26 USC 7501 - Liability for taxes withheld or collected

Collapse to view only § 7501. Liability for taxes withheld or collected

§ 7501. Liability for taxes withheld or collected
§ 7502. Timely mailing treated as timely filing and paying
§ 7503. Time for performance of acts where last day falls on Saturday, Sunday, or legal holiday
§ 7504. Fractional parts of a dollar
§ 7505. Sale of personal property acquired by the United States
§ 7506. Administration of real estate acquired by the United States
§ 7507. Exemption of insolvent banks from tax
§ 7508. Time for performing certain acts postponed by reason of service in combat zone or contingency operation
§ 7508A. Authority to postpone certain deadlines by reason of Federally declared disaster, significant fire, or terroristic or military actions
§ 7509. Expenditures incurred by the United States Postal Service
§ 7510. Exemption from tax of domestic goods purchased for the United States
[§ 7511. Repealed.
§ 7512. Separate accounting for certain collected taxes, etc.
§ 7513. Reproduction of returns and other documents
§ 7514. Authority to prescribe or modify seals
[§ 7515. Repealed.
§ 7516. Supplying training and training aids on request
§ 7517. Furnishing on request of statement explaining estate or gift valuation
§ 7518. Tax incentives relating to merchant marine capital construction funds
§ 7519. Required payments for entities electing not to have required taxable year
§ 7520. Valuation tables
§ 7521. Procedures involving taxpayer interviews
§ 7522. Content of tax due, deficiency, and other notices
§ 7523. Graphic presentation of major categories of Federal outlays and income
§ 7524. Annual notice of tax delinquency
§ 7525. Confidentiality privileges relating to taxpayer communications
§ 7526. Low-income taxpayer clinics
§ 7526A. Return preparation programs for applicable taxpayers
§ 7527. Advance payment of credit for health insurance costs of eligible individuals
§ 7527A. Advance payment of child tax credit
§ 7528. Internal Revenue Service user fees
§ 7529. Notification of suspected identity theft
§ 7530. Application of earned income tax credit to possessions of the United States

§ 7501. Liability for taxes withheld or collected

(a) General rule

(b) Penalties

(Aug. 16, 1954, ch. 736, 68A Stat. 895.)

§ 7502. Timely mailing treated as timely filing and paying

(a) General rule

(1) Date of delivery

(2) Mailing requirementsThis subsection shall apply only if—

(A) the postmark date falls within the prescribed period or on or before the prescribed date—

(i) for the filing (including any extension granted for such filing) of the return, claim, statement, or other document, or

(ii) for making the payment (including any extension granted for making such payment), and

(B) the return, claim, statement, or other document, or payment was, within the time prescribed in subparagraph (A), deposited in the mail in the United States in an envelope or other appropriate wrapper, postage prepaid, properly addressed to the agency, officer, or office with which the return, claim, statement, or other document is required to be filed, or to which such payment is required to be made.

(b) Postmarks

(1) Registered mailFor purposes of this section, if any return, claim, statement, or other document, or payment, is sent by United States registered mail—

(A) such registration shall be prima facie evidence that the return, claim, statement, or other document was delivered to the agency, officer, or office to which addressed; and

(B) the date of registration shall be deemed the postmark date.

(2) Certified mail; electronic filing

(d) ExceptionsThis section shall not apply with respect to—

(1) the filing of a document in, or the making of a payment to, any court other than the Tax Court,

(2) currency or other medium of payment unless actually received and accounted for, or

(3) returns, claims, statements, or other documents, or payments, which are required under any provision of the internal revenue laws or the regulations thereunder to be delivered by any method other than by mailing.

(e) Mailing of deposits

(1) Date of deposit

(2) Mailing requirementsParagraph (1) shall apply only if the person required to make the deposit establishes that—

(A) the date of mailing falls on or before the second day before the prescribed date for making the deposit (including any extension of time granted for making such deposit), and

(B) the deposit was, on or before such second day, mailed in the United States in an envelope or other appropriate wrapper, postage prepaid, properly addressed to the bank, trust company, domestic building and loan association, or credit union authorized to receive such deposit.

In applying subsection (c) for purposes of this subsection, the term “payment” includes “deposit”, and the reference to the postmark date refers to the date of mailing.

(3) No application to certain deposits

(f) Treatment of private delivery services

(1) In general

(2) Designated delivery serviceFor purposes of this subsection, the term “designated delivery service” means any delivery service provided by a trade or business if such service is designated by the Secretary for purposes of this section. The Secretary may designate a delivery service under the preceding sentence only if the Secretary determines that such service—

(A) is available to the general public,

(B) is at least as timely and reliable on a regular basis as the United States mail,

(C) records electronically to its data base, kept in the regular course of its business, or marks on the cover in which any item referred to in this section is to be delivered, the date on which such item was given to such trade or business for delivery, and

(D) meets such other criteria as the Secretary may prescribe.

(3) Equivalents of registered and certified mail

(Aug. 16, 1954, ch. 736, 68A Stat. 895; Pub. L. 85–866, title I, § 89(a), Sept. 2, 1958, 72 Stat. 1665; Pub. L. 89–713, § 5(a), Nov. 2, 1966, 80 Stat. 1110; Pub. L. 90–364, title I, § 106(a), June 28, 1968, 82 Stat. 266; Pub. L. 94–455, title XIX, §§ 1906(a)(49), (b)(13)(A), Oct. 4, 1976, 90 Stat. 1831, 1834; Pub. L. 95–147, § 3(b), Oct. 28, 1977, 91 Stat. 1228; Pub. L. 98–369, div. A, title I, § 157(a), July 18, 1984, 98 Stat. 695; Pub. L. 99–514, title XVIII, § 1811(e), Oct. 22, 1986, 100 Stat. 2833; Pub. L. 104–168, title XII, § 1210, July 30, 1996, 110 Stat. 1474; Pub. L. 105–206, title II, § 2003(b), July 22, 1998, 112 Stat. 725.)

§ 7503. Time for performance of acts where last day falls on Saturday, Sunday, or legal holiday

When the last day prescribed under authority of the internal revenue laws for performing any act falls on Saturday, Sunday, or a legal holiday, the performance of such act shall be considered timely if it is performed on the next succeeding day which is not a Saturday, Sunday, or a legal holiday. For purposes of this section, the last day for the performance of any act shall be determined by including any authorized extension of time; the term “legal holiday” means a legal holiday in the District of Columbia; and in the case of any return, statement, or other document required to be filed, or any other act required under authority of the internal revenue laws to be performed, at any office of the Secretary or at any other office of the United States or any agency thereof, located outside the District of Columbia but within an internal revenue district, the term “legal holiday” also means a Statewide legal holiday in the State where such office is located.

(Aug. 16, 1954, ch. 736, 68A Stat. 896; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

§ 7504. Fractional parts of a dollar

The Secretary may by regulations provide that in the allowance of any amount as a credit or refund, or in the collection of any amount as a deficiency or underpayment, of any tax imposed by this title, a fractional part of a dollar shall be disregarded, unless it amounts to 50 cents or more, in which case it shall be increased to 1 dollar.

(Aug. 16, 1954, ch. 736, 68A Stat. 896; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

§ 7505. Sale of personal property acquired by the United States

(a) Sale

(b) Accounting

(Aug. 16, 1954, ch. 736, 68A Stat. 896; Pub. L. 89–719, title I, § 111(a), (c)(1), Nov. 2, 1966, 80 Stat. 1145; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

§ 7506. Administration of real estate acquired by the United States

(a) Person charged with

(b) Sale

(d) Release to debtor

(Aug. 16, 1954, ch. 736, 68A Stat. 896; Pub. L. 89–719, title I, § 111(b), Nov. 2, 1966, 80 Stat. 1145; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

§ 7507. Exemption of insolvent banks from tax

(a) Assets in general

(b) Segregated assets; earnings

(1) Any such tax collected shall be deemed to be erroneously collected, and shall be refunded subject to all provisions and limitations of law, so far as applicable, relating to the refunding of taxes.

