provide financing for the establishment) after the close of such calendar year.
(II) Exception
Subclause (I) shall not apply if the requirements of this subparagraph would be met if the aggregate face amount of all tax-exempt private activity bonds issued to provide financing for the establishment and outstanding at the close of the 90th day after the close of the calendar year were substituted in clause (i) for such bonds outstanding at the close of such calendar year.
(iii) Testing period
For purposes of this subparagraph, the term "testing period" means, with respect to an issue, each calendar year which begins more than 2 years after the date of issuance of the issue (or, in the case of a refunding obligation, the date of issuance of the original issue).
(E) Definitions
For purposes of this paragraph—
(i) Qualified Indian lands
The term "qualified Indian lands" means land which is held in trust by the United States for the benefit of an Indian tribe.
(ii) Indian tribe
The term "Indian tribe" means any Indian tribe, band, nation, or other organized group or community which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.
(iii) Net proceeds
The term "net proceeds" has the meaning given such term by section 150(a)(3).
(d) Treatment of subdivisions of Indian tribal governments as political subdivisions
For the purposes specified in subsection (a), a subdivision of an Indian tribal government shall be treated as a political subdivision of a State if (and only if) the Secretary determines (after consultation with the Secretary of the Interior) that such subdivision has been delegated the right to exercise one or more of the substantial governmental functions of the Indian tribal government.
(e) Essential governmental function
For purposes of this section, the term "essential governmental function" shall not include any function which is not customarily performed by State and local governments with general taxing powers.
(f) Tribal economic development bonds
(1) Allocation of limitation
(A) In general
The Secretary shall allocate the national tribal economic development bond limitation among the Indian tribal governments in such manner as the Secretary, in consultation with the Secretary of the Interior, determines appropriate.
(B) National limitation
There is a national tribal economic development bond limitation of $2,000,000,000.
(2) Bonds treated as exempt from tax
In the case of a tribal economic development bond—
(A) notwithstanding subsection (c), such bond shall be treated for purposes of this title in the same manner as if such bond were issued by a State,
(B) the Indian tribal government issuing such bond and any instrumentality of such Indian tribal government shall be treated as a State for purposes of section 141, and
(C) section 146 shall not apply.
(3) Tribal economic development bond
(A) In general
For purposes of this section, the term "tribal economic development bond" means any bond issued by an Indian tribal government—
(i) the interest on which would be exempt from tax under section 103 if issued by a State or local government, and
(ii) which is designated by the Indian tribal government as a tribal economic development bond for purposes of this subsection.
(B) Exceptions
Such term shall not include any bond issued as part of an issue if any portion of the proceeds of such issue are used to finance—
(i) any portion of a building in which class II or class III gaming (as defined in section 4 of the Indian Gaming Regulatory Act) is conducted or housed or any other property actually used in the conduct of such gaming, or
(ii) any facility located outside the Indian reservation (as defined in section 168(j)(6)).
(C) Limitation on amount of bonds designated
The maximum aggregate face amount of bonds which may be designated by any Indian tribal government under subparagraph (A) shall not exceed the amount of national tribal economic development bond limitation allocated to such government under paragraph (1).
(Added
Editorial Notes
References in Text
Section 4 of the Indian Gaming Regulatory Act, referred to in subsec. (f)(3)(B)(i), is classified to
Amendments
2018—Subsec. (c)(3)(D)(ii)(II).
2009—Subsec. (f).
1993—Subsec. (a)(6)(B) to (D).
1987—Subsec. (c)(2).
Subsec. (c)(3).
Subsec. (e).
1986—Subsec. (a)(4).
Subsec. (a)(6).
Subsec. (a)(6)(D).
Subsec. (c)(2).
"(A) An industrial development bond (as defined in section 103(b)(2)).
"(B) An obligation described in section 103(l)(1)(A) (relating to scholarship bonds).
"(C) A mortgage subsidy bond (as defined in paragraph (1) of section 103A(b) without regard to paragraph (2) thereof)."
1984—Subsec. (a)(6)(A).
Subsec. (a)(6)(B) to (F).
