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"(B) his gross income from sources other than wages (as defined in section 1621) can reasonably be expected to exceed $100 for the taxable year and his gross income to be more than the total amount of the
exemptions provided in section 25 (b).” (b) The amendment made by this section shall apply only with respect to taxable years beginning after December 31, 1952. SEC. 202. ABATEMENT OF JEOPARDY ASSESSMENT WHEN JEOPARDY DOES NOT EXIST.
AMENDMENT OF SECTION 273.-Section 273 (relating to the abatement of jeopardy assessments of income taxes) is hereby amended by adding at the end thereof the following new subsection :
“(k) ABATEMENT IF JEOPARDY DOES NOT EXIST.-The Secretary may abate the jeopardy assessment if he finds that jeopardy does not exist. Such abatement may not be made after a decision of The Tax Court of the United States in respect of the deficiency has been rendered or, if no petition is filed with The Tax Court of the United States, after the expiration of the period for filing such petition. The period of limitation on the making of assessments and the beginning of distraint or a proceeding in court for collection, in respect of any deficiency, shall be determined as if the jeopardy assessment so abated had not been made, except that the running of such period shall in any event be suspended for the period from the date of such jeopardy assessment until such jeopardy assessment is abated."
(b) AMENDMENT OF SECTIONS 872 AND 1013.—Sections 872 and 1013 (relating to the abatement of jeopardy assessments of estate and gift taxes, respectively) are hereby amended by adding at the end of each of such sections the following new subsection:
“(j) ABATEMENT IF JEOPARDY DOES Not Exist.—The Secretary may abate the jeopardy assessment if he finds that jeopardy does not exist. Such abatement may not be made after a decision of The Tax Court of the United States in respect of the deficiency has been rendered or, if no petition is filed with The Tax Court of the United States, after the expiration of the period for filing such petition. The period of limitation on the making of assessments and the beginning of distraint or a proceeding in court for collection, in respect of iny deficiency, shall be determined as if the jeopardy assessment so abated had not been made, except that the running of such period shall in any event be suspended for the period from the date of such jeopardy assessment until such jeopardy assessment is abated.” SEC. 203. ADDITION TO TAX FOR FAILURE TO FILE RETURN
(a) INCOME Tax.-Section 291 (a) is hereby amended by adding immediately after “5 per centum" where it first appears the following: “of its amount (computed after deducting therefrom amounts of tax withheld at source on wages, amounts paid with respect to declarations of estimated tax, and payments of tax made thereon to Government depositaries as prescribed under section 3310 (f) (2))”. (b) OTHER TAXES.–Section 3612 (d) (1) is hereby amended
(1) By adding immediately after the words “of its amount” the following: "(computed after deducting from such amount payments of tax made thereon to Government depositaries as prescribed under section 3310 (f) (2))”.
(2) By striking out the words "except that when a return is filed after such time and it is shown that the failure to file it was due to a reasonable cause and not to willful neglect, no such addition shall be made to the tax :" and inserting in lieu thereof the following: "unless it is shown that such
failure is due to reasonable cause and not due to willful neglect:". (c) EFFECTIVE DATE OF AMENDMENT OF SECTION 3612 (d) (1).-The amendment of section 3612 (d) (1) provided by paragraph (2) shall apply to any return for which the last date prescribed for filing such return is after the date of enactment of this Act, SEC. 204. ADVANCE PAYMENT OF TAX..
(a) AMENDMENT OF SECTION 322 (e).-Section 322 (e) is hereby amended to read as follows:
“(e) PRESUMPTION AS TO DATE OF PAYMENT.—For purposes of this section and section 3771, any tax actually reduced and withheld at the source shall, in respect of the recipient of the income, be deemed to have been paid by him not earlier than the last day prescribed by law for the filing of the return for his taxable year with respect to which such tax is allowable as a credit under section 32 or 35. For the purposes of this section and section 3771, any amount
paid as estimated tax for any taxable year shall be deemed to have been paid not earlier than the last day prescribed by law for the filing of the return for such taxable year. For the purposes of this subsection, the last day prescribed by law for filing the return shall be determined without regard to any extension of time granted the taxpayer.”
(b) AMENDMENT OF SECTION 3771 (f).-Section 3771 (f) is hereby amended to read as follows:
“(f) PRESUMPTIVE DATE OF PAYMENT OF INDIVIDUAL INCOME TAXES.—For the purpose of this section, if any tax imposed by chapter 1 with respect to any individual for any taxable year is paid prior to the last date prescribed by law for filing of the return of such individual for such taxable year (determined without regard to any extension of time for filing such return), such tax will be deemed to have been paid not earlier than such last date. For date of payment in respect of estimated tax and tax withheld at sourse, see section 322 (e).”
(c) EFFECTIVE DATE.-The amendments made by this section shall be applicable only with respect to taxable years beginning after December 31, 1951.
SEC. 205. PAYMENT BY CHECK AND MONEY ORDER.
(a) Section 3656 is hereby amended to read as follows: "SEC. 3656. PAYMENT BY CHECK AND MONEY ORDER.
“(a) AUTHORITY TO RECEIVE.-It shall be lawful for the Secretary to receive for internal revenue taxes, or in payment for stamps to be used in payment of internal revenue taxes, checks or money orders drawn on any bank or trust company created or organized under the laws of the United States, any State; or any Territory or possession of the United States, and United States postal, express, and telegraph money orders, during such time and under such regulations as the Secretary may prescribe. As used in this section the term “bank? includes a domestic building and loan association (as defined in section 3797 (a) (19), and any similar association created or organized under the laws of a possession of the United States. “(b) CHECK OR MONEY ORDER UNPAID.