(2) Any tax, the assessment, collection, or payment of which is barred under subsection (a), or any such tax which has been abated or remitted shall be assessed or reassessed whenever it shall appear that payment of the tax will not diminish the assets as aforesaid.

(3) Any tax, the assessment, collection, or payment of which is barred under subsection (b), or any such tax which has been refunded shall be assessed or reassessed after full payment of such claims of depositors to the extent of the remaining assets segregated or transferred as described in subsection (b).

(4) The running of the statute of limitations on the making of assessment and collection shall be suspended during, and for 90 days beyond, the period for which, pursuant to this section, assessment or collection may not be made, and a tax may be reassessed as provided in paragraphs (2) and (3) of this subsection and collected, during the time within which, had there been no abatement, collection might have been made.

(d) Exception of employment taxes

(Aug. 16, 1954, ch. 736, 68A Stat. 897; Pub. L. 94–455, title XIX, § 1906(a)(50), (b)(13)(A), Oct. 4, 1976, 90 Stat. 1831, 1834.)

§ 7508. Time for performing certain acts postponed by reason of service in combat zone or contingency operation

(a) Time to be disregardedIn the case of an individual serving in the Armed Forces of the United States, or serving in support of such Armed Forces, in an area designated by the President of the United States by Executive order as a “combat zone” for purposes of section 112, or when deployed outside the United States away from the individual’s permanent duty station while participating in an operation designated by the Secretary of Defense as a contingency operation (as defined in section 101(a)(13) of title 10, United States Code) or which became such a contingency operation by operation of law, at any time during the period designated by the President by Executive order as the period of combatant activities in such zone for purposes of such section or at any time during the period of such contingency operation, or hospitalized as a result of injury received while serving in such an area or operation during such time, the period of service in such area or operation, plus the period of continuous qualified hospitalization attributable to such injury, and the next 180 days thereafter, shall be disregarded in determining, under the internal revenue laws, in respect of any tax liability (including any interest, penalty, additional amount, or addition to the tax) of such individual—

(1) Whether any of the following acts was performed within the time prescribed therefor:

(A) Filing any return of income, estate, gift, employment, or excise tax;

(B) Payment of any income, estate, gift, employment, or excise tax or any installment thereof or of any other liability to the United States in respect thereof;

(D) Allowance of a credit or refund of any tax;

(E) Filing a claim for credit or refund of any tax;

(F) Bringing suit upon any such claim for credit or refund;

(G) Assessment of any tax;

(H) Giving or making any notice or demand for the payment of any tax, or with respect to any liability to the United States in respect of any tax;

(I) Collection, by the Secretary, by levy or otherwise, of the amount of any liability in respect of any tax;

(J) Bringing suit by the United States, or any officer on its behalf, in respect of any liability in respect of any tax or in respect of any erroneous refund; and

(K) Any other act required or permitted under the internal revenue laws specified by the Secretary;

(2) The amount of any credit or refund; and

(3) Any certification of a seriously delinquent tax debt under section 7345.

(b) Special rule for overpayments

(1) In general

(2) Special rules

(d) Missing status

(e) Exceptions

(1) Tax in jeopardy; cases under title 11 of the United States Code and receiverships; and transferred assets

(2) Action taken before ascertainment of right to benefits

(3) Collection period after assessment not extended as a result of hospitalization

(f) Treatment of individuals performing Desert Shield services

(1) In general

(2) Desert Shield servicesFor purposes of this subsection, the term “Desert Shield services” means any services in the Armed Forces of the United States or in support of such Armed Forces if—

(A) such services are performed in the area designated by the President pursuant to this subparagraph as the “Persian Gulf Desert Shield area”, and

(B) such services are performed during the period beginning on August 2, 1990, and ending on the date on which any portion of the area referred to in subparagraph (A) is designated by the President as a combat zone pursuant to section 112.

(g) Qualified hospitalizationFor purposes of subsection (a), the term “qualified hospitalization” means—

(1) any hospitalization outside the United States, and

(2) any hospitalization inside the United States, except that not more than 5 years of hospitalization may be taken into account under this paragraph.

Paragraph (2) shall not apply for purposes of applying this section with respect to the spouse of an individual entitled to the benefits of subsection (a).

(Aug. 16, 1954, ch. 736, 68A Stat. 898; Pub. L. 93–597, § 5(a), Jan. 2, 1975, 88 Stat. 1952; Pub. L. 94–455, title XIX, § 1906(a)(51), (b)(13)(A), Oct. 4, 1976, 90 Stat. 1831, 1834; Pub. L. 94–569, § 3(e), Oct. 20, 1976, 90 Stat. 2700; Pub. L. 96–589, § 6(i)(14), Dec. 24, 1980, 94 Stat. 3411; Pub. L. 97–448, title III, § 307(d), Jan. 12, 1983, 96 Stat. 2407; Pub. L. 99–514, title XVII, § 1708(a)(4), Oct. 22, 1986, 100 Stat. 2782; Pub. L. 102–2, § 1(a)–(c), Jan. 30, 1991, 105 Stat. 5; Pub. L. 107–134, title I, § 112(b), Jan. 23, 2002, 115 Stat. 2434; Pub. L. 108–121, title I, § 104(a)–(b)(2), Nov. 11, 2003, 117 Stat. 1338; Pub. L. 109–73, title IV, § 403(a), Sept. 23, 2005, 119 Stat. 2027; Pub. L. 114–94, div. C, title XXXII, § 32101(d), Dec. 4, 2015, 129 Stat. 1732; Pub. L. 114–113, div. Q, title III, § 309(a), Dec. 18, 2015, 129 Stat. 3089; Pub. L. 117–58, div. H, title V, § 80502(a), Nov. 15, 2021, 135 Stat. 1335.)

§ 7508A. Authority to postpone certain deadlines by reason of Federally declared disaster, significant fire, or terroristic or military actions

(a) In general

In the case of a taxpayer determined by the Secretary to be affected by a federally declared disaster (as defined by section 165(i)(5)(A)), a significant fire, or a terroristic or military action (as defined in section 692(c)(2)), the Secretary may specify a period of up to 1 year that may be disregarded in determining, under the internal revenue laws, in respect of any tax liability of such taxpayer—

(1) whether any of the acts described in paragraph (1) of section 7508(a) were performed within the time prescribed therefor (determined without regard to extension under any other provision of this subtitle for periods after the date (determined by the Secretary) of such disaster, fire, or action),

(2) the amount of any interest, penalty, additional amount, or addition to the tax for periods after such date, and

(3) the amount of any credit or refund.

(b) Special rules regarding pensions, etc.

(d) Mandatory 60-day extension

(1) In general

In the case of any qualified taxpayer, the period—

(A) beginning on the earliest incident date specified in the declaration to which the disaster area referred to in paragraph (2) relates, and

(B) ending on the date which is 60 days after the later of such earliest incident date described in subparagraph (A) or the date such declaration was issued,

shall be disregarded in determining, under the internal revenue laws, in respect of any tax liability of such qualified taxpayer, whether any of the acts described in subparagraphs (A) through (F) of section 7508(a)(1) were performed within the time prescribed therefor (determined without regard to extension under any other provision of this subtitle for periods after the date determined under subparagraph (B)).

(2) Qualified taxpayer

For purposes of this subsection, the term “qualified taxpayer” means—

(A) any individual whose principal residence (for purposes of section 1033(h)(4)) is located in a disaster area,

(B) any taxpayer if the taxpayer’s principal place of business (other than the business of performing services as an employee) is located in a disaster area,

(C) any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a disaster area,

(D) any taxpayer whose records necessary to meet a deadline for an act described in section 7508(a)(1) are maintained in a disaster area,

(E) any individual visiting a disaster area who was killed or injured as a result of the disaster, and

(F) solely with respect to a joint return, any spouse of an individual described in any preceding subparagraph of this paragraph.