1983—Subsec. (a)(6).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Effective Date of 1986 Amendment
Amendment by section 112(b)(4) of
Amendment by section 123(b)(3) of
Amendment by section 1301(j)(6), (7) of
Amendment by section 1878(i) of
Effective Date of 1984 Amendment
Amendment by section 474(r)(41) of
Effective Date of 1983 Amendment
Amendment by
Effective Date
"(1) insofar as they relate to
"(2) insofar as they relate to section 103 of such Code, shall apply to obligations issued after December 31, 1982,
"(3) insofar as they relate to
"(4) insofar as they relate to
"(5) insofar as they relate to taxes imposed by subtitle D of such Code [
Short Title
For short title of title II of
Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States
For nonapplication of amendment by section 123(b)(3) of
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
§7872. Treatment of loans with below-market interest rates
(a) Treatment of gift loans and demand loans
(1) In general
For purposes of this title, in the case of any below-market loan to which this section applies and which is a gift loan or a demand loan, the forgone interest shall be treated as—
(A) transferred from the lender to the borrower, and
(B) retransferred by the borrower to the lender as interest.
(2) Time when transfers made
Except as otherwise provided in regulations prescribed by the Secretary, any forgone interest attributable to periods during any calendar year shall be treated as transferred (and retransferred) under paragraph (1) on the last day of such calendar year.
(b) Treatment of other below-market loans
(1) In general
For purposes of this title, in the case of any below-market loan to which this section applies and to which subsection (a)(1) does not apply, the lender shall be treated as having transferred on the date the loan was made (or, if later, on the first day on which this section applies to such loan), and the borrower shall be treated as having received on such date, cash in an amount equal to the excess of—
(A) the amount loaned, over
(B) the present value of all payments which are required to be made under the terms of the loan.
(2) Obligation treated as having original issue discount
For purposes of this title—
(A) In general
Any below-market loan to which paragraph (1) applies shall be treated as having original issue discount in an amount equal to the excess described in paragraph (1).
(B) Amount in addition to other original issue discount
Any original issue discount which a loan is treated as having by reason of subparagraph (A) shall be in addition to any other original issue discount on such loan (determined without regard to subparagraph (A)).
(c) Below-market loans to which section applies
(1) In general
Except as otherwise provided in this subsection and subsection (g), this section shall apply to—
(A) Gifts
Any below-market loan which is a gift loan.
(B) Compensation-related loans
Any below-market loan directly or indirectly between—
(i) an employer and an employee, or
(ii) an independent contractor and a person for whom such independent contractor provides services.
(C) Corporation-shareholder loans
Any below-market loan directly or indirectly between a corporation and any shareholder of such corporation.
(D) Tax avoidance loans
Any below-market loan 1 of the principal purposes of the interest arrangements of which is the avoidance of any Federal tax.
(E) Other below-market loans
To the extent provided in regulations, any below-market loan which is not described in subparagraph (A), (B), (C), or (F) if the interest arrangements of such loan have a significant effect on any Federal tax liability of the lender or the borrower.
(F) Loans to qualified continuing care facilities
Any loan to any qualified continuing care facility pursuant to a continuing care contract.
(2) $10,000 de minimis exception for gift loans between individuals
(A) In general
In the case of any gift loan directly between individuals, this section shall not apply to any day on which the aggregate outstanding amount of loans between such individuals does not exceed $10,000.
(B) De minimis exception not to apply to loans attributable to acquisition of income-producing assets
Subparagraph (A) shall not apply to any gift loan directly attributable to the purchase or carrying of income-producing assets.
(C) Cross reference
For limitation on amount treated as interest where loans do not exceed $100,000, see subsection (d)(1).
(3) $10,000 de minimis exception for compensation-related and corporate-shareholder loans
(A) In general
In the case of any loan described in subparagraph (B) or (C) of paragraph (1), this section shall not apply to any day on which the aggregate outstanding amount of loans between the borrower and lender does not exceed $10,000.
(B) Exception not to apply where 1 of principal purposes is tax avoidance
Subparagraph (A) shall not apply to any loan the interest arrangements of which have as 1 of their principal purposes the avoidance of any Federal tax.
(d) Special rules for gift loans
(1) Limitation on interest accrual for purposes of income taxes where loans do not exceed $100,000
(A) In general
For purposes of subtitle A, in the case of a gift loan directly between individuals, the amount treated as retransferred by the borrower to the lender as of the close of any year shall not exceed the borrower's net investment income for such year.
(B) Limitation not to apply where 1 of principal purposes is tax avoidance
Subparagraph (A) shall not apply to any loan the interest arrangements of which have as 1 of their principal purposes the avoidance of any Federal tax.
