CHAPTER 78 —DISCOVERY OF LIABILITY AND ENFORCEMENT OF TITLE
Editorial Notes
Amendments
1 Section numbers editorially supplied.
Subchapter A—Examination and Inspection
Editorial Notes
Amendments
1998—
1984—
1976—
1970—
1958—
1956—Act July 18, 1956, ch. 629, §104(b),
§7601. Canvass of districts for taxable persons and objects
(a) General rule
The Secretary shall, to the extent he deems it practicable, cause officers or employees of the Treasury Department to proceed, from time to time, through each internal revenue district and inquire after and concerning all persons therein who may be liable to pay any internal revenue tax, and all persons owning or having the care and management of any objects with respect to which any tax is imposed.
(b) Penalties
For penalties applicable to forcible obstruction or hindrance of Treasury officers or employees in the performance of their duties, see section 7212.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1976—
§7602. Examination of books and witnesses
(a) Authority to summon, etc.
For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary is authorized—
(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry;
(2) To summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the Secretary may deem proper, to appear before the Secretary at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and
(3) To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry.
(b) Purpose may include inquiry into offense
The purposes for which the Secretary may take any action described in paragraph (1), (2), or (3) of subsection (a) include the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws.
(c) Notice of contact of third parties
(1) General notice
An officer or employee of the Internal Revenue Service may not contact any person other than the taxpayer with respect to the determination or collection of the tax liability of such taxpayer unless such contact occurs during a period (not greater than 1 year) which is specified in a notice which—
(A) informs the taxpayer that contacts with persons other than the taxpayer are intended to be made during such period, and
(B) except as otherwise provided by the Secretary, is provided to the taxpayer not later than 45 days before the beginning of such period.
Nothing in the preceding sentence shall prevent the issuance of notices to the same taxpayer with respect to the same tax liability with periods specified therein that, in the aggregate, exceed 1 year. A notice shall not be issued under this paragraph unless there is an intent at the time such notice is issued to contact persons other than the taxpayer during the period specified in such notice. The preceding sentence shall not prevent the issuance of a notice if the requirement of such sentence is met on the basis of the assumption that the information sought to be obtained by such contact will not be obtained by other means before such contact.
(2) Notice of specific contacts
The Secretary shall periodically provide to a taxpayer a record of persons contacted during such period by the Secretary with respect to the determination or collection of the tax liability of such taxpayer. Such record shall also be provided upon request of the taxpayer.
(3) Exceptions
This subsection shall not apply—
(A) to any contact which the taxpayer has authorized;
(B) if the Secretary determines for good cause shown that such notice would jeopardize collection of any tax or such notice may involve reprisal against any person; or
(C) with respect to any pending criminal investigation.
(d) No administrative summons when there is Justice Department referral
(1) Limitation of authority
No summons may be issued under this title, and the Secretary may not begin any action under section 7604 to enforce any summons, with respect to any person if a Justice Department referral is in effect with respect to such person.
(2) Justice Department referral in effect
For purposes of this subsection—
(A) In general
A Justice Department referral is in effect with respect to any person if—
(i) the Secretary has recommended to the Attorney General a grand jury investigation of, or the criminal prosecution of, such person for any offense connected with the administration or enforcement of the internal revenue laws, or
(ii) any request is made under section 6103(h)(3)(B) for the disclosure of any return or return information (within the meaning of section 6103(b)) relating to such person.
(B) Termination
A Justice Department referral shall cease to be in effect with respect to a person when—
(i) the Attorney General notifies the Secretary, in writing, that—
(I) he will not prosecute such person for any offense connected with the administration or enforcement of the internal revenue laws,
(II) he will not authorize a grand jury investigation of such person with respect to such an offense, or
(III) he will discontinue such a grand jury investigation,
(ii) a final disposition has been made of any criminal proceeding pertaining to the enforcement of the internal revenue laws which was instituted by the Attorney General against such person, or
(iii) the Attorney General notifies the Secretary, in writing, that he will not prosecute such person for any offense connected with the administration or enforcement of the internal revenue laws relating to the request described in subparagraph (A)(ii).
(3) Taxable years, etc., treated separately
For purposes of this subsection, each taxable period (or, if there is no taxable period, each taxable event) and each tax imposed by a separate chapter of this title shall be treated separately.
(e) Limitation on examination on unreported income
The Secretary shall not use financial status or economic reality examination techniques to determine the existence of unreported income of any taxpayer unless the Secretary has a reasonable indication that there is a likelihood of such unreported income.
(f) Limitation on access of persons other than Internal Revenue Service officers and employees
The Secretary shall not, under the authority of section 6103(n), provide any books, papers, records, or other data obtained pursuant to this section to any person authorized under section 6103(n), except when such person requires such information for the sole purpose of providing expert evaluation and assistance to the Internal Revenue Service. No person other than an officer or employee of the Internal Revenue Service or the Office of Chief Counsel may, on behalf of the Secretary, question a witness under oath whose testimony was obtained pursuant to this section.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2019—Subsec. (c)(1).
Subsec. (f).
1998—Subsec. (c).
Subsec. (d).
Subsec. (e).
1982—
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 2019 Amendment
"(1) shall take effect on the date of the enactment of this Act [July 1, 2019]; and
"(2) shall not fail to apply to a contract in effect under section 6103(n) of the Internal Revenue Code of 1986 merely because such contract was in effect before the date of the enactment of this Act."
Effective Date of 1998 Amendment
Effective Date of 1982 Amendment
§7603. Service of summons
(a) In general
A summons issued under section 6420(e)(2), 6421(g)(2), 6427(j)(2), or 7602 shall be served by the Secretary, by an attested copy delivered in hand to the person to whom it is directed, or left at his last and usual place of abode; and the certificate of service signed by the person serving the summons shall be evidence of the facts it states on the hearing of an application for the enforcement of the summons. When the summons requires the production of books, papers, records, or other data, it shall be sufficient if such books, papers, records, or other data are described with reasonable certainty.
(b) Service by mail to third-party recordkeepers
(1) In general
A summons referred to in subsection (a) for the production of books, papers, records, or other data by a third-party recordkeeper may also be served by certified or registered mail to the last known address of such recordkeeper.
(2) Third-party recordkeeper
For purposes of paragraph (1), the term "third-party recordkeeper" means—
(A) any mutual savings bank, cooperative bank, domestic building and loan association, or other savings institution chartered and supervised as a savings and loan or similar association under Federal or State law, any bank (as defined in section 581), or any credit union (within the meaning of section 501(c)(14)(A)),
(B) any consumer reporting agency (as defined under section 603(f) of the Fair Credit Reporting Act (
(C) any person extending credit through the use of credit cards or similar devices,
(D) any broker (as defined in section 3(a)(4) of the Securities Exchange Act of 1934 (
(E) any attorney,
(F) any accountant,
(G) any barter exchange (as defined in section 6045(c)(3)),
(H) any regulated investment company (as defined in section 851) and any agent of such regulated investment company when acting as an agent thereof,
(I) any enrolled agent, and
(J) any owner or developer of a computer software source code (as defined in section 7612(d)(2)).
Subparagraph (J) shall apply only with respect to a summons requiring the production of the source code referred to in subparagraph (J) or the program and data described in section 7612(b)(1)(A)(ii) to which such source code relates.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2000—Subsec. (b)(2)(A) to (G).
1998—Subsec. (a).
Subsec. (b).
Subsec. (b)(2).
1988—
1986—
1984—
1983—
1980—
1978—
1976—
1970—
1965—
1956—Act June 29, 1956, inserted reference to section 6421(f)(2).
Act Apr. 2, 1956, inserted reference to section 6420(e)(2).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by section 3413(c) of
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1984 Amendment
Amendment by
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1978 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by
Effective Date of 1970 Amendment
Amendment by
Effective Date of 1965 Amendment
Amendment by
Effective Date of 1956 Amendment
Amendment by act June 29, 1956, effective June 29, 1956, see section 211 of act June 29, 1956, set out as a note under
§7604. Enforcement of summons
(a) Jurisdiction of district court
If any person is summoned under the internal revenue laws to appear, to testify, or to produce books, papers, records, or other data, the United States district court for the district in which such person resides or is found shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, records, or other data.
(b) Enforcement
Whenever any person summoned under section 6420(e)(2), 6421(g)(2), 6427(j)(2), or 7602 neglects or refuses to obey such summons, or to produce books, papers, records, or other data, or to give testimony, as required, the Secretary may apply to the judge of the district court or to a United States magistrate judge for the district within which the person so summoned resides or is found for an attachment against him as for a contempt. It shall be the duty of the judge or magistrate judge to hear the application, and, if satisfactory proof is made, to issue an attachment, directed to some proper officer, for the arrest of such person, and upon his being brought before him to proceed to a hearing of the case; and upon such hearing the judge or the United States magistrate judge shall have power to make such order as he shall deem proper, not inconsistent with the law for the punishment of contempts, to enforce obedience to the requirements of the summons and to punish such person for his default or disobedience.
(c) Cross references
(1) Authority to issue orders, processes, and judgments
For authority of district courts generally to enforce the provisions of this title, see section 7402.
(2) Penalties
For penalties applicable to violation of section 6420(e)(2), 6421(g)(2), 6427(j)(2), or 7602, see section 7210.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1988—Subsecs. (b), (c)(2).
1986—Subsecs. (b), (c)(2).
1984—Subsecs. (b), (c)(2).
1983—Subsecs. (b), (c)(2).
1980—Subsecs. (b), (c)(2).
1978—Subsec. (b).
Subsec. (c)(2).
1976—Subsec. (b).
1970—Subsecs. (b), (c).
1965—Subsecs. (b), (c).
1956—Subsecs. (b), (c). Act Apr. 2, 1956, inserted references to section 6420(e)(2).
Act June 29, 1956, inserted references to section 6421(f)(2).