(3) Disaster area

(4) Application to rules regarding pensions

In the case of any person described in subsection (b), a rule similar to the rule of paragraph (1) shall apply for purposes of subsection (b) with respect to—

(A) making contributions to a qualified retirement plan (within the meaning of section 4974(c)) under section 219(f)(3), 404(a)(6), 404(h)(1)(B), or 404(m)(2),

(B) making distributions under section 408(d)(4),

(D) making a rollover under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3).

(5) Coordination with periods specified by the Secretary

(6) Multiple declarations

(e) Significant fire

(Added Pub. L. 105–34, title IX, § 911(a), Aug. 5, 1997, 111 Stat. 877; amended Pub. L. 107–16, title VIII, § 802(a), June 7, 2001, 115 Stat. 149; Pub. L. 107–134, title I, § 112(a), Jan. 23, 2002, 115 Stat. 2433; Pub. L. 110–343, div. C, title VII, § 706(a)(2)(D)(vii), Oct. 3, 2008, 122 Stat. 3922; Pub. L. 115–141, div. U, title IV, § 401(b)(10)(B), Mar. 23, 2018, 132 Stat. 1202; Pub. L. 116–94, div. Q, title II, § 205(a), Dec. 20, 2019, 133 Stat. 3245; Pub. L. 117–58, div. H, title V, §§ 80501(a), 80504(a), (b)(1), Nov. 15, 2021, 135 Stat. 1335, 1336.)

§ 7509. Expenditures incurred by the United States Postal Service

The Postmaster General or his delegate shall at least once a month transfer to the Treasury of the United States a statement of the additional expenditures in the District of Columbia and elsewhere incurred by the United States Postal Service in performing the duties, if any, imposed upon such Service with respect to chapter 21, relating to the tax under the Federal Insurance Contributions Act, and the Secretary shall be authorized and directed to advance from time to time to the credit of the United States Postal Service, from appropriations made for the collection of the taxes imposed by chapter 21, such sums as may be required for such additional expenditures incurred by the United States Postal Service.

(Aug. 16, 1954, ch. 736, 68A Stat. 899; Pub. L. 94–455, title XIX, § 1906(a)(52), (b)(13)(A), Oct. 4, 1976, 90 Stat. 1832, 1834.)

§ 7510. Exemption from tax of domestic goods purchased for the United States

The privilege existing by provision of law on December 1, 1873, or thereafter of purchasing supplies of goods imported from foreign countries for the use of the United States, duty free, shall be extended, under such regulations as the Secretary may prescribe, to all articles of domestic production which are subject to tax by the provisions of this title.

(Aug. 16, 1954, ch. 736, 68A Stat. 900; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

[§ 7511. Repealed. Pub. L. 87–456, title III, § 302(d), May 24, 1962, 76 Stat. 77]

§ 7512. Separate accounting for certain collected taxes, etc.

(a) General rule

Whenever any person who is required to collect, account for, and pay over any tax imposed by subtitle C or chapter 33—

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

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

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

(b) Requirements

(Added Pub. L. 85–321, § 1, Feb. 11, 1958, 72 Stat. 5; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 96–223, title I, § 101(c)(3), Apr. 2, 1980, 94 Stat. 251; Pub. L. 100–418, title I, § 1941(b)(2)(O), Aug. 23, 1988, 102 Stat. 1324.)

§ 7513. Reproduction of returns and other documents

(a) In general

(b) Regulations

(Added Pub. L. 85–866, title I, § 90(a), Sept. 2, 1958, 72 Stat. 1666; amended Pub. L. 94–455, title XII, § 1202(f), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1687, 1834.)

§ 7514. Authority to prescribe or modify seals

The Secretary is authorized to prescribe or modify seals of office for the district directors of internal revenue and other officers or employees of the Treasury Department to whom any of the functions of the Secretary of the Treasury shall have been or may be delegated. Each seal so prescribed shall contain such device as the Secretary may select. Each seal shall remain in the custody of any officer or employee whom the Secretary may designate, and, in accordance with the regulations approved by the Secretary, may be affixed in lieu of the seal of the Treasury Department to any certificate or attestation (except for material to be published in the Federal Register) that may be required of such officer or employee. Judicial notice shall be taken of any seal prescribed in accordance with this authority, a facsimile of which has been published in the Federal Register together with the regulations prescribing such seal and the affixation thereof.

(Added Pub. L. 85–866, title I, § 91(a), Sept. 2, 1958, 72 Stat. 1667; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), (M), Oct. 4, 1976, 90 Stat. 1834, 1835.)

[§ 7515. Repealed. Pub. L. 94–455, title XII, § 1202(h)(4), Oct. 4, 1976, 90 Stat. 1688]

§ 7516. Supplying training and training aids on request

The Secretary is authorized within his discretion, upon written request, to admit employees and officials of any State, the Commonwealth of Puerto Rico, any possession of the United States, any political subdivision or instrumentality of any of the foregoing, the District of Columbia, or any foreign government to training courses conducted by the Internal Revenue Service, and to supply them with texts and other training aids. The Secretary may require payment from the party or parties making the request of a reasonable fee not to exceed the cost of the training and training aids supplied pursuant to such request.

(Added Pub. L. 87–870, § 3(a)(1), Oct. 23, 1962, 76 Stat. 1160; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

§ 7517. Furnishing on request of statement explaining estate or gift valuation

(a) General rule

(b) Contents of statement

A statement required to be furnished under subsection (a) with respect to the value of an item of property shall—

(1) explain the basis on which the valuation was determined or proposed,

(2) set forth any computation used in arriving at such value, and

(3) contain a copy of any expert appraisal made by or for the Secretary.

(Added Pub. L. 94–455, title XX, § 2008(a)(1), Oct. 4, 1976, 90 Stat. 1891.)

§ 7518. Tax incentives relating to merchant marine capital construction funds

(a) Ceiling on deposits

(1) In generalThe amount deposited in a fund established under chapter 535 of title 46 of the United States Code (hereinafter in this section referred to as a “capital construction fund”) shall not exceed for any taxable year the sum of:

(A) that portion of the taxable income of the owner or lessee for such year (computed as provided in chapter 1 but without regard to the carryback of any net operating loss or net capital loss and without regard to this section) which is attributable to the operation of the agreement vessels in the foreign or domestic commerce of the United States or in the fisheries of the United States,

(B) the amount allowable as a deduction under section 167 for such year with respect to the agreement vessels,

(C) if the transaction is not taken into account for purposes of subparagraph (A), the net proceeds (as defined in joint regulations) from—

(i) the sale or other disposition of any agreement vessel, or

(ii) insurance or indemnity attributable to any agreement vessel, and

(D) the receipts from the investment or reinvestment of amounts held in such fund.

(2) Limitations on deposits by lessees

(3) Certain barges and containers included

(b) Requirements as to investments

(1) In general

(2) Limitation on fund investments

(3) Investment in certain preferred stock permitted

(1) In generalFor purposes of this title—

(A) taxable income (determined without regard to this section and chapter 535 of title 46, United States Code) for the taxable year shall be reduced by an amount equal to the amount deposited for the taxable year out of amounts referred to in subsection (a)(1)(A),

(B) gain from a transaction referred to in subsection (a)(1)(C) shall not be taken into account if an amount equal to the net proceeds (as defined in joint regulations) from such transaction is deposited in the fund,

(C) the earnings (including gains and losses) from the investment and reinvestment of amounts held in the fund shall not be taken into account,

(D) the earnings and profits (within the meaning of section 316) of any corporation shall be determined without regard to this section and chapter 535 of title 46, United States Code, and

(E) in applying the tax imposed by section 531 (relating to the accumulated earnings tax), amounts while held in the fund shall not be taken into account.