(C) Special rule where more than 1 gift loan outstanding
For purposes of subparagraph (A), in any case in which a borrower has outstanding more than 1 gift loan, the net investment income of such borrower shall be allocated among such loans in proportion to the respective amounts which would be treated as retransferred by the borrower without regard to this paragraph.
(D) Limitation not to apply where aggregate amount of loans exceed $100,000
This paragraph shall not apply to any loan made by a lender to a borrower for any day on which the aggregate outstanding amount of loans between the borrower and lender exceeds $100,000.
(E) Net investment income
For purposes of this paragraph—
(i) In general
The term "net investment income" has the meaning given such term by section 163(d)(4).
(ii) De minimis rule
If the net investment income of any borrower for any year does not exceed $1,000, the net investment income of such borrower for such year shall be treated as zero.
(iii) Additional amounts treated as interest
In determining the net investment income of a person for any year, any amount which would be included in the gross income of such person for such year by reason of section 1272 if such section applied to all deferred payment obligations shall be treated as interest received by such person for such year.
(iv) Deferred payment obligations
The term "deferred payment obligation" includes any market discount bond, short-term obligation, United States savings bond, annuity, or similar obligation.
(2) Special rule for gift tax
In the case of any gift loan which is a term loan, subsection (b)(1) (and not subsection (a)) shall apply for purposes of
(e) Definitions of below-market loan and forgone interest
For purposes of this section—
(1) Below-market loan
The term "below-market loan" means any loan if—
(A) in the case of a demand loan, interest is payable on the loan at a rate less than the applicable Federal rate, or
(B) in the case of a term loan, the amount loaned exceeds the present value of all payments due under the loan.
(2) Forgone interest
The term "forgone interest" means, with respect to any period during which the loan is outstanding, the excess of—
(A) the amount of interest which would have been payable on the loan for the period if interest accrued on the loan at the applicable Federal rate and were payable annually on the day referred to in subsection (a)(2), over
(B) any interest payable on the loan properly allocable to such period.
(f) Other definitions and special rules
For purposes of this section—
(1) Present value
The present value of any payment shall be determined in the manner provided by regulations prescribed by the Secretary—
(A) as of the date of the loan, and
(B) by using a discount rate equal to the applicable Federal rate.
(2) Applicable Federal rate
(A) Term loans
In the case of any term loan, the applicable Federal rate shall be the applicable Federal rate in effect under section 1274(d) (as of the day on which the loan was made), compounded semiannually.
(B) Demand loans
In the case of a demand loan, the applicable Federal rate shall be the Federal short-term rate in effect under section 1274(d) for the period for which the amount of forgone interest is being determined, compounded semiannually.
(3) Gift loan
The term "gift loan" means any below-market loan where the forgoing of interest is in the nature of a gift.
(4) Amount loaned
The term "amount loaned" means the amount received by the borrower.
(5) Demand loan
The term "demand loan" means any loan which is payable in full at any time on the demand of the lender. Such term also includes (for purposes other than determining the applicable Federal rate under paragraph (2)) any loan if the benefits of the interest arrangements of such loan are not transferable and are conditioned on the future performance of substantial services by an individual. To the extent provided in regulations, such term also includes any loan with an indefinite maturity.
(6) Term loan
The term "term loan" means any loan which is not a demand loan.
(7) Husband and wife treated as 1 person
A husband and wife shall be treated as 1 person.
(8) Loans to which section 483, 643(i), or 1274 applies
This section shall not apply to any loan to which section 483, 643(i), or 1274 applies.
(9) No withholding
No amount shall be withheld under
(A) any amount treated as transferred or retransferred under subsection (a), and
(B) any amount treated as received under subsection (b).
(10) Special rule for term loans
If this section applies to any term loan on any day, this section shall continue to apply to such loan notwithstanding paragraphs (2) and (3) of subsection (c). In the case of a gift loan, the preceding sentence shall only apply for purposes of
(11) Time for determining rate applicable to employee relocation loans
(A) In general
In the case of any term loan made by an employer to an employee the proceeds of which are used by the employee to purchase a principal residence (within the meaning of section 121), the determination of the applicable Federal rate shall be made as of the date the written contract to purchase such residence was entered into.
(B) Paragraph only to apply to cases to which section 217 applies
Subparagraph (A) shall only apply to the purchase of a principal residence in connection with the commencement of work by an employee or a change in the principal place of work of an employee to which section 217 applies.