Statutory Notes and Related Subsidiaries
Change of Name
"United States magistrate judge" and "magistrate judge" substituted for "United States magistrate" and "magistrate", respectively, wherever appearing in subsec. (b) pursuant to section 321 of
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1984 Amendment
Amendment by
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1978 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by
Effective Date of 1970 Amendment
Amendment by
Effective Date of 1965 Amendment
Amendment by
Effective Date of 1956 Amendment
Amendment by act June 29, 1956, effective June 29, 1956, see section 211 of act June 29, 1956, set out as a note under
§7605. Time and place of examination
(a) Time and place
The time and place of examination pursuant to the provisions of section 6420(e)(2), 6421(g)(2), 6427(j)(2), or 7602 shall be such time and place as may be fixed by the Secretary and as are reasonable under the circumstances. In the case of a summons under authority of paragraph (2) of section 7602, or under the corresponding authority of section 6420(e)(2), 6421(g)(2), or 6427(j)(2), the date fixed for appearance before the Secretary shall not be less than 10 days from the date of the summons.
(b) Restrictions on examination of taxpayer
No taxpayer shall be subjected to unnecessary examination or investigations, and only one inspection of a taxpayer's books of account shall be made for each taxable year unless the taxpayer requests otherwise or unless the Secretary, after investigation, notifies the taxpayer in writing that an additional inspection is necessary.
(c) Cross reference
For provisions restricting church tax inquiries and examinations, see section 7611.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1988—Subsec. (a).
1986—Subsec. (a).
1984—Subsec. (a).
Subsec. (c).
1983—Subsec. (a).
1980—Subsec. (a).
1978—Subsec. (a).
1976—Subsec. (a).
Subsecs. (b), (c).
1970—Subsec. (a).
1969—Subsec. (c).
1965—Subsec. (a).
1956—Subsec. (a). Act June 29, 1956, inserted references to section 6421(f)(2).
Act Apr. 2, 1956, inserted references to section 6420(e)(2) in second sentence.
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1984 Amendment
Amendment by section 911(d)(2)(G) of
Amendment by section 1033(c)(1) of
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1978 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by
Effective Date of 1970 Amendment
Amendment by
Effective Date of 1969 Amendment
Amendment by
Effective Date of 1965 Amendment
Amendment by
Effective Date of 1956 Amendment
Amendment by act June 29, 1956, effective June 29, 1956, see section 211 of act June 29, 1956, set out as a note under
Regulations
§7606. Entry of premises for examination of taxable objects
(a) Entry during day
The Secretary may enter, in the daytime, any building or place where any articles or objects subject to tax are made, produced, or kept, so far as it may be necessary for the purpose of examining said articles or objects.
(b) Entry at night
When such premises are open at night, the Secretary may enter them while so open, in the performance of his official duties.
(c) Penalties
For penalty for refusal to permit entry or examination, see section 7342.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1976—
[§7607. Repealed. Pub. L. 98–473, title II, §320(b), Oct. 12, 1984, 98 Stat. 2056 , and Pub. L. 98–573, title II, §213(b)(1), Oct. 30, 1984, 98 Stat. 2988 ]
Section, added July 18, 1956, ch. 629, title I, §104(a),
Another section 7607 was renumbered
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Oct. 15, 1984, see section 214(e) of
§7608. Authority of internal revenue enforcement officers
(a) Enforcement of subtitle E and other laws pertaining to liquor, tobacco, and firearms
Any investigator, agent, or other internal revenue officer by whatever term designated, whom the Secretary charges with the duty of enforcing any of the criminal, seizure, or forfeiture provisions of subtitle E or of any other law of the United States pertaining to the commodities subject to tax under such subtitle for the enforcement of which the Secretary is responsible, may—
(1) carry firearms;
(2) execute and serve search warrants and arrest warrants, and serve subpoenas and summonses issued under authority of the United States;
(3) in respect to the performance of such duty, make arrests without warrant for any offense against the United States committed in his presence, or for any felony cognizable under the laws of the United States if he has reasonable grounds to believe that the person to be arrested has committed, or is committing, such felony; and
(4) in respect to the performance of such duty, make seizures of property subject to forfeiture to the United States.
(b) Enforcement of laws relating to internal revenue other than subtitle E
(1) Any criminal investigator of the Intelligence Division of the Internal Revenue Service whom the Secretary charges with the duty of enforcing any of the criminal provisions of the internal revenue laws, any other criminal provisions of law relating to internal revenue for the enforcement of which the Secretary is responsible, or any other law for which the Secretary has delegated investigatory authority to the Internal Revenue Service, is, in the performance of his duties, authorized to perform the functions described in paragraph (2).
(2) The functions authorized under this subsection to be performed by an officer referred to in paragraph (1) are—
(A) to execute and serve search warrants and arrest warrants, and serve subpoenas and summonses issued under authority of the United States;
(B) to make arrests without warrant for any offense against the United States relating to the internal revenue laws committed in his presence, or for any felony cognizable under such laws if he has reasonable grounds to believe that the person to be arrested has committed or is committing any such felony; and
(C) to make seizures of property subject to forfeiture under the internal revenue laws.
(c) Rules relating to undercover operations
(1) Certification required for exemption of undercover operations from certain laws
With respect to any undercover investigative operation of the Internal Revenue Service (hereinafter in this subsection referred to as the "Service") which is necessary for the detection and prosecution of offenses under the internal revenue laws, any other criminal provisions of law relating to internal revenue, or any other law for which the Secretary has delegated investigatory authority to the Internal Revenue Service—
(A) sums authorized to be appropriated for the Service may be used—
(i) to purchase property, buildings, and other facilities, and to lease space, within the United States, the District of Columbia, and the territories and possessions of the United States without regard to—
(I)
(II) sections 6301(a) and (b)(1)–(3) and 6306 of
(III)
(IV)
(V)
(ii) to establish or to acquire proprietary corporations or business entities as part of the undercover operation, and to operate such corporations or business entities on a commercial basis, without regard to
(B) sums authorized to be appropriated for the Service and the proceeds from the undercover operations may be deposited in banks or other financial institutions without regard to the provisions of
(C) the proceeds from the undercover operation may be used to offset necessary and reasonable expenses incurred in such operation without regard to the provisions of
This paragraph shall apply only upon the written certification of the Commissioner of Internal Revenue (or, if designated by the Commissioner, the Deputy Commissioner or an Assistant Commissioner of Internal Revenue) that any action authorized by subparagraph (A), (B), or (C) is necessary for the conduct of such undercover operation.
(2) Liquidation of corporations and business entities
If a corporation or business entity established or acquired as part of an undercover operation under subparagraph (B) of paragraph (1) with a net value over $50,000 is to be liquidated, sold, or otherwise disposed of, the Service, as much in advance as the Commissioner or his delegate determines is practicable, shall report the circumstances to the Secretary. The proceeds of the liquidation, sale, or other disposition, after obligations are met, shall be deposited in the Treasury of the United States as miscellaneous receipts.
(3) Deposit of proceeds
As soon as the proceeds from an undercover investigative operation with respect to which an action is authorized and carried out under subparagraphs (B) and (C) of paragraph (1) are no longer necessary for the conduct of such operation, such proceeds or the balance of such proceeds remaining at the time shall be deposited into the Treasury of the United States as miscellaneous receipts.
(4) Audits
(A) The Service shall conduct a detailed financial audit of each undercover investigative operation which is closed in each fiscal year; and
(i) submit the results of the audit in writing to the Secretary; and
(ii) not later than 180 days after such undercover operation is closed, submit a report to the Congress concerning such audit.
(B) The Service shall also submit a report annually to the Congress specifying as to its undercover investigative operations—
(i) the number, by programs, of undercover investigative operations pending as of the end of the 1-year period for which such report is submitted;
(ii) the number, by programs, of undercover investigative operations commenced in the 1-year period for which such report is submitted;
(iii) the number, by programs, of undercover investigative operations closed in the 1-year period for which such report is submitted, and
(iv) the following information with respect to each undercover investigative operation pending as of the end of the 1-year period for which such report is submitted or closed during such 1-year period—
(I) the date the operation began and the date of the certification referred to in the last sentence of paragraph (1),
(II) the total expenditures under the operation and the amount and use of the proceeds from the operation,
(III) a detailed description of the operation including the potential violation being investigated and whether the operation is being conducted under grand jury auspices, and
(IV) the results of the operation including the results of criminal proceedings.
(5) Definitions
For purposes of paragraph (4)—
(A) Closed
The term "closed" means the date on which the later of the following occurs;
(i) all criminal proceedings (other than appeals) are concluded, or
(ii) covert activities are concluded, whichever occurs later.
(B) Employees
The term "employees" has the meaning given such term by
(C) Undercover investigative operation
The term "undercover investigative operation" means any undercover investigative operation of the Service; except that, for purposes of subparagraphs (A) and (C) of paragraph (4), such term only includes an operation which is exempt from
(Added
Editorial Notes
Prior Provisions
A prior section 7608 was renumbered
Amendments
2011—Subsec. (c)(1)(A)(i)(II).
Subsec. (c)(1)(A)(i)(III).
Subsec. (c)(1)(A)(i)(V).
2008—Subsec. (c)(6).
"(A) shall apply after November 17, 1988, and before January 1, 1990, and
"(B) shall apply after the date of the enactment of this paragraph and before January 1, 2008.
All amounts expended pursuant to this subsection during the period described in subparagraph (B) shall be recovered to the extent possible, and deposited in the Treasury of the United States as miscellaneous receipts, before January 1, 2008."
2006—Subsec. (c)(6).
2005—Subsec. (c)(6).
2003—Subsec. (c)(1)(A)(i)(IV).
2002—Subsec. (c)(1)(A)(i)(IV).
2000—Subsec. (c)(6).
1998—Subsec. (b)(1).
1996—Subsec. (c)(2).
Subsec. (c)(4)(B)(ii).
Subsec. (c)(4)(B)(iii), (iv).
Subsec. (c)(5)(C).