(2) Only qualified deposits eligible for treatment

(d) Establishment of accountsFor purposes of this section—

(1) In generalWithin a capital construction fund 3 accounts shall be maintained:

(A) the capital account,

(B) the capital gain account, and

(2) Capital accountThe capital account shall consist of—

(A) amounts referred to in subsection (a)(1)(B),

(B) amounts referred to in subsection (a)(1)(C) other than that portion thereof which represents gain not taken into account by reason of subsection (c)(1)(B),

(C) the percentage applicable under section 243(a)(1) of any dividend received by the fund with respect to which the person maintaining the fund would (but for subsection (c)(1)(C)) be allowed a deduction under section 243, and

(D) interest income exempt from taxation under section 103.

(3) Capital gain accountThe capital gain account shall consist of—

(A) amounts representing capital gains on assets held for more than 6 months and referred to in subsection (a)(1)(C) or (a)(1)(D), reduced by

(B) amounts representing capital losses on assets held in the fund for more than 6 months.

(4) Ordinary income accountThe ordinary income account shall consist of—

(A) amounts referred to in subsection (a)(1)(A),

(B)

(i) amounts representing capital gains on assets held for 6 months or less and referred to in subsection (a)(1)(C) or (a)(1)(D), reduced by

(ii) amounts representing capital losses on assets held in the fund for 6 months or less,

(C) interest (not including any tax-exempt interest referred to in paragraph (2)(D)) and other ordinary income (not including any dividend referred to in subparagraph (E)) received on assets held in the fund,

(D) ordinary income from a transaction described in subsection (a)(1)(C), and

(E) the portion of any dividend referred to in paragraph (2)(C) not taken into account under such paragraph.

(5) Capital losses only allowed to offset certain gains

(e) Purposes of qualified withdrawals

(1) In generalA qualified withdrawal from the fund is one made in accordance with the terms of the agreement but only if it is for:

(A) the acquisition, construction, or reconstruction of a qualified vessel,

(B) the acquisition, construction, or reconstruction of barges and containers which are part of the complement of a qualified vessel, or

(C) the payment of the principal on indebtedness incurred in connection with the acquisition, construction, or reconstruction of a qualified vessel or a barge or container which is part of the complement of a qualified vessel.

Except to the extent provided in regulations prescribed by the Secretary, subparagraph (B), and so much of subparagraph (C) as relates only to barges and containers, shall apply only with respect to barges and containers constructed in the United States.

(2) Penalty for failing to fulfill any substantial obligation

(f) Tax treatment of qualified withdrawals

(1) Ordering ruleAny qualified withdrawal from a fund shall be treated—

(A) first as made out of the capital account,

(B) second as made out of the capital gain account, and

(2) Adjustment to basis of vessel, etc., where withdrawal from ordinary income account

(3) Adjustment to basis of vessel, etc., where withdrawal from capital gain account

(4) Adjustment to basis of vessels, etc., where withdrawals pay principal on debt

(5) Ordinary income recapture of basis reduction

(g) Tax treatment of nonqualified withdrawals

(1) In general

(2) Ordering ruleAny nonqualified withdrawal from a fund shall be treated—

(A) first as made out of the ordinary income account,

(B) second as made out of the capital gain account, and

For purposes of this section, items withdrawn from any account shall be treated as withdrawn on a first-in-first-out basis; except that (i) any nonqualified withdrawal for research, development, and design expenses incident to new and advanced ship design, machinery and equipment, and (ii) any amount treated as a nonqualified withdrawal under the second sentence of subsection (f)(4), shall be treated as withdrawn on a last-in-first-out basis.

(3) Operating rulesFor purposes of this title—

(A) any amount referred to in paragraph (2)(A) shall be included in income as an item of ordinary income for the taxable year in which the withdrawal is made,

(B) any amount referred to in paragraph (2)(B) shall be included in income for the taxable year in which the withdrawal is made as an item of gain realized during such year from the disposition of an asset held for more than 6 months, and

(C) for the period on or before the last date prescribed for payment of tax for the taxable year in which this withdrawal is made—

(i) no interest shall be payable under section 6601 and no addition to the tax shall be payable under section 6651,

(ii) interest on the amount of the additional tax attributable to any item referred to in subparagraph (A) or (B) shall be paid at the applicable rate (as defined in paragraph (4)) from the last date prescribed for payment of the tax for the taxable year for which such item was deposited in the fund, and

(iii) no interest shall be payable on amounts referred to in clauses (i) and (ii) of paragraph (2) or in the case of any nonqualified withdrawal arising from the application of the recapture provision of section 606(5) of the Merchant Marine Act, 1936, as in effect on December 31, 1969.

(4) Interest rate

(5) Amount not withdrawn from fund after 25 years from deposit taxed as nonqualified withdrawal

(A) In general

(B) Earnings treated as deposits

(D) Authority to treat excess funds as withdrawn

(E) Amounts in fund on January 1, 1987

(6) Nonqualified withdrawals taxed at highest marginal rate

(A) In generalIn the case of any taxable year for which there is a nonqualified withdrawal (including any amount so treated under paragraph (5)), the tax imposed by chapter 1 shall be determined—

(i) by excluding such withdrawal from gross income, and

(ii) by increasing the tax imposed by chapter 1 by the product of the amount of such withdrawal and the highest rate of tax specified in section 1 (section 11 in the case of a corporation).

In the case of a taxpayer other than a corporation, with respect to the portion of any nonqualified withdrawal made out of the capital gain account during a taxable year to which section 1(h) applies, the rate of tax taken into account under the preceding sentence shall not exceed 20 percent.

(B) Tax benefit ruleIf any portion of a nonqualified withdrawal is properly attributable to deposits (other than earnings on deposits) made by the taxpayer in any taxable year which did not reduce the taxpayer’s liability for tax under chapter 1 for any taxable year preceding the taxable year in which such withdrawal occurs—

(i) such portion shall not be taken into account under subparagraph (A), and

(ii) an amount equal to such portion shall be treated as allowed as a deduction under section 172 for the taxable year in which such withdrawal occurs.

(h) Certain corporate reorganizations and changes in partnershipsUnder joint regulations—

(1) a transfer of a fund from one person to another person in a transaction to which section 381 applies may be treated as if such transaction did not constitute a nonqualified withdrawal, and

(2) a similar rule shall be applied in the case of a continuation of a partnership.

(i) Definitions

(Added Pub. L. 99–514, title II, § 261(b), Oct. 22, 1986, 100 Stat. 2208; amended Pub. L. 100–647, title I, §§ 1002(m)(1), 1018(u)(23), Nov. 10, 1988, 102 Stat. 3382, 3591; Pub. L. 101–508, title XI, § 11101(d)(7)(A), Nov. 5, 1990, 104 Stat. 1388–405; Pub. L. 105–34, title III, § 311(c)(2), Aug. 5, 1997, 111 Stat. 835; Pub. L. 108–27, title III, § 301(a)(2)(D), May 28, 2003, 117 Stat. 758; Pub. L. 109–304, § 17(e)(6), Oct. 6, 2006, 120 Stat. 1708; Pub. L. 112–240, title I, § 102(c)(1)(D), Jan. 2, 2013, 126 Stat. 2319; Pub. L. 113–295, div. A, title II, § 221(a)(117), Dec. 19, 2014, 128 Stat. 4054; Pub. L. 115–97, title I, § 13001(b)(2)(Q), (7), Dec. 22, 2017, 131 Stat. 2097, 2098; Pub. L. 115–141, div. U, title IV, § 401(a)(352), Mar. 23, 2018, 132 Stat. 1201.)

§ 7519. Required payments for entities electing not to have required taxable year

(a) General ruleThis section applies to a partnership or S corporation for any taxable year, if—

(1) an election under section 444 is in effect for the taxable year, and

(2) the required payment determined under subsection (b) for such taxable year (or any preceding taxable year) exceeds $500.