(g) Exception for certain loans to qualified continuing care facilities
(1) In general
This section shall not apply for any calendar year to any below-market loan made by a lender to a qualified continuing care facility pursuant to a continuing care contract if the lender (or the lender's spouse) attains age 65 before the close of such year.
(2) $90,000 limit
Paragraph (1) shall apply only to the extent that the aggregate outstanding amount of any loan to which such paragraph applies (determined without regard to this paragraph), when added to the aggregate outstanding amount of all other previous loans between the lender (or the lender's spouse) and any qualified continuing care facility to which paragraph (1) applies, does not exceed $90,000.
(3) Continuing care contract
For purposes of this section, the term "continuing care contract" means a written contract between an individual and a qualified continuing care facility under which—
(A) the individual or individual's spouse may use a qualified continuing care facility for their life or lives,
(B) the individual or individual's spouse—
(i) will first—
(I) reside in a separate, independent living unit with additional facilities outside such unit for the providing of meals and other personal care, and
(II) not require long-term nursing care, and
(ii) then will be provided long-term and skilled nursing care as the health of such individual or individual's spouse requires, and
(C) no additional substantial payment is required if such individual or individual's spouse requires increased personal care services or long-term and skilled nursing care.
(4) Qualified continuing care facility
(A) In general
For purposes of this section, the term "qualified continuing care facility" means 1 or more facilities—
(i) which are designed to provide services under continuing care contracts, and
(ii) substantially all of the residents of which are covered by continuing care contracts.
(B) Substantially all facilities must be owned or operated by borrower
A facility shall not be treated as a qualified continuing care facility unless substantially all facilities which are used to provide services which are required to be provided under a continuing care contract are owned or operated by the borrower.
(C) Nursing homes excluded
The term "qualified continuing care facility" shall not include any facility which is of a type which is traditionally considered a nursing home.
(5) Adjustment of limit for inflation
In the case of any loan made during any calendar year after 1986, the dollar amount in paragraph (2) shall be increased by an amount equal to—
(A) such amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting "calendar year 1985" for "calendar year 2016" in subparagraph (A)(ii) thereof.
Any increase under the preceding sentence shall be rounded to the nearest multiple of $100 (or, if such increase is a multiple of $50, such increase shall be increased to the nearest multiple of $100).
(6) Suspension of application
Paragraph (1) shall not apply for any calendar year to which subsection (h) applies.
(h) Exception for loans to qualified continuing care facilities
(1) In general
This section shall not apply for any calendar year to any below-market loan owed by a facility which on the last day of such year is a qualified continuing care facility, if such loan was made pursuant to a continuing care contract and if the lender (or the lender's spouse) attains age 62 before the close of such year.
(2) Continuing care contract
For purposes of this section, the term "continuing care contract" means a written contract between an individual and a qualified continuing care facility under which—
(A) the individual or individual's spouse may use a qualified continuing care facility for their life or lives,
(B) the individual or individual's spouse will be provided with housing, as appropriate for the health of such individual or individual's spouse—
(i) in an independent living unit (which has additional available facilities outside such unit for the provision of meals and other personal care), and
(ii) in an assisted living facility or a nursing facility, as is available in the continuing care facility, and
(C) the individual or individual's spouse will be provided assisted living or nursing care as the health of such individual or individual's spouse requires, and as is available in the continuing care facility.
The Secretary shall issue guidance which limits such term to contracts which provide only facilities, care, and services described in this paragraph.
(3) Qualified continuing care facility
(A) In general
For purposes of this section, the term "qualified continuing care facility" means 1 or more facilities—
(i) which are designed to provide services under continuing care contracts,
(ii) which include an independent living unit, plus an assisted living or nursing facility, or both, and
(iii) substantially all of the independent living unit residents of which are covered by continuing care contracts.
(B) Nursing homes excluded
The term "qualified continuing care facility" shall not include any facility which is of a type which is traditionally considered a nursing home.
(i) Regulations
(1) In general
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including—
(A) regulations providing that where, by reason of varying rates of interest, conditional interest payments, waivers of interest, disposition of the lender's or borrower's interest in the loan, or other circumstances, the provisions of this section do not carry out the purposes of this section, adjustments to the provisions of this section will be made to the extent necessary to carry out the purposes of this section,
(B) regulations for the purpose of assuring that the positions of the borrower and lender are consistent as to the application (or nonapplication) of this section, and
(C) regulations exempting from the application of this section any class of transactions the interest arrangements of which have no significant effect on any Federal tax liability of the lender or the borrower.