"(i) in which—
"(I) the gross receipts (excluding interest earned) exceed $50,000; or
"(II) expenditures, both recoverable and nonrecoverable (other than expenditures for salaries of employees), exceed $150,000; and
"(ii) which is exempt from
Clauses (i) and (ii) shall not apply with respect to the report required under subparagraph (B) of paragraph (4)."
Subsec. (c)(6).
1990—Subsec. (c)(1)(B).
Subsec. (c)(5)(C).
1988—Subsec. (b)(1).
Subsec. (c).
1976—
1962—
Statutory Notes and Related Subsidiaries
Effective Date of 2008 Amendment
Effective Date of 2003 Amendment
Amendment by
Effective Date of 1996 Amendment
Effective Date of 1988 Amendment
Effective Date of 1962 Amendment
Effective Date
Section effective Sept. 3, 1958, see section 210(a)(1) of
§7609. Special procedures for third-party summonses
(a) Notice
(1) In general
If any summons to which this section applies requires the giving of testimony on or relating to, the production of any portion of records made or kept on or relating to, or the production of any computer software source code (as defined in 7612(d)(2)) with respect to, any person (other than the person summoned) who is identified in the summons, then notice of the summons shall be given to any person so identified within 3 days of the day on which such service is made, but no later than the 23rd day before the day fixed in the summons as the day upon which such records are to be examined. Such notice shall be accompanied by a copy of the summons which has been served and shall contain an explanation of the right under subsection (b)(2) to bring a proceeding to quash the summons.
(2) Sufficiency of notice
Such notice shall be sufficient if, on or before such third day, such notice is served in the manner provided in section 7603 (relating to service of summons) upon the person entitled to notice, or is mailed by certified or registered mail to the last known address of such person, or, in the absence of a last known address, is left with the person summoned. If such notice is mailed, it shall be sufficient if mailed to the last known address of the person entitled to notice or, in the case of notice to the Secretary under section 6903 of the existence of a fiduciary relationship, to the last known address of the fiduciary of such person, even if such person or fiduciary is then deceased, under a legal disability, or no longer in existence.
(3) Nature of summons
Any summons to which this subsection applies (and any summons in aid of collection described in subsection (c)(2)(D)) shall identify the taxpayer to whom the summons relates or the other person to whom the records pertain and shall provide such other information as will enable the person summoned to locate the records required under the summons.
(b) Right to intervene; right to proceeding to quash
(1) Intervention
Notwithstanding any other law or rule of law, any person who is entitled to notice of a summons under subsection (a) shall have the right to intervene in any proceeding with respect to the enforcement of such summons under section 7604.
(2) Proceeding to quash
(A) In general
Notwithstanding any other law or rule of law, any person who is entitled to notice of a summons under subsection (a) shall have the right to begin a proceeding to quash such summons not later than the 20th day after the day such notice is given in the manner provided in subsection (a)(2). In any such proceeding, the Secretary may seek to compel compliance with the summons.
(B) Requirement of notice to person summoned and to Secretary
If any person begins a proceeding under subparagraph (A) with respect to any summons, not later than the close of the 20-day period referred to in subparagraph (A) such person shall mail by registered or certified mail a copy of the petition to the person summoned and to such office as the Secretary may direct in the notice referred to in subsection (a)(1).
(C) Intervention; etc.
Notwithstanding any other law or rule of law, the person summoned shall have the right to intervene in any proceeding under subparagraph (A). Such person shall be bound by the decision in such proceeding (whether or not the person intervenes in such proceeding).
(c) Summons to which section applies
(1) In general
Except as provided in paragraph (2), this section shall apply to any summons issued under paragraph (2) of section 7602(a) or under section 6420(e)(2), 6421(g)(2), 6427(j)(2), or 7612.
(2) Exceptions
This section shall not apply to any summons—
(A) served on the person with respect to whose liability the summons is issued, or any officer or employee of such person;
(B) issued to determine whether or not records of the business transactions or affairs of an identified person have been made or kept;
(C) issued solely to determine the identity of any person having a numbered account (or similar arrangement) with a bank or other institution described in section 7603(b)(2)(A);
(D) issued in aid of the collection of—
(i) an assessment made or judgment rendered against the person with respect to whose liability the summons is issued; or
(ii) the liability at law or in equity of any transferee or fiduciary of any person referred to in clause (i); or
(E)(i) issued by a criminal investigator of the Internal Revenue Service in connection with the investigation of an offense connected with the administration or enforcement of the internal revenue laws; and
(ii) served on any person who is not a third-party recordkeeper (as defined in section 7603(b)).
(3) John Doe and certain other summonses
Subsection (a) shall not apply to any summons described in subsection (f) or (g).
(4) Records
For purposes of this section, the term "records" includes books, papers, and other data.
(d) Restriction on examination of records
No examination of any records required to be produced under a summons as to which notice is required under subsection (a) may be made—
(1) before the close of the 23rd day after the day notice with respect to the summons is given in the manner provided in subsection (a)(2), or
(2) where a proceeding under subsection (b)(2)(A) was begun within the 20-day period referred to in such subsection and the requirements of subsection (b)(2)(B) have been met, except in accordance with an order of the court having jurisdiction of such proceeding or with the consent of the person beginning the proceeding to quash.
(e) Suspension of statute of limitations
(1) Subsection (b) action
If any person takes any action as provided in subsection (b) and such person is the person with respect to whose liability the summons is issued (or is the agent, nominee, or other person acting under the direction or control of such person), then the running of any period of limitations under section 6501 (relating to the assessment and collection of tax) or under section 6531 (relating to criminal prosecutions) with respect to such person shall be suspended for the period during which a proceeding, and appeals therein, with respect to the enforcement of such summons is pending.
(2) Suspension after 6 months of service of summons
In the absence of the resolution of the summoned party's response to the summons, the running of any period of limitations under section 6501 or under section 6531 with respect to any person with respect to whose liability the summons is issued (other than a person taking action as provided in subsection (b)) shall be suspended for the period—
(A) beginning on the date which is 6 months after the service of such summons, and
(B) ending with the final resolution of such response.
(f) Additional requirement in the case of a John Doe summons
Any summons described in subsection (c)(1) which does not identify the person with respect to whose liability the summons is issued may be served only after a court proceeding in which the Secretary establishes that—
(1) the summons relates to the investigation of a particular person or ascertainable group or class of persons,
(2) there is a reasonable basis for believing that such person or group or class of persons may fail or may have failed to comply with any provision of any internal revenue law, and
(3) the information sought to be obtained from the examination of the records or testimony (and the identity of the person or persons with respect to whose liability the summons is issued) is not readily available from other sources.
The Secretary shall not issue any summons described in the preceding sentence unless the information sought to be obtained is narrowly tailored to information that pertains to the failure (or potential failure) of the person or group or class of persons referred to in paragraph (2) to comply with one or more provisions of the internal revenue law which have been identified for purposes of such paragraph.
(g) Special exception for certain summonses
A summons is described in this subsection if, upon petition by the Secretary, the court determines, on the basis of the facts and circumstances alleged, that there is reasonable cause to believe the giving of notice may lead to attempts to conceal, destroy, or alter records relevant to the examination, to prevent the communication of information from other persons through intimidation, bribery, or collusion, or to flee to avoid prosecution, testifying, or production of records.
(h) Jurisdiction of district court; etc.
(1) Jurisdiction
The United States district court for the district within which the person to be summoned resides or is found shall have jurisdiction to hear and determine any proceeding brought under subsection (b)(2), (f), or (g). An order denying the petition shall be deemed a final order which may be appealed.
(2) Special rule for proceedings under subsections (f) and (g)
The determinations required to be made under subsections (f) and (g) shall be made ex parte and shall be made solely on the petition and supporting affidavits.
(i) Duty of summoned party
(1) Recordkeeper must assemble records and be prepared to produce records
On receipt of a summons to which this section applies for the production of records, the summoned party shall proceed to assemble the records requested, or such portion thereof as the Secretary may prescribe, and shall be prepared to produce the records pursuant to the summons on the day on which the records are to be examined.
(2) Secretary may give summoned party certificate
The Secretary may issue a certificate to the summoned party that the period prescribed for beginning a proceeding to quash a summons has expired and that no such proceeding began within such period, or that the taxpayer consents to the examination.
(3) Protection for summoned party who discloses
Any summoned party, or agent or employee thereof, making a disclosure of records or testimony pursuant to this section in good faith reliance on the certificate of the Secretary or an order of a court requiring production of records or the giving of such testimony shall not be liable to any customer or other person for such disclosure.
(4) Notice of suspension of statute of limitations in the case of a John Doe summons
In the case of a summons described in subsection (f) with respect to which any period of limitations has been suspended under subsection (e)(2), the summoned party shall provide notice of such suspension to any person described in subsection (f).
(j) Use of summons not required
Nothing in this section shall be construed to limit the Secretary's ability to obtain information, other than by summons, through formal or informal procedures authorized by sections 7601 and 7602.
(Added
Editorial Notes
Prior Provisions
A prior section 7609 was renumbered
Amendments
2019—Subsec. (f).
2005—Subsec. (c)(2)(D) to (F).
Subsec. (c)(3), (4).
1998—Subsec. (a)(1).
"(A) any summons described in subsection (c) is served on any person who is a third-party recordkeeper, and
"(B) the summons requires the production of any portion of records made or kept of the business transactions or affairs of any person (other than the person summoned) who is identified in the description of the records contained in the summons,
then".
Subsec. (a)(3).
"(A) any mutual savings bank, cooperative bank, domestic building and loan association, or other savings institution chartered and supervised as a savings and loan or similar association under Federal or State law, any bank (as defined in section 581), or any credit union (within the meaning of section 501(c)(14)(A));
"(B) any consumer reporting agency (as defined under section 603(d) of the Fair Credit Reporting Act (
"(C) any person extending credit through the use of credit cards or similar devices;
"(D) any broker (as defined in section 3(a)(4) of the Securities Exchange Act of 1934 (
"(E) any attorney;
"(F) any accountant;
"(G) any barter exchange (as defined in section 6045(c)(3));
"(H) any regulated investment company (as defined in section 851) and any agent of such regulated investment company when acting as an agent thereof; and
"(I) any enrolled agent."