(b) Required paymentFor purposes of this section, the term “required payment” means, with respect to any applicable election year of a partnership or S corporation, an amount equal to—

(1) the excess of the product of—

(A) the applicable percentage of the adjusted highest section 1 rate, multiplied by

(B) the net base year income of the entity, over

(2) the net required payment balance.

For purposes of paragraph (1)(A), the term “adjusted highest section 1 rate” means the highest rate of tax in effect under section 1 as of the end of the base year plus 1 percentage point (or, in the case of applicable election years beginning in 1987, 36 percent).

(1) In general

(2) Termination of elections, etc.If—

(A) an election under section 444 is terminated effective with respect to any year, or

(B) the entity is liquidated during any year, the entity shall be entitled to a refund of the net required payment balance.

(3) Date on which refund payableAny refund under this subsection shall be payable on the later of—

(A) April 15 of the calendar year following—

(i) in the case of the year referred to in paragraph (1), the calendar year in which it begins,

(ii) in the case of the year referred to in paragraph (2), the calendar year in which it ends, or

(B) the day 90 days after the day on which claim therefor is filed with the Secretary.

(d) Net base year incomeFor purposes of this section—

(1) In generalAn entity’s net base year income shall be equal to the sum of—

(A) the deferral ratio multiplied by the entity’s net income for the base year, plus

(B) the excess (if any) of—

(i) the deferral ratio multiplied by the aggregate amount of applicable payments made by the entity during the base year, over

(ii) the aggregate amount of such applicable payments made during the deferral period of the base year.

For purposes of this paragraph, the term “deferral ratio” means the ratio which the number of months in the deferral period of the base year bears to the number of months in the partnership’s or S corporation’s taxable year.

(2) Net incomeNet income is determined by taking into account the aggregate amount of the following items—

(A) Partnerships

(B) S corporations

(3) Applicable payments

(A) In general

(B) ExceptionsThe term “applicable payment” shall not include any—

(i) gain from the sale or exchange of property between the partner or shareholder and the partnership or S corporation, and

(ii) dividend paid by the S corporation.

(4) Applicable percentage

(5) Treatment of guaranteed payments

(A) In general

(B) Guaranteed payment

(e) Other definitions and special rulesFor purposes of this section—

(1) Deferral period

(2) Years

(A) Base year

(B) Applicable election year

(3) Requirement of reporting

(4) Net required payment balanceThe term “net required payment balance” means the excess (if any) of—

(A) the aggregate of the required payments under this section for all preceding applicable election years, over

(B) the aggregate amount allowable as a refund to the entity under subsection (c) for all preceding applicable election years.

(f) Administrative provisions

(1) In general

(2) Due date

(3) Interest

(4) Penalties

(A) In general

(B) Negligence and fraud penalties made applicable

(g) RegulationsThe Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the provisions of this section and section 280H, including regulations providing for appropriate adjustments in the application of this section and sections 280H and 444 in cases where—

(1) 2 or more applicable election years begin in the same calendar year, or

(2) the base year is a taxable year of less than 12 months.

(Added Pub. L. 100–203, title X, § 10206(b)(1), Dec. 22, 1987, 101 Stat. 1330–398; amended Pub. L. 100–647, title II, § 2004(e)(4)–(10), (14)(B), Nov. 10, 1988, 102 Stat. 3601, 3602; Pub. L. 101–239, title VII, §§ 7721(c)(12), 7821(b), Dec. 19, 1989, 103 Stat. 2400, 2424; Pub. L. 101–508, title XI, § 11704(a)(29), Nov. 5, 1990, 104 Stat. 1388–519; Pub. L. 105–34, title XII, § 1281(d), Aug. 5, 1997, 111 Stat. 1037.)

§ 7520. Valuation tables

(a) General rule

For purposes of this title, the value of any annuity, any interest for life or a term of years, or any remainder or reversionary interest shall be determined—

(1) under tables prescribed by the Secretary, and

(2) by using an interest rate (rounded to the nearest 2/10ths of 1 percent) equal to 120 percent of the Federal midterm rate in effect under section 1274(d)(1) for the month in which the valuation date falls.

If an income, estate, or gift tax charitable contribution is allowable for any part of the property transferred, the taxpayer may elect to use such Federal midterm rate for either of the 2 months preceding the month in which the valuation date falls for purposes of paragraph (2). In the case of transfers of more than 1 interest in the same property with respect to which the taxpayer may use the same rate under paragraph (2), the taxpayer shall use the same rate with respect to each such interest.

(b) Section not to apply for certain purposes

(1) In general

(2) Revision for recent mortality charges

(d) Valuation date

(e) Tables to include formulas

(Added Pub. L. 100–647, title V, § 5031(a), Nov. 10, 1988, 102 Stat. 3668; amended Pub. L. 113–295, div. A, title II, § 221(a)(118), Dec. 19, 2014, 128 Stat. 4054.)

§ 7521. Procedures involving taxpayer interviews

(a) Recording of interviews

(1) Recording by taxpayer

(2) Recording by IRS officer or employee

An officer or employee of the Internal Revenue Service may record any interview described in paragraph (1) if such officer or employee—

(A) informs the taxpayer of such recording prior to the interview, and

(B) upon request of the taxpayer, provides the taxpayer with a transcript or copy of such recording but only if the taxpayer provides reimbursement for the cost of the transcription and reproduction of such transcript or copy.

(b) Safeguards

(1) Explanations of processes

An officer or employee of the Internal Revenue Service shall before or at an initial interview provide to the taxpayer—

(A) in the case of an in-person interview with the taxpayer relating to the determination of any tax, an explanation of the audit process and the taxpayer’s rights under such process, or

(B) in the case of an in-person interview with the taxpayer relating to the collection of any tax, an explanation of the collection process and the taxpayer’s rights under such process.

(2) Right of consultation

(d) Section not to apply to certain investigations

(Added Pub. L. 100–647, title VI, § 6228(a), Nov. 10, 1988, 102 Stat. 3731, § 7520; renumbered § 7521, Pub. L. 101–239, title VII, § 7816(u)(1), Dec. 19, 1989, 103 Stat. 2423.)

§ 7522. Content of tax due, deficiency, and other notices

(a) General rule

(b) Notices to which section applies

This section shall apply to—

(1) any tax due notice or deficiency notice described in section 6155, 6212, or 6303,

(2) any notice generated out of any information return matching program, and

(3) the 1st letter of proposed deficiency which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Independent Office of Appeals.

(Added Pub. L. 100–647, title VI, § 6233(a), Nov. 10, 1988, 102 Stat. 3735, § 7521; renumbered § 7522, Pub. L. 101–508, title XI, § 11704(a)(30), Nov. 5, 1990, 104 Stat. 1388–519; amended Pub. L. 116–25, title I, § 1001(b)(1)(I), July 1, 2019, 133 Stat. 985.)

§ 7523. Graphic presentation of major categories of Federal outlays and income

(a) General rule

In the case of any booklet of instructions for Form 1040, 1040A, or 1040EZ prepared by the Secretary for filing individual income tax returns for taxable years beginning in any calendar year, the Secretary shall include in a prominent place—

(1) a pie-shaped graph showing the relative sizes of the major outlay categories, and

(2) a pie-shaped graph showing the relative sizes of the major income categories.

(b) Definitions and special rules

For purposes of subsection (a)—

(1) Major outlay categories

The term “major outlay categories” means the following:

(A) Defense, veterans, and foreign affairs.

(B) Social security, medicare, and other retirement.

(D) Social programs.

(E) Law enforcement and general government.

(F) Interest on the debt.

(2) Major income categories

The term “major income categories” means the following:

(A) Social security, medicare, and unemployment and other retirement taxes.

(B) Personal income taxes.

(D) Borrowing to cover the deficit.

(E) Excise, customs, estate, gift, and miscellaneous taxes.

(3) Required footnotes

The pie-shaped graph showing the major outlay categories shall include the following footnotes:

(A) A footnote to the category referred to in paragraph (1)(A) showing the percentage of the total outlays which is for defense, the percentage of total outlays which is for veterans, and the percentage of total outlays which is for foreign affairs.