(2) Estate tax coordination
Under regulations prescribed by the Secretary, any loan which is made with donative intent and which is a term loan shall be taken into account for purposes of
(Added
Editorial Notes
Amendments
2017—Subsec. (g)(5).
"(A)
"(B)
"(i) the CPI for the preceding calendar year exceeds
"(ii) the CPI for calendar year 1985.
For purposes of the preceding sentence, the CPI for any calendar year is the average of the Consumer Price Index as of the close of the 12-month period ending on September 30 of such calendar year."
2006—Subsec. (g)(6).
Subsec. (h).
Subsec. (h)(4).
Subsec. (i).
2000—Subsec. (f)(3).
1998—Subsec. (f)(2)(B).
1997—Subsec. (f)(11)(A).
1996—Subsec. (a)(1), (2).
Subsec. (e).
Subsec. (e)(2).
Subsec. (f)(8).
Subsec. (f)(12).
1988—Subsec. (d)(1)(E)(i).
Subsec. (f)(11), (12).
1986—Subsec. (d)(1)(E)(i).
Subsec. (f)(2)(B).
Subsec. (f)(5).
Subsec. (f)(9).
Subsec. (f)(11).
1985—Subsec. (c)(1).
Subsec. (c)(1)(E).
Subsec. (c)(1)(F).
Subsec. (f)(11).
Subsecs. (g), (h).
Statutory Notes and Related Subsidiaries
Effective Date of 2017 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1997 Amendment
Amendment by
Effective Date of 1996 Amendment
Amendment by section 1602(b)(7) of
Amendment by section 1906(c)(2) of
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by section 511(d)(1) of
Amendment by sections 1812(b)(2)–(4) and 1854(c)(2)(B) of
Effective Date of 1985 Amendment
"(a)
"(1)
"(2)
"(b)
Effective Date
"(1)
"(A) term loans made after June 6, 1984, and
"(B) demand loans outstanding after June 6, 1984.
"(2)
"(A) was outstanding on June 6, 1984, and
"(B) was repaid before the date 60 days after the date of the enactment of this Act [July 18, 1984].
"(3)
"(4)
"(5)
"(6)
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
Certain Israel or Polish Bonds Not Subject to Rules Relating to Below-Market Loans
"(A) the obligation is payable in United States dollars, and
"(B) the obligation bears interest at an annual rate of not less than 4 percent."
[
§7873. Income derived by Indians from exercise of fishing rights
(a) In general
(1) Income and self-employment taxes
No tax shall be imposed by subtitle A on income derived—
(A) by a member of an Indian tribe directly or through a qualified Indian entity, or
(B) by a qualified Indian entity,
from a fishing rights-related activity of such tribe.
(2) Employment taxes
No tax shall be imposed by subtitle C on remuneration paid for services performed in a fishing rights-related activity of an Indian tribe by a member of such tribe for another member of such tribe or for a qualified Indian entity.
(b) Definitions
For purposes of this section—
(1) Fishing rights-related activity
The term "fishing rights-related activity" means, with respect to an Indian tribe, any activity directly related to harvesting, processing, or transporting fish harvested in the exercise of a recognized fishing right of such tribe or to selling such fish but only if substantially all of such harvesting was performed by members of such tribe.
(2) Recognized fishing rights
The term "recognized fishing rights" means, with respect to an Indian tribe, fishing rights secured as of March 17, 1988, by a treaty between such tribe and the United States or by an Executive order or an Act of Congress.
(3) Qualified Indian entity
(A) In general
The term "qualified Indian entity" means, with respect to an Indian tribe, any entity if—
(i) such entity is engaged in a fishing rights-related activity of such tribe,
(ii) all of the equity interests in the entity are owned by qualified Indian tribes, members of such tribes, or their spouses,
(iii) except as provided in regulations, in the case of an entity which engages to any extent in any substantial processing or transporting of fish, 90 percent or more of the annual gross receipts of the entity is derived from fishing rights-related activities of one or more qualified Indian tribes each of which owns at least 10 percent of the equity interests in the entity, and
(iv) substantially all of the management functions of the entity are performed by members of qualified Indian tribes.
For purposes of clause (iii), equity interests owned by a member (or the spouse of a member) of a qualified Indian tribe shall be treated as owned by the tribe.