Subsec. (a)(4).
"(A) served on the person with respect to whose liability the summons is issued, or any officer or employee of such person,
"(B) to determine whether or not records of the business transactions or affairs of an identified person have been made or kept, or
"(C) described in subsection (f)."
Subsec. (a)(5).
Subsec. (c).
Subsec. (e)(2).
Subsec. (f).
Subsec. (f)(3).
Subsec. (g).
Subsec. (i).
Subsec. (i)(1).
Subsec. (i)(2).
Subsec. (i)(3).
Subsec. (j).
1996—Subsec. (a)(3)(I).
1988—Subsec. (c)(1).
Subsec. (e)(2).
Subsec. (i).
Subsec. (i)(4).
1986—Subsec. (a)(3)(H).
Subsec. (c)(1).
Subsec. (e).
Subsec. (i)(4).
1984—Subsec. (c)(1).
Subsec. (h)(3).
1983—Subsec. (c)(1).
1982—Subsec. (a)(1).
Subsec. (a)(3)(G).
Subsec. (b).
Subsec. (d).
Subsec. (h).
Subsec. (i).
1980—Subsec. (c)(1).
1978—Subsec. (c)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 2019 Amendment
Effective Date of 2005 Amendment
Effective Date of 1998 Amendment
Effective Date of 1996 Amendment
Effective Date of 1988 Amendment
Amendment by section 1017(c)(9), (12) of
Effective Date of 1986 Amendment
Amendment by section 1703(e)(2)(G) of
Effective Date of 1984 Amendments
Amendment by
Amendment by section 714(i) of
Amendment by section 911(d)(2)(G) of
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1982 Amendment
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1978 Amendments
Amendment by
Amendment by
Effective Date
§7610. Fees and costs for witnesses
(a) In general
The Secretary shall by regulations establish the rates and conditions under which payment may be made of—
(1) fees and mileage to persons who are summoned to appear before the Secretary, and
(2) reimbursement for such costs that are reasonably necessary which have been directly incurred in searching for, reproducing, or transporting books, papers, records, or other data required to be produced by summons.
(b) Exceptions
No payment may be made under paragraph (2) of subsection (a) if—
(1) the person with respect to whose liability the summons is issued has a proprietary interest in the books, papers, records or other data required to be produced, or
(2) the person summoned is the person with respect to whose liability the summons is issued or an officer, employee, agent, accountant, or attorney of such person who, at the time the summons is served, is acting as such.
(c) Summons to which section applies
This section applies with respect to any summons authorized under section 6420(e)(2), 6421(g)(2), 6427(j)(2), or 7602.
(Added
Editorial Notes
Amendments
1988—Subsec. (c).
1986—Subsec. (c).
1984—Subsec. (c).
1983—Subsec. (c).
1980—Subsec. (c).
1978—Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1984 Amendment
Amendment by
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1978 Amendment
Amendment by
§7611. Restrictions on church tax inquiries and examinations
(a) Restrictions on inquiries
(1) In general
The Secretary may begin a church tax inquiry only if—
(A) the reasonable belief requirements of paragraph (2), and
(B) the notice requirements of paragraph (3), have been met.
(2) Reasonable belief requirements
The requirements of this paragraph are met with respect to any church tax inquiry if an appropriate high-level Treasury official reasonably believes (on the basis of facts and circumstances recorded in writing) that the church—
(A) may not be exempt, by reason of its status as a church, from tax under section 501(a), or
(B) may be carrying on an unrelated trade or business (within the meaning of section 513) or otherwise engaged in activities subject to taxation under this title.
(3) Inquiry notice requirements
(A) In general
The requirements of this paragraph are met with respect to any church tax inquiry if, before beginning such inquiry, the Secretary provides written notice to the church of the beginning of such inquiry.
(B) Contents of inquiry notice
The notice required by this paragraph shall include—
(i) an explanation of—
(I) the concerns which gave rise to such inquiry, and
(II) the general subject matter of such inquiry, and
(ii) a general explanation of the applicable—
(I) administrative and constitutional provisions with respect to such inquiry (including the right to a conference with the Secretary before any examination of church records), and
(II) provisions of this title which authorize such inquiry or which may be otherwise involved in such inquiry.
(b) Restrictions on examinations
(1) In general
The Secretary may begin a church tax examination only if the requirements of paragraph (2) have been met and such examination may be made only—
(A) in the case of church records, to the extent necessary to determine the liability for, and the amount of, any tax imposed by this title, and
(B) in the case of religious activities, to the extent necessary to determine whether an organization claiming to be a church is a church for any period.
(2) Notice of examination; opportunity for conference
The requirements of this paragraph are met with respect to any church tax examination if—
(A) at least 15 days before the beginning of such examination, the Secretary provides the notice described in paragraph (3) to both the church and the appropriate regional counsel of the Internal Revenue Service, and
(B) the church has a reasonable time to participate in a conference described in paragraph (3)(A)(iii), but only if the church requests such a conference before the beginning of the examination.
(3) Contents of examination notice, et cetera
(A) In general
The notice described in this paragraph is a written notice which includes—
(i) a copy of the church tax inquiry notice provided to the church under subsection (a),
(ii) a description of the church records and activities which the Secretary seeks to examine,
(iii) an offer to have a conference between the church and the Secretary in order to discuss, and attempt to resolve, concerns relating to such examination, and
(iv) a copy of all documents which were collected or prepared by the Internal Revenue Service for use in such examination and the disclosure of which is required by the Freedom of Information Act (
(B) Earliest day examination notice may be provided
The examination notice described in subparagraph (A) shall not be provided to the church before the 15th day after the date on which the church tax inquiry notice was provided to the church under subsection (a).
(C) Opinion of regional counsel with respect to examination
Any regional counsel of the Internal Revenue Service who receives an examination notice under paragraph (1) may, within 15 days after such notice is provided, submit to the regional commissioner for the region an advisory objection to the examination.
(4) Examination of records and activities not specified in notice
Within the course of a church tax examination which (at the time the examination begins) meets the requirements of paragraphs (1) and (2), the Secretary may examine any church records or religious activities which were not specified in the examination notice to the extent such examination meets the requirement of subparagraph (A) or (B) of paragraph (1) (whichever applies).
(c) Limitation on period of inquiries and examinations
(1) Inquiries and examinations must be completed within 2 years
(A) In general
The Secretary shall complete any church tax status inquiry or examination (and make a final determination with respect thereto) not later than the date which is 2 years after the examination notice date.
(B) Inquiries not followed by examinations
In the case of a church tax inquiry with respect to which there is no examination notice under subsection (b), the Secretary shall complete such inquiry (and make a final determination with respect thereto) not later than the date which is 90 days after the inquiry notice date.
(2) Suspension of 2-year period
The running of the 2-year period described in paragraph (1)(A) and the 90-day period in paragraph (1)(B) shall be suspended—
(A) for any period during which—
(i) a judicial proceeding brought by the church against the Secretary with respect to the church tax inquiry or examination is pending or being appealed,
(ii) a judicial proceeding brought by the Secretary against the church (or any official thereof) to compel compliance with any reasonable request of the Secretary in a church tax examination for examination of church records or religious activities is pending or being appealed, or
(iii) the Secretary is unable to take actions with respect to the church tax inquiry or examination by reason of an order issued in any judicial proceeding brought under section 7609,
(B) for any period in excess of 20 days (but not in excess of 6 months) in which the church or its agents fail to comply with any reasonable request of the Secretary for church records or other information, or
(C) for any period mutually agreed upon by the Secretary and the church.
(d) Limitations on revocation of tax-exempt status, etc.
(1) In general
The Secretary may—
(A) determine that an organization is not a church which—
(i) is exempt from taxation by reason of section 501(a), or
(ii) is described in section 170(c), or
(B)(i) send a notice of deficiency of any tax involved in a church tax examination, or
(ii) in the case of any tax with respect to which subchapter B of
only if the appropriate regional counsel of the Internal Revenue Service determines in writing that there has been substantial compliance with the requirements of this section and approves in writing of such revocation, notice of deficiency, or assessment.
(2) Limitations on period of assessment
(A) Revocation of tax-exempt status
(i) 3-year statute of limitations generally
In the case of any church tax examination with respect to the revocation of tax-exempt status under section 501(a), any tax imposed by
(ii) 6-year statute of limitations where tax-exempt status revoked
If an organization is not a church exempt from tax under section 501(a) for any of the 3 taxable years described in clause (i), clause (i) shall be applied by substituting "6 most recent taxable years" for "3 most recent taxable years".
(B) Unrelated business tax
In the case of any church tax examination with respect to the tax imposed by section 511 (relating to unrelated business income), such tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, only with respect to the 6 most recent taxable years ending before the examination notice date.
(C) Exception where shorter statute of limitations otherwise applicable
Subparagraphs (A) and (B) shall not be construed to increase the period otherwise applicable under subchapter A of
(e) Information not collected in substantial compliance with procedures to stay summons proceeding
(1) In general
If there has not been substantial compliance with—
(A) the notice requirements of subsection (a) or (b),
(B) the conference requirement described in subsection (b)(3)(A)(iii), or
(C) the approval requirement of subsection (d)(1) (if applicable),
with respect to any church tax inquiry or examination, any proceeding to compel compliance with any summons with respect to such inquiry or examination shall be stayed until the court finds that all practicable steps to correct the noncompliance have been taken. The period applicable under paragraph (1) or subsection (c) shall not be suspended during the period of any stay under the preceding sentence.
(2) Remedy to be exclusive
No suit may be maintained, and no defense may be raised in any proceeding (other than as provided in paragraph (1)), by reason of any noncompliance by the Secretary with the requirements of this section.