(B) A footnote to the category referred to in paragraph (1)(C) showing that such category consists of agriculture, natural resources, environment, transportation, education, job training, economic development, space, energy, and general science.

(C) A footnote to the category referred to in paragraph (1)(D) showing the percentage of the total outlays which is for medicaid, supplemental nutrition assistance program benefits, and assistance under a State program funded under part A of title IV of the Social Security Act and the percentage of total outlays which is for public health, unemployment, assisted housing, and social services.

(4) Data on which graphs are based

(Added Pub. L. 101–508, title XI, § 11622(a), Nov. 5, 1990, 104 Stat. 1388–504; amended Pub. L. 104–193, title I, § 110(l)(4), formerly § 110(l)(8), Aug. 22, 1996, 110 Stat. 2173, renumbered Pub. L. 105–33, title V, § 5514(a)(2), Aug. 5, 1997, 111 Stat. 620; Pub. L. 110–234, title IV, § 4002(b)(1)(E), (2)(O), May 22, 2008, 122 Stat. 1096, 1097; Pub. L. 110–246, § 4(a), title IV, § 4002(b)(1)(E), (2)(O), June 18, 2008, 122 Stat. 1664, 1857, 1858.)

§ 7524. Annual notice of tax delinquency

Not less often than annually, the Secretary shall send a written notice to each taxpayer who has a tax delinquent account of the amount of the tax delinquency as of the date of the notice.

(Added Pub. L. 104–168, title XII, § 1204(a), July 30, 1996, 110 Stat. 1471.)

§ 7525. Confidentiality privileges relating to taxpayer communications

(a) Uniform application to taxpayer communications with federally authorized practitioners

(1) General rule

(2) LimitationsParagraph (1) may only be asserted in—

(A) any noncriminal tax matter before the Internal Revenue Service; and

(B) any noncriminal tax proceeding in Federal court brought by or against the United States.

(3) DefinitionsFor purposes of this subsection—

(A) Federally authorized tax practitioner

(B) Tax advice

(b) Section not to apply to communications regarding tax sheltersThe privilege under subsection (a) shall not apply to any written communication which is—

(1) between a federally authorized tax practitioner and—

(A) any person,

(B) any director, officer, employee, agent, or representative of the person, or

(2) in connection with the promotion of the direct or indirect participation of the person in any tax shelter (as defined in section 6662(d)(2)(C)(ii)).

(Added Pub. L. 105–206, title III, § 3411(a), July 22, 1998, 112 Stat. 750; amended Pub. L. 108–357, title VIII, § 813(a), Oct. 22, 2004, 118 Stat. 1581.)

§ 7526. Low-income taxpayer clinics

(a) In general

(b) Definitions

For purposes of this section—

(1) Qualified low-income taxpayer clinic

(A) In general

The term “qualified low-income taxpayer clinic” means a clinic that—

(i) does not charge more than a nominal fee for its services (except for reimbursement of actual costs incurred); and

(ii)(I) represents low-income taxpayers in controversies with the Internal Revenue Service; or(II) operates programs to inform individuals for whom English is a second language about their rights and responsibilities under this title.

(B) Representation of low-income taxpayers

A clinic meets the requirements of subparagraph (A)(ii)(I) if—

(i) at least 90 percent of the taxpayers represented by the clinic have incomes which do not exceed 250 percent of the poverty level, as determined in accordance with criteria established by the Director of the Office of Management and Budget; and

(ii) the amount in controversy for any taxable year generally does not exceed the amount specified in section 7463.

(2) Clinic

The term “clinic” includes—

(A) a clinical program at an accredited law, business, or accounting school in which students represent low-income taxpayers in controversies arising under this title; and

(B) an organization described in section 501(c) and exempt from tax under section 501(a) which satisfies the requirements of paragraph (1) through representation of taxpayers or referral of taxpayers to qualified representatives.

(3) Qualified representative

(1) Aggregate limitation

(2) Limitation on annual grants to a clinic

(3) Multi-year grants

(4) Criteria for awards

In determining whether to make a grant under this section, the Secretary shall consider—

(A) the numbers of taxpayers who will be served by the clinic, including the number of taxpayers in the geographical area for whom English is a second language;

(B) the existence of other low-income taxpayer clinics serving the same population;

(C) the quality of the program offered by the low-income taxpayer clinic, including the qualifications of its administrators and qualified representatives, and its record, if any, in providing service to low-income taxpayers; and

(D) alternative funding sources available to the clinic, including amounts received from other grants and contributions, and the endowment and resources of the institution sponsoring the clinic.

(5) Requirement of matching funds

A low-income taxpayer clinic must provide matching funds on a dollar-for-dollar basis for all grants provided under this section. Matching funds may include—

(A) the salary (including fringe benefits) of individuals performing services for the clinic; and

(B) the cost of equipment used in the clinic.

Indirect expenses, including general overhead of the institution sponsoring the clinic, shall not be counted as matching funds.

(6) Provision of information regarding qualified low-income taxpayer clinics

Notwithstanding any other provision of law, officers and employees of the Department of the Treasury may—

(A) advise taxpayers of the availability of, and eligibility requirements for receiving, advice and assistance from one or more specific qualified low-income taxpayer clinics receiving funding under this section, and

(B) provide information regarding the location of, and contact information for, such clinics.

(Added Pub. L. 105–206, title III, § 3601(a), July 22, 1998, 112 Stat. 774; amended Pub. L. 116–25, title I, § 1402(a), July 1, 2019, 133 Stat. 997.)

§ 7526A. Return preparation programs for applicable taxpayers

(a) Establishment of Volunteer Income Tax Assistance Matching Grant Program

(b) Use of funds

(1) In generalQualified return preparation programs may use grants received under this section for—

(A) ordinary and necessary costs associated with program operation in accordance with cost principles under the applicable Office of Management and Budget circular, including—

(i) wages or salaries of persons coordinating the activities of the program,

(ii) developing training materials, conducting training, and performing quality reviews of the returns prepared under the program,

(iii) equipment purchases, and

(iv) vehicle-related expenses associated with remote or rural tax preparation services,

(B) outreach and educational activities described in subsection (c)(2)(B), and

(C) services related to financial education and capability, asset development, and the establishment of savings accounts in connection with tax return preparation.

(2) Requirement of matching fundsA qualified return preparation program must provide matching funds on a dollar-for-dollar basis for all grants provided under this section. Matching funds may include—

(A) the salary (including fringe benefits) of individuals performing services for the program,

(B) the cost of equipment used in the program, and

Indirect expenses, including general overhead of any entity administering the program, shall not be counted as matching funds.

(1) In general

(2) PriorityIn awarding grants under this section, the Secretary shall give priority to applications which demonstrate—

(A) assistance to applicable taxpayers, with emphasis on outreach to, and services for, such taxpayers,

(B) taxpayer outreach and educational activities relating to eligibility and availability of income supports available through this title, including the earned income tax credit, and

(3) Amounts taken into account

(d) Program adherence

(1) In generalThe Secretary shall establish procedures for, and shall conduct not less frequently than once every 5 calendar years during which a qualified return preparation program is operating under a grant under this section, periodic site visits—

(A) to ensure the program is carrying out the purposes of this section, and

(B) to determine whether the program meets such program adherence standards as the Secretary shall by regulation or other guidance prescribe.

(2) Additional requirements for grant recipients not meeting program adherence standardsIn the case of any qualified return preparation program which—

(A) is awarded a grant under this section, and

(B) is subsequently determined—

(i) not to meet the program adherence standards described in paragraph (1)(B), or

(ii) not to be otherwise carrying out the purposes of this section,

such program shall not be eligible for any additional grants under this section unless such program provides sufficient documentation of corrective measures established to address any such deficiencies determined.