(B) Qualified Indian tribe
For purposes of subparagraph (A), an Indian tribe is a qualified Indian tribe with respect to an entity if such entity is engaged in a fishing rights-related activity of such tribe.
(c) Special rules
(1) Distributions from qualified Indian entity
For purposes of this section, any distribution with respect to an equity interest in a qualified Indian entity of an Indian tribe to a member of such tribe shall be treated as derived by such member from a fishing rights-related activity of such tribe to the extent such distribution is attributable to income derived by such entity from a fishing rights-related activity of such tribe.
(2) De minimis unrelated amounts may be excluded
If, but for this paragraph, all but a de minimis amount—
(A) derived by a qualified Indian tribal entity, or by an individual through such an entity, is entitled to the benefits of paragraph (1) of subsection (a), or
(B) paid to an individual for services is entitled to the benefits of paragraph (2) of subsection (a),
then the entire amount shall be entitled to the benefits of such paragraph.
(Added
Statutory Notes and Related Subsidiaries
Effective Date
"(a)
"(b)
§7874. Rules relating to expatriated entities and their foreign parents
(a) Tax on inversion gain of expatriated entities
(1) In general
The taxable income of an expatriated entity for any taxable year which includes any portion of the applicable period shall in no event be less than the inversion gain of the entity for the taxable year.
(2) Expatriated entity
For purposes of this subsection—
(A) In general
The term "expatriated entity" means—
(i) the domestic corporation or partnership referred to in subparagraph (B)(i) with respect to which a foreign corporation is a surrogate foreign corporation, and
(ii) any United States person who is related (within the meaning of section 267(b) or 707(b)(1)) to a domestic corporation or partnership described in clause (i).
(B) Surrogate foreign corporation
A foreign corporation shall be treated as a surrogate foreign corporation if, pursuant to a plan (or a series of related transactions)—
(i) the entity completes after March 4, 2003, the direct or indirect acquisition of substantially all of the properties held directly or indirectly by a domestic corporation or substantially all of the properties constituting a trade or business of a domestic partnership,
(ii) after the acquisition at least 60 percent of the stock (by vote or value) of the entity is held—
(I) in the case of an acquisition with respect to a domestic corporation, by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation, or
(II) in the case of an acquisition with respect to a domestic partnership, by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partnership, and
(iii) after the acquisition the expanded affiliated group which includes the entity does not have substantial business activities in the foreign country in which, or under the law of which, the entity is created or organized, when compared to the total business activities of such expanded affiliated group.
An entity otherwise described in clause (i) with respect to any domestic corporation or partnership trade or business shall be treated as not so described if, on or before March 4, 2003, such entity acquired directly or indirectly more than half of the properties held directly or indirectly by such corporation or more than half of the properties constituting such partnership trade or business, as the case may be.
(3) Coordination with subsection (b)
A corporation which is treated as a domestic corporation under subsection (b) shall not be treated as a surrogate foreign corporation for purposes of paragraph (2)(A).
(b) Inverted corporations treated as domestic corporations
Notwithstanding section 7701(a)(4), a foreign corporation shall be treated for purposes of this title as a domestic corporation if such corporation would be a surrogate foreign corporation if subsection (a)(2) were applied by substituting "80 percent" for "60 percent".
(c) Definitions and special rules
(1) Expanded affiliated group
The term "expanded affiliated group" means an affiliated group as defined in section 1504(a) but without regard to section 1504(b)(3), except that section 1504(a) shall be applied by substituting "more than 50 percent" for "at least 80 percent" each place it appears.
(2) Certain stock disregarded
There shall not be taken into account in determining ownership under subsection (a)(2)(B)(ii)—
(A) stock held by members of the expanded affiliated group which includes the foreign corporation, or
(B) stock of such foreign corporation which is sold in a public offering related to the acquisition described in subsection (a)(2)(B)(i).
(3) Plan deemed in certain cases
If a foreign corporation acquires directly or indirectly substantially all of the properties of a domestic corporation or partnership during the 4-year period beginning on the date which is 2 years before the ownership requirements of subsection (a)(2)(B)(ii) are met, such actions shall be treated as pursuant to a plan.
(4) Certain transfers disregarded
The transfer of properties or liabilities (including by contribution or distribution) shall be disregarded if such transfers are part of a plan a principal purpose of which is to avoid the purposes of this section.