(f) Limitations on additional inquiries and examinations
(1) In general
If any church tax inquiry or examination with respect to any church is completed and does not result in—
(A) a revocation, notice of deficiency, or assessment described in subsection (d)(1), or
(B) a request by the Secretary for any significant change in the operational practices of the church (including the adequacy of accounting practices),
no other church tax inquiry or examination may begin with respect to such church during the applicable 5-year period unless such inquiry or examination is approved in writing by the Secretary or does not involve the same or similar issues involved in the preceding inquiry or examination. For purposes of the preceding sentence, an inquiry or examination shall be treated as completed not later than the expiration of the applicable period under paragraph (1) of subsection (c).
(2) Applicable 5-year period
For purposes of paragraph (1), the term "applicable 5-year period" means the 5-year period beginning on the date the notice taken into account for purposes of subsection (c)(1) was provided. For purposes of the preceding sentence, the rules of subsection (c)(2) shall apply.
(g) Treatment of final report of revenue agent
Any final report of an agent of the Internal Revenue Service shall be treated as a determination of the Secretary under paragraph (1) of section 7428(a), and any church receiving such a report shall be treated for purposes of sections 7428 and 7430 as having exhausted the administrative remedies available to it.
(h) Definitions
For purposes of this section—
(1) Church
The term "church" includes—
(A) any organization claiming to be a church, and
(B) any convention or association of churches.
(2) Church tax inquiry
The term "church tax inquiry" means any inquiry to a church (other than an examination) to serve as a basis for determining whether a church—
(A) is exempt from tax under section 501(a) by reason of its status as a church, or
(B) is carrying on an unrelated trade or business (within the meaning of section 513) or otherwise engaged in activities which may be subject to taxation under this title.
(3) Church tax examination
The term "church tax examination" means any examination for purposes of making a determination described in paragraph (2) of—
(A) church records at the request of the Internal Revenue Service, or
(B) the religious activities of any church.
(4) Church records
(A) In general
The term "church records" means all corporate and financial records regularly kept by a church, including corporate minute books and lists of members and contributors.
(B) Exception
Such term shall not include records acquired—
(i) pursuant to a summons to which section 7609 applies, or
(ii) from any governmental agency.
(5) Inquiry notice date
The term "inquiry notice date" means the date the notice with respect to a church tax inquiry is provided under subsection (a).
(6) Examination notice date
The term "examination notice date" means the date the notice with respect to a church tax examination is provided under subsection (b) to the church.
(7) Appropriate high-level Treasury official
The term "appropriate high-level Treasury official" means the Secretary of the Treasury or any delegate of the Secretary whose rank is no lower than that of a principal Internal Revenue officer for an internal revenue region.
(i) Section not to apply to criminal investigations, etc.
This section shall not apply to—
(1) any criminal investigation,
(2) any inquiry or examination relating to the tax liability of any person other than a church,
(3) any assessment under section 6851 (relating to termination assessments of income tax), section 6852 (relating to termination assessments in case of flagrant political expenditures of section 501(c)(3) organizations), or section 6861 (relating to jeopardy assessments of income taxes, etc.),
(4) any willful attempt to defeat or evade any tax imposed by this title, or
(5) any knowing failure to file a return of tax imposed by this title.
(Added
Editorial Notes
Prior Provisions
A prior section 7611 was renumbered
Amendments
1998—Subsec. (f)(1).
1996—Subsec. (h)(7).
1989—Subsec. (i)(3).
1988—Subsec. (i)(5).
1987—Subsec. (i)(3).
1986—Subsec. (a)(1)(B).
Subsec. (i).
Statutory Notes and Related Subsidiaries
Effective Date of 1989 Amendment
Amendment by
Effective Date of 1988 Amendment
Amendment by
Effective Date
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
§7612. Special procedures for summonses for computer software
(a) General rule
For purposes of this title—
(1) except as provided in subsection (b), no summons may be issued under this title, and the Secretary may not begin any action under section 7604 to enforce any summons to produce or analyze any tax-related computer software source code; and
(2) any software and related materials which are provided to the Secretary under this title shall be subject to the safeguards under subsection (c).
(b) Circumstances under which computer software source code may be provided
(1) In general
Subsection (a)(1) shall not apply to any portion, item, or component of tax-related computer software source code if—
(A) the Secretary is unable to otherwise reasonably ascertain the correctness of any item on a return from—
(i) the taxpayer's books, papers, records, or other data; or
(ii) the computer software executable code (and any modifications thereof) to which such source code relates and any associated data which, when executed, produces the output to ascertain the correctness of the item;
(B) the Secretary identifies with reasonable specificity the portion, item, or component of such source code needed to verify the correctness of such item on the return; and
(C) the Secretary determines that the need for the portion, item, or component of such source code with respect to such item outweighs the risks of unauthorized disclosure of trade secrets.
(2) Exceptions
Subsection (a)(1) shall not apply to—
(A) any inquiry into any offense connected with the administration or enforcement of the internal revenue laws;
(B) any tax-related computer software source code acquired or developed by the taxpayer or a related person primarily for internal use by the taxpayer or such person rather than for commercial distribution;
(C) any communications between the owner of the tax-related computer software source code and the taxpayer or related persons; or
(D) any tax-related computer software source code which is required to be provided or made available pursuant to any other provision of this title.
(3) Cooperation required
For purposes of paragraph (1), the Secretary shall be treated as meeting the requirements of subparagraphs (A) and (B) of such paragraph if—
(A) the Secretary determines that it is not feasible to determine the correctness of an item without access to the computer software executable code and associated data described in paragraph (1)(A)(ii);
(B) the Secretary makes a formal request to the taxpayer for such code and data and to the owner of the computer software source code for such executable code; and
(C) such code and data is not provided within 180 days of such request.
(4) Right to contest summons
In any proceeding brought under section 7604 to enforce a summons issued under the authority of this subsection, the court shall, at the request of any party, hold a hearing to determine whether the applicable requirements of this subsection have been met.
(c) Safeguards to ensure protection of trade secrets and other confidential information
(1) Entry of protective order
In any court proceeding to enforce a summons for any portion of software, the court may receive evidence and issue any order necessary to prevent the disclosure of trade secrets or other confidential information with respect to such software, including requiring that any information be placed under seal to be opened only as directed by the court.
(2) Protection of software
Notwithstanding any other provision of this section, and in addition to any protections ordered pursuant to paragraph (1), in the case of software that comes into the possession or control of the Secretary in the course of any examination with respect to any taxpayer—
(A) the software may be used only in connection with the examination of such taxpayer's return, any appeal by the taxpayer to the Internal Revenue Service Independent Office of Appeals, any judicial proceeding (and any appeals therefrom), and any inquiry into any offense connected with the administration or enforcement of the internal revenue laws;
(B) the Secretary shall provide, in advance, to the taxpayer and the owner of the software a written list of the names of all individuals who will analyze or otherwise have access to the software;
(C) the software shall be maintained in a secure area or place, and, in the case of computer software source code, shall not be removed from the owner's place of business unless the owner permits, or a court orders, such removal;
(D) the software may not be copied except as necessary to perform such analysis, and the Secretary shall number all copies made and certify in writing that no other copies have been (or will be) made;
(E) at the end of the period during which the software may be used under subparagraph (A)—
(i) the software and all copies thereof shall be returned to the person from whom they were obtained and any copies thereof made under subparagraph (D) on the hard drive of a machine or other mass storage device shall be permanently deleted; and
(ii) the Secretary shall obtain from any person who analyzes or otherwise had access to such software a written certification under penalty of perjury that all copies and related materials have been returned and that no copies were made of them;
(F) the software may not be decompiled or disassembled;
(G) the Secretary shall provide to the taxpayer and the owner of any interest in such software, as the case may be, a written agreement, between the Secretary and any person who is not an officer or employee of the United States and who will analyze or otherwise have access to such software, which provides that such person agrees not to—
(i) disclose such software to any person other than persons to whom such information could be disclosed for tax administration purposes under section 6103; or
(ii) participate for 2 years in the development of software which is intended for a similar purpose as the software examined; and
(H) the software shall be treated as return information for purposes of section 6103.
For purposes of subparagraph (C), the owner shall make available any necessary equipment or materials for analysis of computer software source code required to be conducted on the owner's premises. The owner of any interest in the software shall be considered a party to any agreement described in subparagraph (G).
(d) Definitions
For purposes of this section—
(1) Software
The term "software" includes computer software source code and computer software executable code.
(2) Computer software source code
The term "computer software source code" means—
(A) the code written by a programmer using a programming language which is comprehensible to appropriately trained persons and is not capable of directly being used to give instructions to a computer;
(B) related programmers' notes, design documents, memoranda, and similar documentation; and
(C) related customer communications.
(3) Computer software executable code
The term "computer software executable code" means—
(A) any object code, machine code, or other code readable by a computer when loaded into its memory and used directly by such computer to execute instructions; and
(B) any related user manuals.
(4) Owner
The term "owner" shall, with respect to any software, include the developer of the software.
(5) Related person
A person shall be treated as related to another person if such persons are related persons under section 267 or 707(b).
(6) Tax-related computer software source code
The term "tax-related computer software source code" means the computer source code for any computer software program intended for accounting, tax return preparation or compliance, or tax planning.
(Added
Editorial Notes
Prior Provisions
A prior section 7612 was renumbered
Amendments
2019—Subsec. (c)(2)(A).
Statutory Notes and Related Subsidiaries
Effective Date
"(1)
"(2)
§7613. Cross references
(a) Inspection of books, papers, records, or other data
For inspection of books, papers, records, or other data in the case of—
(1) Wagering, see section 4423.
(2) Alcohol, tobacco, and firearms taxes, see subtitle E.
(b) Search warrants
For provisions relating to—
(1) Searches and seizures, see Rule 41 of the Federal Rules of Criminal Procedure.
(2) Issuance of search warrants with respect to subtitle E, see section 5557.
(3) Search warrants with respect to property used in violation of the internal revenue laws, see section 7302.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1976—Subsec. (a).
1970—Subsec. (a).
1958—Subsec. (a)(6).
Subsec. (b)(2).
Subsec. (b)(3).