(e) DefinitionsFor purposes of this section—

(1) Qualified return preparation programThe term “qualified return preparation program” means any program—

(A) which provides assistance to individuals, not less than 90 percent of whom are applicable taxpayers, in preparing and filing Federal income tax returns,

(B) which is administered by a qualified entity,

(C) in which all volunteers who assist in the preparation of Federal income tax returns meet the training requirements prescribed by the Secretary, and

(D) which uses a quality review process which reviews 100 percent of all returns.

(2) Qualified entity

(A) In generalThe term “qualified entity” means any entity which—

(i) is an eligible organization,

(ii) is in compliance with Federal tax filing and payment requirements,

(iii) is not debarred or suspended from Federal contracts, grants, or cooperative agreements, and

(iv) agrees to provide documentation to substantiate any matching funds provided pursuant to the grant program under this section.

(B) Eligible organizationThe term “eligible organization” means—

(i) an institution of higher education which is described in section 102 (other than subsection (a)(1)(C) thereof) of the Higher Education Act of 1965 (20 U.S.C. 1002), as in effect on the date of the enactment of this section, and which has not been disqualified from participating in a program under title IV of such Act,

(ii) an organization described in section 501(c) and exempt from tax under section 501(a),

(iii) a local government agency, including—(I) a county or municipal government agency, and(II) an Indian tribe, as defined in section 4(13) of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4103(13)), including any tribally designated housing entity (as defined in section 4(22) of such Act (25 U.S.C. 4103(22))), tribal subsidiary, subdivision, or other wholly owned tribal entity,

(iv) a local, State, regional, or national coalition (with one lead organization which meets the eligibility requirements of clause (i), (ii), or (iii) acting as the applicant organization), or

(v) in the case of applicable taxpayers and members of underserved populations with respect to which no organizations described in the preceding clauses are available—(I) a State government agency, or(II) an office providing Cooperative Extension services (as established at the land-grant colleges and universities under the Smith-Lever Act of May 8, 1914).

(3) Applicable taxpayers

(4) Underserved population

(f) Special rules and limitations

(1) Duration of grants

(2) Aggregate limitation

(g) Promotion of programs

(1) In general

(2) Provision of information regarding qualified return preparation programs

(3) Referrals to low-income taxpayer clinicsQualified return preparation programs receiving a grant under this section are encouraged, in appropriate cases, to—

(A) advise taxpayers of the availability of, and eligibility requirements for receiving, advice and assistance from qualified low-income taxpayer clinics receiving funding under section 7526, and

(B) provide information regarding the location of, and contact information for, such clinics.

(Added Pub. L. 116–25, title I, § 1401(a), July 1, 2019, 133 Stat. 993.)

§ 7527. Advance payment of credit for health insurance costs of eligible individuals

(a) General rule

(b) Limitation on advance payments during any taxable year

(d) Qualified health insurance costs eligibility certificate

(1) In general

For purposes of this section, the term “qualified health insurance costs eligibility certificate” means any written statement that an individual is an eligible individual (as defined in section 35(c)) if such statement provides such information as the Secretary may require for purposes of this section and—

(A) in the case of an eligible TAA recipient (as defined in section 35(c)(2)) or an eligible alternative TAA recipient (as defined in section 35(c)(3)), is certified by the Secretary of Labor (or by any other person or entity designated by the Secretary), or

(B) in the case of an eligible PBGC pension recipient (as defined in section 35(c)(4)), is certified by the Pension Benefit Guaranty Corporation (or by any other person or entity designated by the Secretary).

(2) Inclusion of certain information

In the case of any statement described in paragraph (1), such statement shall not be treated as a qualified health insurance costs credit eligibility certificate unless such statement includes—

(A) the name, address, and telephone number of the State office or offices responsible for providing the individual with assistance with enrollment in qualified health insurance (as defined in section 35(e)),

(B) a list of the coverage options that are treated as qualified health insurance (as so defined) by the State in which the individual resides, and

(C) in the case of a TAA-eligible individual (as defined in section 4980B(f)(5)(C)(iv)(II)), a statement informing the individual that the individual has 63 days from the date that is 7 days after the date of the issuance of such certificate to enroll in such insurance without a lapse in creditable coverage (as defined in section 9801(c)).

(e) Payment for premiums due prior to commencement of advance payments

(1) In general

(A) after the date that is 1 year after the date of the enactment of the Trade Adjustment Assistance Reauthorization Act of 2015; and

(B) prior to the first month for which an advance payment is made on behalf of such individual under subsection (a).

(2) Reduction of payment for amounts received under national emergency grants

(Added Pub. L. 107–210, div. A, title II, § 202(a), Aug. 6, 2002, 116 Stat. 960; amended Pub. L. 111–5, div. B, title I, §§ 1899A(a)(2), 1899B(a), 1899H(a), Feb. 17, 2009, 123 Stat. 424, 430; Pub. L. 111–344, title I, §§ 111(b), 112(a), 118(a), Dec. 29, 2010, 124 Stat. 3615, 3616; Pub. L. 112–40, title II, § 241(b)(2), Oct. 21, 2011, 125 Stat. 418; Pub. L. 113–128, title V, § 512(r), July 22, 2014, 128 Stat. 1712; Pub. L. 114–27, title IV, § 407(c), June 29, 2015, 129 Stat. 382.)

§ 7527A. Advance payment of child tax credit

(a) In general

(b) Annual advance amountFor purposes of this section—

(1) In generalExcept as otherwise provided in this subsection, the term “annual advance amount” means, with respect to any taxpayer for any calendar year, the amount (if any) which is estimated by the Secretary as being equal to 50 percent of the amount which would be treated as allowed under subpart C of part IV of subchapter A of chapter 1 by reason of section 24(i)(1) for the taxpayer’s taxable year beginning in such calendar year if—

(A) the status of the taxpayer as a taxpayer described in section 24(i)(1) is determined with respect to the reference taxable year,

(B) the taxpayer’s modified adjusted gross income for such taxable year is equal to the taxpayer’s modified adjusted gross income for the reference taxable year,

(C) the only children of such taxpayer for such taxable year are qualifying children properly claimed on the taxpayer’s return of tax for the reference taxable year, and

(D) the ages of such children (and the status of such children as qualifying children) are determined for such taxable year by taking into account the passage of time since the reference taxable year.

(2) Reference taxable year

(3) Modifications during calendar year

(A) In generalThe Secretary may modify, during any calendar year, the annual advance amount with respect to any taxpayer for such calendar year to take into account—

(i) a return of tax filed by such taxpayer during such calendar year (and the taxable year to which such return relates may be taken into account as the reference taxable year), and

(ii) any other information provided by the taxpayer to the Secretary which allows the Secretary to determine payments under subsection (a) which, in the aggregate during any taxable year of the taxpayer, more closely total the Secretary’s estimate of the amount treated as allowed under subpart C of part IV of subchapter A of chapter 1 by reason of section 24(i)(1) for such taxable year of such taxpayer.

(B) Adjustment to reflect excess or deficit in prior payments

(4) Determination of status

(5) Treatment of certain deaths

(1) elect not to receive payments under this section, and

(2) provide information to the Secretary which would be relevant to a modification under subsection (b)(3)(B) of the annual advance amount, including information regarding—

(A) a change in the number of the taxpayer’s qualifying children, including by reason of the birth of a child,

(B) a change in the taxpayer’s marital status,

(D) any other factor which the Secretary may provide.

(d) Notice of payments

(e) Administrative provisions

(1) Application of electronic funds payment requirement

(2) Application of certain rules

(3) Exception from reduction or offsetAny payment made to any individual under this section shall not be—

(A) subject to reduction or offset pursuant to subsection (c), (d), (e), or (f) of section 6402 or any similar authority permitting offset, or

(B) reduced or offset by other assessed Federal taxes that would otherwise be subject to levy or collection.