(5) Special rule for related partnerships
For purposes of applying subsection (a)(2)(B)(ii) to the acquisition of a trade or business of a domestic partnership, except as provided in regulations, all partnerships which are under common control (within the meaning of section 482) shall be treated as 1 partnership.
(6) Regulations
The Secretary shall prescribe such regulations as may be appropriate to determine whether a corporation is a surrogate foreign corporation, including regulations—
(A) to treat warrants, options, contracts to acquire stock, convertible debt interests, and other similar interests as stock, and
(B) to treat stock as not stock.
(d) Other definitions
For purposes of this section—
(1) Applicable period
The term "applicable period" means the period—
(A) beginning on the first date properties are acquired as part of the acquisition described in subsection (a)(2)(B)(i), and
(B) ending on the date which is 10 years after the last date properties are acquired as part of such acquisition.
(2) Inversion gain
The term "inversion gain" means the income or gain recognized by reason of the transfer during the applicable period of stock or other properties by an expatriated entity, and any income received or accrued during the applicable period by reason of a license of any property by an expatriated entity—
(A) as part of the acquisition described in subsection (a)(2)(B)(i), or
(B) after such acquisition if the transfer or license is to a foreign related person.
Subparagraph (B) shall not apply to property described in section 1221(a)(1) in the hands of the expatriated entity.
(3) Foreign related person
The term "foreign related person" means, with respect to any expatriated entity, a foreign person which—
(A) is related (within the meaning of section 267(b) or 707(b)(1)) to such entity, or
(B) is under the same common control (within the meaning of section 482) as such entity.
(e) Special rules
(1) Credits not allowed against tax on inversion gain
Credits (other than the credit allowed by section 901) shall be allowed against the tax imposed by this chapter on an expatriated entity for any taxable year described in subsection (a) only to the extent such tax exceeds the product of—
(A) the amount of the inversion gain for the taxable year, and
(B) the highest rate of tax specified in section 11(b).
For purposes of determining the credit allowed by section 901, inversion gain shall be treated as from sources within the United States.
(2) Special rules for partnerships
In the case of an expatriated entity which is a partnership—
(A) subsection (a)(1) shall apply at the partner rather than the partnership level,
(B) the inversion gain of any partner for any taxable year shall be equal to the sum of—
(i) the partner's distributive share of inversion gain of the partnership for such taxable year, plus
(ii) gain recognized for the taxable year by the partner by reason of the transfer during the applicable period of any partnership interest of the partner in such partnership to the surrogate foreign corporation, and
(C) the highest rate of tax specified in the rate schedule applicable to the partner under this chapter shall be substituted for the rate of tax referred to in paragraph (1).
(3) Coordination with section 172 and minimum tax
Rules similar to the rules of paragraphs (3) and (4) of section 860E(a) shall apply for purposes of subsection (a).
(4) Statute of limitations
(A) In general
The statutory period for the assessment of any deficiency attributable to the inversion gain of any taxpayer for any pre-inversion year shall not expire before the expiration of 3 years from the date the Secretary is notified by the taxpayer (in such manner as the Secretary may prescribe) of the acquisition described in subsection (a)(2)(B)(i) to which such gain relates and such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.
(B) Pre-inversion year
For purposes of subparagraph (A), the term "pre-inversion year" means any taxable year if—
(i) any portion of the applicable period is included in such taxable year, and
(ii) such year ends before the taxable year in which the acquisition described in subsection (a)(2)(B)(i) is completed.
(f) Special rule for treaties
Nothing in section 894 or 7852(d) or in any other provision of law shall be construed as permitting an exemption, by reason of any treaty obligation of the United States heretofore or hereafter entered into, from the provisions of this section.
(g) Regulations
The Secretary shall provide such regulations as are necessary to carry out this section, including regulations providing for such adjustments to the application of this section as are necessary to prevent the avoidance of the purposes of this section, including the avoidance of such purposes through—
(1) the use of related persons, pass-through or other noncorporate entities, or other intermediaries, or
(2) transactions designed to have persons cease to be (or not become) members of expanded affiliated groups or related persons.
(Added
Editorial Notes
Amendments
2017—Subsec. (e)(1)(B).
2005—Subsec. (a)(3).
Statutory Notes and Related Subsidiaries
Effective Date of 2017 Amendment
Amendment by
Effective Date of 2005 Amendment
Amendment by