Statutory Notes and Related Subsidiaries
Effective Date of 1970 Amendment
Amendment by
Effective Date of 1958 Amendment
Amendment by
Savings Provision
Prosecutions for any violation of law occurring, and civil seizures or forfeitures and injunctive proceedings commenced, prior to the effective date of amendment of this section by section 1102 of
Subchapter B—General Powers and Duties
Editorial Notes
Amendments
1996—
1988—
§7621. Internal revenue districts
(a) Establishment and alteration
The President shall establish convenient internal revenue districts for the purpose of administering the internal revenue laws. The President may from time to time alter such districts.
(b) Boundaries
For the purpose mentioned in subsection (a), the President may subdivide any State, or the District of Columbia, or may unite into one district two or more States.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1976—Subsec. (b).
1959—Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 1959 Amendment
Amendment by
Executive Documents
Delegation of Functions
For delegation to Secretary of the Treasury of authority vested in President by this section, see section 1(g) of Ex. Ord. No. 10289, Sept. 17, 1951, 16 F.R. 9499, as amended, set out as a note under
§7622. Authority to administer oaths and certify
(a) Internal revenue personnel
Every officer or employee of the Treasury Department designated by the Secretary for that purpose is authorized to administer such oaths or affirmations and to certify to such papers as may be necessary under the internal revenue laws or regulations made thereunder.
(b) Others
Any oath or affirmation required or authorized under any internal revenue law or under any regulations made thereunder may be administered by any person authorized to administer oaths for general purposes by the law of the United States, or of any State or possession of the United States, or of the District of Columbia, wherein such oath or affirmation is administered. This subsection shall not be construed as an exclusive enumeration of the persons who may administer such oaths or affirmations.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1976—Subsec. (a).
Subsec. (b).
§7623. Expenses of detection of underpayments and fraud, etc.
(a) In general
The Secretary, under regulations prescribed by the Secretary, is authorized to pay such sums as he deems necessary for—
(1) detecting underpayments of tax, or
(2) detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving at the same,
in cases where such expenses are not otherwise provided for by law. Any amount payable under the preceding sentence shall be paid from the proceeds of amounts collected by reason of the information provided, and any amount so collected shall be available for such payments.
(b) Awards to whistleblowers
(1) In general
If the Secretary proceeds with any administrative or judicial action described in subsection (a) based on information brought to the Secretary's attention by an individual, such individual shall, subject to paragraph (2), receive as an award at least 15 percent but not more than 30 percent of the proceeds collected as a result of the action (including any related actions) or from any settlement in response to such action (determined without regard to whether such proceeds are available to the Secretary). The determination of the amount of such award by the Whistleblower Office shall depend upon the extent to which the individual substantially contributed to such action.
(2) Award in case of less substantial contribution
(A) In general
In the event the action described in paragraph (1) is one which the Whistleblower Office determines to be based principally on disclosures of specific allegations (other than information provided by the individual described in paragraph (1)) resulting from a judicial or administrative hearing, from a governmental report, hearing, audit, or investigation, or from the news media, the Whistleblower Office may award such sums as it considers appropriate, but in no case more than 10 percent of the proceeds collected as a result of the action (including any related actions) or from any settlement in response to such action (determined without regard to whether such proceeds are available to the Secretary), taking into account the significance of the individual's information and the role of such individual and any legal representative of such individual in contributing to such action.
(B) Nonapplication of paragraph where individual is original source of information
Subparagraph (A) shall not apply if the information resulting in the initiation of the action described in paragraph (1) was originally provided by the individual described in paragraph (1).
(3) Reduction in or denial of award
If the Whistleblower Office determines that the claim for an award under paragraph (1) or (2) is brought by an individual who planned and initiated the actions that led to the underpayment of tax or actions described in subsection (a)(2), then the Whistleblower Office may appropriately reduce such award. If such individual is convicted of criminal conduct arising from the role described in the preceding sentence, the Whistleblower Office shall deny any award.
(4) Appeal of award determination
Any determination regarding an award under paragraph (1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).
(5) Application of this subsection
This subsection shall apply with respect to any action—
(A) against any taxpayer, but in the case of any individual, only if such individual's gross income exceeds $200,000 for any taxable year subject to such action, and
(B) if the proceeds in dispute exceed $2,000,000.
(6) Additional rules
(A) No contract necessary
No contract with the Internal Revenue Service is necessary for any individual to receive an award under this subsection.
(B) Representation
Any individual described in paragraph (1) or (2) may be represented by counsel.
(C) Submission of information
No award may be made under this subsection based on information submitted to the Secretary unless such information is submitted under penalty of perjury.
(c) Proceeds
For purposes of this section, the term "proceeds" includes—
(1) penalties, interest, additions to tax, and additional amounts provided under the internal revenue laws, and
(2) any proceeds arising from laws for which the Internal Revenue Service is authorized to administer, enforce, or investigate, including—
(A) criminal fines and civil forfeitures, and
(B) violations of reporting requirements.
(d) Civil action to protect against retaliation cases
(1) Anti-retaliation whistleblower protection for employees
No employer, or any officer, employee, contractor, subcontractor, or agent of such employer, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment (including through an act in the ordinary course of such employee's duties) in reprisal for any lawful act done by the employee—
(A) to provide information, cause information to be provided, or otherwise assist in an investigation regarding underpayment of tax or any conduct which the employee reasonably believes constitutes a violation of the internal revenue laws or any provision of Federal law relating to tax fraud, when the information or assistance is provided to the Internal Revenue Service, the Secretary of the Treasury, the Treasury Inspector General for Tax Administration, the Comptroller General of the United States, the Department of Justice, the United States Congress, a person with supervisory authority over the employee, or any other person working for the employer who has the authority to investigate, discover, or terminate misconduct, or
(B) to testify, participate in, or otherwise assist in any administrative or judicial action taken by the Internal Revenue Service relating to an alleged underpayment of tax or any violation of the internal revenue laws or any provision of Federal law relating to tax fraud.
(2) Enforcement action
(A) In general
A person who alleges discharge or other reprisal by any person in violation of paragraph (1) may seek relief under paragraph (3) by—
(i) filing a complaint with the Secretary of Labor, or
(ii) if the Secretary of Labor has not issued a final decision within 180 days of the filing of the complaint and there is no showing that such delay is due to the bad faith of the claimant, bringing an action at law or equity for de novo review in the appropriate district court of the United States, which shall have jurisdiction over such an action without regard to the amount in controversy.
(B) Procedure
(i) In general
An action under subparagraph (A)(i) shall be governed under the rules and procedures set forth in
(ii) Exception
Notification made under
(iii) Burdens of proof
An action brought under subparagraph (A)(ii) shall be governed by the legal burdens of proof set forth in
(I) "behavior described in paragraph (1)" shall be substituted for "behavior described in paragraphs (1) through (4) of subsection (a)" each place it appears in paragraph (2)(B) thereof, and
(II) "a violation of paragraph (1)" shall be substituted for "a violation of subsection (a)" each place it appears.
(iv) Statute of limitations
A complaint under subparagraph (A)(i) shall be filed not later than 180 days after the date on which the violation occurs.
(v) Jury trial
A party to an action brought under subparagraph (A)(ii) shall be entitled to trial by jury.
(3) Remedies
(A) In general
An employee prevailing in any action under paragraph (2)(A) shall be entitled to all relief necessary to make the employee whole.
(B) Compensatory damages
Relief for any action under subparagraph (A) shall include—
(i) reinstatement with the same seniority status that the employee would have had, but for the reprisal,
(ii) the sum of 200 percent of the amount of back pay and 100 percent of all lost benefits, with interest, and
(iii) compensation for any special damages sustained as a result of the reprisal, including litigation costs, expert witness fees, and reasonable attorney fees.
(4) Rights retained by employee
Nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any employee under any Federal or State law, or under any collective bargaining agreement.
(5) Nonenforceability of certain provisions waiving rights and remedies or requiring arbitration of disputes
(A) Waiver of rights and remedies
The rights and remedies provided for in this subsection may not be waived by any agreement, policy form, or condition of employment, including by a predispute arbitration agreement.
(B) Predispute arbitration agreements
No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this subsection.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2019—Subsec. (d).
2018—Subsec. (b)(1), (2)(A).
Subsec. (b)(5)(B).
Subsec. (c).
2006—
1996—
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 2019 Amendment
Effective Date of 2018 Amendment
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1996 Amendment
Whistleblower Office
"(1)
"(A) shall at all times operate at the direction of the Commissioner of Internal Revenue and coordinate and consult with other divisions in the Internal Revenue Service as directed by the Commissioner of Internal Revenue,
"(B) shall analyze information received from any individual described in section 7623(b) of the Internal Revenue Code of 1986 and either investigate the matter itself or assign it to the appropriate Internal Revenue Service office, and
"(C) in its sole discretion, may ask for additional assistance from such individual or any legal representative of such individual.
"(2)
Report by Secretary
"(1) an analysis of the use of such section during the preceding year and the results of such use, and
"(2) any legislative or administrative recommendations regarding the provisions of such section and its application."
Study of Payments Made for Detection of Underpayments and Fraud
Annual Report to Congress on Payments Made Under This Section and Resultant Collections
§7624. Reimbursement to State and local law enforcement agencies
(a) Authorization of reimbursement
Whenever a State or local law enforcement agency provides information to the Internal Revenue Service that substantially contributes to the recovery of Federal taxes imposed with respect to illegal drug-related activities (or money laundering in connection with such activities), such agency may be reimbursed by the Internal Revenue Service for costs incurred in the investigation (including but not limited to reasonable expenses, per diem, salary, and overtime) not to exceed 10 percent of the sum recovered.
(b) Records; 10 percent limitation
The Internal Revenue Service shall maintain records of the receipt of information from a contributing agency and shall notify the agency when monies have been recovered as the result of such information. Following such notification, the agency shall submit a statement detailing the investigative costs it incurred. Where more than 1 State or local agency has given information that substantially contributes to the recovery of Federal taxes, the Internal Revenue Service shall equitably allocate investigative costs among such agencies not to exceed an aggregate amount of 10 percent of the taxes recovered.