(4) Application of advance payments in the possessions of the United States

(A) In generalThe advance payment amount determined under this section shall be determined—

(i) by applying section 24(i)(1) without regard to the phrase “or is a bona fide resident of Puerto Rico (within the meaning of section 937(a))”, and

(ii) without regard to section 24(k)(3)(C)(ii)(I).

(B) Mirror code possessions

(i) Mirror code possessions

(ii) American Samoa

(iii) Timing of payment

(f) ApplicationNo payments shall be made under the program established under subsection (a) with respect to—

(1) any period before July 1, 2021, or

(2) any period after December 31, 2021.

(g) Regulations

(Added Pub. L. 117–2, title IX, § 9611(b)(1), Mar. 11, 2021, 135 Stat. 146.)

§ 7528. Internal Revenue Service user fees

(a) General ruleThe Secretary shall establish a program requiring the payment of user fees for—

(1) requests to the Internal Revenue Service for ruling letters, opinion letters, and determination letters, and

(2) other similar requests.

(b) Program criteria

(1) In generalThe fees charged under the program required by subsection (a)—

(A) shall vary according to categories (or subcategories) established by the Secretary,

(B) shall be determined after taking into account the average time for (and difficulty of) complying with requests in each category (and subcategory), and

(2) Exemptions, etc.

(A) In general

(B) Exemption for certain requests regarding pension plansThe Secretary shall not require payment of user fees under such program for requests for determination letters with respect to the qualified status of a pension benefit plan maintained solely by 1 or more eligible employers or any trust which is part of the plan. The preceding sentence shall not apply to any request—

(i) made after the later of—(I) the fifth plan year the pension benefit plan is in existence, or(II) the end of any remedial amendment period with respect to the plan beginning within the first 5 plan years, or

(ii) made by the sponsor of any prototype or similar plan which the sponsor intends to market to participating employers.

(i) Pension benefit plan

(ii) Eligible employer

(iii) Determination of average fees charged

(3) Average fee requirement

(4) Certified professional employer organizations

(Added Pub. L. 108–89, title II, § 202(a), Oct. 1, 2003, 117 Stat. 1132; amended Pub. L. 108–357, title VIII, § 891(a), Oct. 22, 2004, 118 Stat. 1644; Pub. L. 110–28, title VIII, § 8244, May 25, 2007, 121 Stat. 200; Pub. L. 113–295, div. B, title II, § 206(f), Dec. 19, 2014, 128 Stat. 4071.)

§ 7529. Notification of suspected identity theft

(a) In generalIf the Secretary determines that there has been or may have been an unauthorized use of the identity of any individual, the Secretary shall, without jeopardizing an investigation relating to tax administration—

(1) as soon as practicable—

(A) notify the individual of such determination,

(B) provide instructions on how to file a report with law enforcement regarding the unauthorized use,

(C) identify any steps to be taken by the individual to permit law enforcement to access personal information of the individual during the investigation,

(D) provide information regarding actions the individual may take in order to protect the individual from harm relating to the unauthorized use, and

(E) offer identity protection measures to the individual, such as the use of an identity protection personal identification number, and

(2) at the time the information described in paragraph (1) is provided (or, if not available at such time, as soon as practicable thereafter), issue additional notifications to such individual (or such individual’s designee) regarding—

(A) whether an investigation has been initiated in regards to such unauthorized use,

(B) whether the investigation substantiated an unauthorized use of the identity of the individual, and

(i) any action has been taken against a person relating to such unauthorized use, or

(ii) any referral has been made for criminal prosecution of such person and, to the extent such information is available, whether such person has been criminally charged by indictment or information.

(b) Employment-related identity theft

(1) In general

(2) Determination of employment-related identity theftFor purposes of this section, in making a determination as to whether there has been or may have been an unauthorized use of the identity of an individual to obtain employment, the Secretary shall review any information—

(A) obtained from a statement described in section 6051 or an information return relating to compensation for services rendered other than as an employee, or

(B) provided to the Internal Revenue Service by the Social Security Administration regarding any statement described in section 6051,

which indicates that the social security account number provided on such statement or information return does not correspond with the name provided on such statement or information return or the name on the tax return reporting the income which is included on such statement or information return.

(Added Pub. L. 116–25, title II, § 2007(a), July 1, 2019, 133 Stat. 1005.)

§ 7530. Application of earned income tax credit to possessions of the United States

(a) Puerto Rico

(1) In generalWith respect to calendar year 2021 and each calendar year thereafter, the Secretary shall, except as otherwise provided in this subsection, make payments to Puerto Rico equal to—

(A) the specified matching amount for such calendar year, plus

(B) in the case of calendar years 2021 through 2025, the lesser of—

(i) the expenditures made by Puerto Rico during such calendar year for education efforts with respect to individual taxpayers and tax return preparers relating to the earned income tax credit, or

(ii) $1,000,000.

(2) Requirement to reform earned income tax credit

(3) Specified matching amountFor purposes of this subsection—

(A) In generalThe term “specified matching amount” means, with respect to any calendar year, the lesser of—

(i) the excess (if any) of—(I) the cost to Puerto Rico of the earned income tax credit for taxable years beginning in or with such calendar year, over(II) the base amount for such calendar year, or

(ii) the product of 3, multiplied by the base amount for such calendar year.

(B) Base amount

(i) Base amount for 2021In the case of calendar year 2021, the term “base amount” means the greater of—(I) the cost to Puerto Rico of the earned income tax credit for taxable years beginning in or with calendar year 2019 (rounded to the nearest multiple of $1,000,000), or(II) $200,000,000.

(ii) Inflation adjustmentIn the case of any calendar year after 2021, the term “base amount” means the dollar amount determined under clause (i) increased by an amount equal to—(I) such dollar amount, multiplied by—(II) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting “calendar year 2020” for “calendar year 2016” in subparagraph (A)(ii) thereof.

Any amount determined under this clause shall be rounded to the nearest multiple of $1,000,000.

(4) Rules related to payments

(A) Timing of paymentsThe Secretary shall make payments under paragraph (1) for any calendar year—

(i) after receipt of such information as the Secretary may require to determine such payments, and

(ii) except as provided in clause (i), within a reasonable period of time before the due date for individual income tax returns (as determined under the laws of Puerto Rico) for taxable years which began on the first day of such calendar year.

(B) Information

(b) Possessions with mirror code tax systems

(1) In generalWith respect to calendar year 2021 and each calendar year thereafter, the Secretary shall, except as otherwise provided in this subsection, make payments to the Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands equal to—

(A) the cost to such possession of the earned income tax credit for taxable years beginning in or with such calendar year, plus

(B) in the case of calendar years 2021 through 2025, the lesser of—

(i) the expenditures made by such possession during such calendar year for education efforts with respect to individual taxpayers and tax return preparers relating to such earned income tax credit, or

(ii) $50,000.

(2) Application of certain rules

(1) In generalWith respect to calendar year 2021 and each calendar year thereafter, the Secretary shall, except as otherwise provided in this subsection, make payments to American Samoa equal to—

(A) the lesser of—

(i) the cost to American Samoa of the earned income tax credit for taxable years beginning in or with such calendar year, or

(ii) $16,000,000, plus

(B) in the case of calendar years 2021 through 2025, the lesser of—

(i) the expenditures made by American Samoa during such calendar year for education efforts with respect to individual taxpayers and tax return preparers relating to such earned income tax credit, or

(ii) $50,000.

(2) Requirement to enact and maintain an earned income tax credit

(3) Inflation adjustmentIn the case of any calendar year after 2021, the $16,000,000 amount in paragraph (1)(A)(ii) shall be increased by an amount equal to—

(A) such dollar amount, multiplied by—

(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting “calendar year 2020” for “calendar year 2016” in subparagraph (A)(ii) thereof.

Any increase determined under this clause shall be rounded to the nearest multiple of $100,000.

(4) Application of certain rules

(d) Treatment of payments

(Added Pub. L. 117–2, title IX, § 9625(a), Mar. 11, 2021, 135 Stat. 155.)