(c) No reimbursement where duplicative
No State or local agency may receive reimbursement under this section if reimbursement has been received by such agency under a Federal or State forfeiture program or under State revenue laws.
(Added
Statutory Notes and Related Subsidiaries
Effective Date
Section applicable to information first provided more than 90 days after Nov. 18, 1988, see section 7602(e) of
Regulations
[Subchapter C—Repealed]
[§7641. Repealed. Pub. L. 94–455, title XIX, §1906(a)(54), Oct. 4, 1976, 90 Stat. 1832 ]
Section, acts Aug. 16, 1954, ch. 736,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective on first day of first month which begins more than 90 days after Oct. 4, 1976, see section 1906(d)(1) of
Subchapter D—Possessions
Editorial Notes
Amendments
1986—
1972—
§7651. Administration and collection of taxes in possessions
Except as otherwise provided in this subchapter, and except as otherwise provided in section 28(a) of the Revised Organic Act of the Virgin Islands and section 30 of the Organic Act of Guam (relating to the covering of the proceeds of certain taxes into the treasuries of the Virgin Islands and Guam, respectively)—
(1) Applicability of administrative provisions
All provisions of the laws of the United States applicable to the assessment and collection of any tax imposed by this title or of any other liability arising under this title (including penalties) shall, in respect of such tax or liability, extend to and be applicable in any possession of the United States in the same manner and to the same extent as if such possession were a State, and as if the term "United States" when used in a geographical sense included such possession.
(2) Tax imposed in possession
In the case of any tax which is imposed by this title in any possession of the United States—
(A) Internal revenue collections
Such tax shall be collected under the direction of the Secretary, and shall be paid into the Treasury of the United States as internal revenue collections; and
(B) Applicable laws
All provisions of the laws of the United States applicable to the administration, collection, and enforcement of such tax (including penalties) shall, in respect of such tax, extend to and be applicable in such possession of the United States in the same manner and to the same extent as if such possession were a State, and as if the term "United States" when used in a geographical sense included such possession.
(3) Other laws relating to possessions
This section shall apply notwithstanding any other provision of law relating to any possession of the United States.
(4) Virgin Islands
(A) For purposes of this section, the reference in section 28(a) of the Revised Organic Act of the Virgin Islands to "any tax specified in section 3811 of the Internal Revenue Code" shall be deemed to refer to any tax imposed by
(B) For purposes of this title, section 28(a) of the Revised Organic Act of the Virgin Islands shall be effective as if such section 28(a) had been enacted before the enactment of this title and such section 28(a) shall have no effect on the amount of income tax liability required to be paid by any person to the United States.
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
Section 28(a) of the Revised Organic Act of the Virgin Islands, referred to in introductory provisions and par. (4), is classified to
Section 30 of the Organic Act of Guam, referred to in introductory provisions, is classified to
Amendments
2007—Pars. (4), (5).
1986—Par. (5)(B).
1984—Par. (5)(B).
1976—Par. (2)(A).
1970—
Statutory Notes and Related Subsidiaries
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1984 Amendment
Amendment by section 130(c) of
Amendment by section 801(d)(9) of
Effective Date of 1970 Amendment
Amendment by
Savings Provision
Prosecutions for any violation of law occurring, and civil seizures or forfeitures and injunctive proceedings commenced, prior to the effective date of amendment of this section by section 1102 of
Compensation to Guam and Virgin Islands for Unexpected Revenue Losses Occasioned by Tax Reduction Act of 1975 and Tax Reform Act of 1976
Payments to Government of American Samoa, Guam, and the Virgin Islands
"(a) The Secretary of the Treasury is authorized to make separate payments to the government of American Samoa, the government of Guam, and the government of the Virgin Islands. The payment to the government of a particular possession shall be in an amount equal to the loss to that possession with respect to tax returns for the first taxable year beginning after December 31, 1976, by reason of sections 101 and 102 of this Act [amending
"(b) There are hereby authorized to be appropriated, out of any funds in the Treasury not otherwise appropriated, such sums as may be necessary to carry out the provisions of this section."
§7652. Shipments to the United States
(a) Puerto Rico
(1) Rate of tax
Except as provided in section 5314, articles of merchandise of Puerto Rican manufacture coming into the United States and withdrawn for consumption or sale shall be subject to a tax equal to the internal revenue tax imposed in the United States upon the like articles of merchandise of domestic manufacture.
(2) Payment of tax
The Secretary shall by regulations prescribe the mode and time for payment and collection of the tax described in paragraph (1), including any discretionary method described in section 6302(b) and (c). Such regulations shall authorize the payment of such tax before shipment from Puerto Rico, and the provisions of section 7651(2)(B) shall be applicable to the payment and collection of such tax in Puerto Rico.
(3) Deposit of internal revenue collections
All taxes collected under the internal revenue laws of the United States on articles produced in Puerto Rico and transported to the United States (less the estimated amount necessary for payment of refunds and drawbacks), or consumed in the island, shall be covered into the treasury of Puerto Rico.
(b) Virgin Islands
(1) Taxes imposed in the United States
Except as provided in section 5314, there shall be imposed in the United States, upon articles coming into the United States from the Virgin Islands, a tax equal to the internal revenue tax imposed in the United States upon like articles of domestic manufacture.
(2) Exemption from tax imposed in the Virgin Islands
Such articles shipped from such islands to the United States shall be exempt from the payment of any tax imposed by the internal revenue laws of such islands.
(3) Disposition of internal revenue collections
The Secretary shall determine the amount of all taxes imposed by, and collected under the internal revenue laws of the United States on articles produced in the Virgin Islands and transported to the United States. The amount so determined less 1 percent and less the estimated amount of refunds or credits shall be subject to disposition as follows:
(A) The payment of an estimated amount shall be made to the government of the Virgin Islands before the commencement of each fiscal year as set forth in section 4(c)(2) of the Act entitled "An Act to authorize appropriations for certain insular areas of the United States, and for other purposes", approved August 18, 1978 (
(B) Any amounts remaining shall be deposited in the Treasury of the United States as miscellaneous receipts.
If at the end of any fiscal year the total of the Federal contribution made under subparagraph (A) with respect to the four calendar quarters immediately preceding the beginning of that fiscal year has not been obligated or expended for an approved purpose, the balance shall continue available for expenditure during any succeeding fiscal year, but only for emergency relief purposes and essential public projects. The aggregate amount of moneys available for expenditure for emergency relief purposes and essential public projects only shall not exceed the sum of $5,000,000 at the end of any fiscal year. Any unobligated or unexpended balance of the Federal contribution remaining at the end of a fiscal year which would cause the moneys available for emergency relief purposes and essential public projects only to exceed the sum of $5,000,000 shall thereupon be transferred and paid over to the Treasury of the United States as miscellaneous receipts.
(c) Articles containing distilled spirits
For purposes of subsections (a)(3) and (b)(3), any article containing distilled spirits shall in no event be treated as produced in Puerto Rico or the Virgin Islands unless at least 92 percent of the alcoholic content in such article is attributable to rum.
(d) Articles other than articles containing distilled spirits
For purposes of subsections (a)(3) and (b)(3)—
(1) Value added requirement for Puerto Rico
Any article, other than an article containing distilled spirits, shall in no event be treated as produced in Puerto Rico unless the sum of—
(A) the cost or value of the materials produced in Puerto Rico, plus
(B) the direct costs of processing operations performed in Puerto Rico,
equals or exceeds 50 percent of the value of such article as of the time it is brought into the United States.
(2) Prohibition of Federal excise tax subsidies
(A) In general
No amount shall be transferred under subsection (a)(3) or (b)(3) in respect of taxes imposed on any article, other than an article containing distilled spirits, if the Secretary determines that a Federal excise tax subsidy was provided by Puerto Rico or the Virgin Islands (as the case may be) with respect to such article.
(B) Federal excise tax subsidy
For purposes of this paragraph, the term "Federal excise tax subsidy" means any subsidy—
(i) of a kind different from, or
(ii) in an amount per value or volume of production greater than,
the subsidy which Puerto Rico or the Virgin Islands offers generally to industries producing articles not subject to Federal excise taxes.
(3) Direct costs of processing operations
For purposes of this subsection, the term "direct cost of processing operations" has the same meaning as when used in section 213 of the Caribbean Basin Economic Recovery Act.
(e) Shipments of rum to the United States
(1) Excise taxes on rum covered into treasuries of Puerto Rico and Virgin Islands
All taxes collected under section 5001(a)(1) on rum imported into the United States (less the estimated amount necessary for payment of refunds and drawbacks) shall be covered into the treasuries of Puerto Rico and the Virgin Islands.
(2) Secretary prescribes formula
The Secretary shall, from time to time, prescribe by regulation a formula for the division of such tax collections between Puerto Rico and the Virgin Islands and the timing and methods for transferring such tax collections.
(3) Rum defined
For purposes of this subsection, the term "rum" means any article classified under subheading 2208.40.00 of the Harmonized Tariff Schedule of the United States (
(4) Coordination with subsections (a) and (b)
Paragraph (1) shall not apply with respect to any rum subject to tax under subsection (a) or (b).
(f) Limitation on cover over of tax on distilled spirits
For purposes of this section, with respect to taxes imposed under section 5001 or this section on distilled spirits, the amount covered into the treasuries of Puerto Rico and the Virgin Islands shall not exceed the lesser of the rate of—
(1) $10.50 ($13.25 in the case of distilled spirits brought into the United States after June 30, 1999, and before January 1, 2022), or
(2) the tax imposed under subsection (a)(1) of section 5001, determined as if subsection (c)(1) of such section did not apply, on each proof gallon.
(g) Drawback for medicinal alcohol, etc.
In the case of medicines, medicinal preparations, food products, flavors, flavoring extracts, or perfume containing distilled spirits, which are unfit for beverage purposes and which are brought into the United States from Puerto Rico or the Virgin Islands—
(1) subpart B of part II of subchapter A of
(A) the use and tax determination described in section 5111 had occurred in the United States by a United States person at the time the article is brought into the United States, and
(B) the rate of tax were the rate applicable under subsection (f) of this section, and
(2) no amount shall be covered into the treasuries of Puerto Rico or the Virgin Islands.
(h) Manner of cover over of tax must be derived from this title
No amount shall be covered into the treasury of Puerto Rico or the Virgin Islands with respect to taxes for which cover over is provided under this section unless made in the manner specified in this section without regard to—
(1) any provision of law which is not contained in this title or in a revenue Act; and
(2) whether such provision of law is a subsequently enacted provision or directly or indirectly seeks to waive the application of this subsection.
(i) Determination of taxes collected
For purposes of subsections (a)(3), (b)(3), and (e)(1), refunds under section 5001(c)(4) shall not be taken into account as a refund, and the amount of taxes imposed by and collected under section 5001(a)(1) shall be determined without regard to section 5001(c).
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
The date of the enactment of the Trade and Development Act of 2000, referred to in subsec. (b)(3)(A), is the date of enactment of
Section 213 of the Caribbean Basin Economic Recovery Act, referred to in subsec. (d)(3), is classified to
The Harmonized Tariff Schedule of the United States (
Amendments
2020—Subsec. (e)(5).
Subsec. (i).
2018—Subsec. (e)(5).
Subsec. (f)(1).
2017—Subsec. (f)(2).
2015—Subsec. (f)(1).
2014—Subsec. (f)(1).
2013—Subsec. (f)(1).
2010—Subsec. (f)(1).
2008—Subsec. (f)(1).
2006—Subsec. (f)(1).
2005—Subsec. (g)(1).
Subsec. (g)(1)(A).
2004—Subsec. (f)(1).
2002—Subsec. (f)(1).
2000—Subsec. (b)(3).
"(A) There shall be transferred and paid over, as soon as practicable after the close of the quarter, to the Government of the Virgin Islands from the amounts so determined a sum equal to the total amount of the revenue collected by the Government of the Virgin Islands during the quarter, as certified by the Government Comptroller of the Virgin Islands. The moneys so transferred and paid over shall constitute a separate fund in the treasury of the Virgin Islands and may be expended as the legislature may determine."
Subsec. (h).
1999—Subsec. (f)(1).
1994—Subsec. (g).
1993—Subsec. (f)(1).
1988—Subsec. (e)(3).
1986—Subsec. (g).
1984—Subsecs. (c)–(e).
Subsec. (f).
1983—Subsec. (b)(3).
Subsec. (c).
1976—Subsec. (a)(2).
Subsec. (b)(3).
Subsec. (b)(3)(A).
Subsec. (b)(3)(B), (C).
1965—Subsec. (a)(3).
1958—Subsec. (a)(1).
Subsec. (b)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2018 Amendment
Effective Date of 2017 Amendment
Amendment by
Effective Date of 2015 Amendment
Effective Date of 2014 Amendment
Effective Date of 2013 Amendment
Effective Date of 2010 Amendment
Effective Date of 2008 Amendment
Effective Date of 2006 Amendment
Effective Date of 2005 Amendment
Amendment by
Effective Date of 2004 Amendment
Effective Date of 2002 Amendment
Effective Date of 2000 Amendment
Effective Date of 1999 Amendment
Effective Date of 1994 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1986 Amendment
Effective Date of 1984 Amendment
"(1)
"(2)
"(A)
"(B) $130,000,000
"(i) $130,000,000, over
"(ii) the aggregate amount payable to Puerto Rico under section 7652(a) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] with respect to such articles which were brought into the United States after June 30, 1983, and before March 1, 1984, and which would not meet the requirements of section 7652(c) of such Code.
"(C) $75,000,000
"(i) brought into the United States after June 30, 1984, and before January 1, 1985,
"(ii) which would not meet the requirements of section 7652(c) of such Code,
"(iii) which have been redistilled in Puerto Rico, and
"(iv) which do not contain distilled spirits derived from cane.
"(3)
"(A)
"(B)
"(C)
"(i)
"(ii)
"(D)
"(E)
"(i)
"(ii)
Effective Date of 1983 Amendment
Effective Date of 1976 Amendments
Amendment by
Effective Date of 1965 Amendment
Amendment by
Effective Date of 1958 Amendment
Amendment by
Special Cover Over Transfer Rules
"(1)
"(A) the amount of such increase otherwise required to be covered over after June 30, 1999, and before the date of the enactment of this Act; or
"(B) $20,000,000.
"(2)
"(A) the amount of such increase otherwise required to be covered over after June 30, 1999, and before the first day of the month within which such date of enactment occurs, over
"(B) the amount of the transfer described in paragraph (1)."
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
Payment to Puerto Rico or Virgin Islands of Amounts With Respect to Medicines, etc. Unfit for Beverage Purposes
"(A) Section 7652 of the Internal Revenue Code of 1954 [now 1986] (other than subsection (f) thereof) shall not prevent the payment to Puerto Rico or the Virgin Islands of amounts with respect to medicines, medicinal preparations, food products, flavors, or flavoring extracts containing distilled spirits, which are unfit for beverage purposes and which are brought into the United States from Puerto Rico or the Virgin Islands on or before the date of the enactment of this Act [Oct. 22, 1986].
"(B) With respect to articles brought into the United States after September 27, 1985, subparagraph (A) shall apply only if the Secretary of the Treasury or his delegate is satisfied that the amounts paid to Puerto Rico or the Virgin Islands under subparagraph (A) are being repaid to the proper persons who used the distilled spirits in such articles."
Executive Documents
Ex. Ord. No. 10602. Secretary of the Interior as Representative of President
Ex. Ord. No. 10602, Mar. 24, 1955, 20 F.R. 1795, provided: "By virtue of the authority vested in me by section 7652(b)(3) of the Internal Revenue Code of 1954 [now I.R.C. 1986] (Public Law 591, 83rd Congress,
Dwight D. Eisenhower
[
§7653. Shipments from the United States
(a) Tax imposed
(1) Puerto Rico
All articles of merchandise of United States manufacture coming into Puerto Rico shall be entered at the port of entry upon payment of a tax equal in rate and amount to the internal revenue tax imposed in Puerto Rico upon the like articles of Puerto Rican manufacture.
(2) Virgin Islands
There shall be imposed in the Virgin Islands upon articles imported from the United States a tax equal to the internal revenue tax imposed in such islands upon like articles there manufactured.
(b) Exemption from tax imposed in the United States
Articles, goods, wares, or merchandise going into Puerto Rico, the Virgin Islands, Guam, and American Samoa from the United States shall be exempted from the payment of any tax imposed by the internal revenue laws of the United States.
(c) Drawback of tax paid in the United States
All provisions of law for the allowance of drawback of internal revenue tax on articles exported from the United States are, so far as applicable, extended to like articles upon which an internal revenue tax has been paid when shipped from the United States to Puerto Rico, the Virgin Islands, Guam, or American Samoa.
(d) Cross reference
For the disposition of the proceeds of all taxes collected under the internal revenue laws of the United States on articles produced in Guam and transported into the United States or its possessions, or consumed in Guam, see the Act of August 1, 1950 (
(Aug. 16, 1954, ch. 736
Editorial Notes
References in Text
Act of August 1, 1950, referred to in subsec. (d), is act Aug. 1, 1950, ch. 512,
Amendments
1976—Subsec. (d).
1960—Subsec. (d).
1959—Subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date of 1960 Amendment
Amendment by
Effective Date of 1959 Amendment
Amendment by
§7654. Coordination of United States and certain possession individual income taxes
(a) General rule
The net collection of taxes imposed by
(b) Definition and special rule
For purposes of this section—
(1) Net collections
In determining net collections for a taxable year, an appropriate adjustment shall be made for credits allowed against the tax liability and refunds made of income taxes for the taxable year.
(2) Specified possession
The term "specified possession" means Guam, American Samoa, the Northern Mariana Islands, and the Virgin Islands.
(c) Transfers
The transfers of funds between the United States and any specified possession required by this section shall be made not less frequently than annually.
(d) Federal personnel
In addition to the amount determined under subsection (a), the United States shall pay to each specified possession at such times and in such manner as determined by the Secretary—
(1) the amount of the taxes deducted and withheld by the United States under
(2) the amount of the taxes deducted and withheld under
(e) Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this section and sections 931 and 932, including regulations prohibiting the rebate of taxes covered over which are allocable to United States source income and prescribing the information which the individuals to whom such sections may apply shall furnish to the Secretary.
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
The Servicemembers Civil Relief Act, referred to in subsec. (d)(1), is act Oct. 17, 1940, ch. 888,
Amendments
2018—Subsec. (d)(1).
2003—Subsec. (d)(1).
1988—Subsec. (a).
1986—
1983—Subsec. (d).
1982—Subsec. (d).
1976—Subsecs. (d), (e).
1972—
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1972 Amendment
Amendment by
§7655. Cross references
(a) Imposition of tax in possessions
For provisions imposing tax in possessions, see—
(1)
(2)
(b) Other provisions
For other provisions relating to possessions of the United States, see—
(1) Section 931, relating to income tax on residents of Guam, American Samoa, or the Northern Mariana Islands;
(2) Section 933, relating to income tax on residents of Puerto Rico.
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
The Federal Insurance Contributions Act, referred to in subsec. (a)(2), is act Aug. 16, 1954, ch. 736, §§3101, 3102, 3111, 3112, 3121 to 3128,
Amendments
1990—Subsec. (a)(2), (3).
Subsec. (b)(2), (3).
1986—Subsec. (b).
1976—Subsec. (a)(3), (5).
1970—Subsec. (a)(3), (4).
1958—Subsec. (a)(5), (6).
Statutory Notes and Related Subsidiaries
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1970 Amendment
Amendment by
Effective Date of 1958 Amendment
Amendment by
Savings Provision
For provisions that nothing in amendment by
Prosecutions for any violation of law occurring, and civil seizures or forfeitures and injunctive proceedings commenced, prior to the effective date of amendment of this section by section 1102 of