“(1) ULTIMATE LIABILITY.-If a check or money order so received is not duly paid, the person by whom such check or money order has been tendered shall remain liable for the payment of the tax or for the stamps, and for all legal penalties and additions, to the same extent as if such check or money order had not been tendered.
“(2) LIABILITY OF BANK, ETC.—If any certified, cashier's or treasurer's check or money order so received is not duly paid, the United States shall, in addition to its right to exact payment from the party originally indebted therefor, have a lien for the amount of such check upon all the assets of the bank on which drawn or for the amount of such money order upon all the assets of the issuer thereof; and such amount shall be paid out of its assets in preference to any other claims whatsoever against said bank or issuer except the necessary costs and expenses of administration and the reim-bursement of the United States for the amount expended in the redempton of the circulating notes of such bank.
3) COLLECTION OF UNPAID CHECK OR MONEY ORDER.-In any case in which a check or money order received as provisional payment for stamps is not duly paid, the unpaid amount may be assessed and collected as if it were a tax imposed by section 2700 due, at the time of such receipt, from the person
who tendered such check or money order.” (b) Section 3950 (b) (relating to credits to the accounts of collectors) is hereby amended by strking out the word "and" at the end of paragraph (5) thereof, by striking out the period at the end of paragraph (6) thereof and inserting in lieu thereof “; and”, and by inserting at the end thereof the following new paragraph :
“(7) UNPAID CHECKS, ETC.--The unpaid amount in respect of any check or money order received in payment for stamps pursuant to section 3656, provided he establishes to the satisfaction of the Secretary that reasonable discretion was exercised in accepting such check or money order and that
an endeavor was made with due diligence to collect thereon." SEC. 206. INCLUSION OF INTEREST AS PART OF OVERPAYMENT WHEN OVERPAYMENT
Is CREDITED AGAINST INTEREST OR TAX DUE. Section 3770 (a) (4) is hereby amended to read as follows:
“(4) CREDIT OF OVERPAYMENT OF ONE CLASS OF TAX AGAINST ANOTHER CLASS OF TAX DUE.—Notwithstanding any provision of law to the contrary, the Secretary may, in his discretion, in lieu of refunding an overpayment of tax imposed by any provision of this title, credit such overpayment against any, tax due from the taxpayer under any other provision of this title. For the
purpose of this paragraph, the term 'tax' includes interest and any penalty,
additional amount, and addition to the tax." SEC. 207. TIME LIMIT ON SUITS FOR REFUND. Section 3772 (a) (2) is hereby amended to read as follows:
“(2) TIME.—No such suit or proceeding shall be begun (A) before the expiration of six months from the date of filing of such claim unless the Secretary renders a decision thereon within that time, or (B) after the expiration of two years from the date of mailing by registered mail by the Secretary to the taxpayer of a notice of the disallowance of the part of the claim to which such suit or proceeding relates, or (C) after the expiration of two years from the date of the signing by the taxpayer of a waiver of such notice of disallowance. Such a suit or proceeding in respect of any tax imposed by chapter 1 may (despite the preceding sentence) be begun before the expiration of the six-month period provided for in clause (A), if the amount claimed has been paid by the taxpayer pursuant to written notice of a deficiency from any officer or employee of the Department of the
Treasury." SEC. 208. EXTENSION OF TIME IN THE CASE OF SATURDAY, SUNDAY, OR LEGAL
HOLIDAY. Chapter 38 (miscellaneous provisions) is hereby amended by adding after section 3814 the following new section: “SEC. 3815. TIME FOR PERFORMANCE OF ACTS WHERE LAST DAY FALLS ON SATUR
DAY, SUNDAY, OR LEGAL HOLIDAY. “When the last day prescribed under this title for filing any paper or making any payment at the office of the Secretary or any authorized representative of the Bureau of Internal Revenue, or for the issuance, signing or filing of any paper by the Secretary or any authorized representative of the Bureau of Internal Revenue, falls on Saturday, Sunday, or a legal holiday in the District of Columbia, the performance of such act shall not be considered late if it is performed on the next succeeding day which is not a Saturday, Sunday, or a legal holiday in the District of Columbia. For the purposes of this section the last day for the performance of any act shall be determined by including any authorized extension of time." SEC. 209. CLARIFICATION OF POWERS OF JOINT COMMITTEE.
Section 5012 (c) (relating to powers of the Joint Committee on Internal Revenue Taxation to obtain data) is hereby amended to read as follows:
"(c) Subsections (a) and (b) shall be applied in accordance with their provisions without regard to Reorganization Plan Numbered 1 of 1952 or to any other reorganization plan becoming effective on, before, or after January 1, 1952."
TITLE III_AMENDMENTS OF OTHER LAWS
SEC. 301. INFLUENCE PEDDLING.
(a) Chapter 11 of title 18 of the United States Code is hereby amended by adding at the end thereof the following new section : “8 224. INFLUENCE PEDDLING IN MATTERS BEFORE THE DEPARTMENT OF THE
TREASURY. “Whoever pays or whoever solicits or receives any money or other thing of value, for himself or another, in consideration of a promise or agreement to use personal influence, duress, threats, false accusations, any special inducement or promise of advantage, or any bestowal of any gift or favor or other thing of value, to affect in any way (other than by ordinary professional representation) any decision of any officer or employee of the Department of the Treasury in any matter that is or might come before any officer or employee thereof, or to obtain any information of any kind with respect to such a matter other than information which is made available by proper authority, shall be fined not more than $10,000 or imprisoned not more than one year, or both."
(b) The analysis of chapter 11 of title 18 of the United States Code is hereby amended by adding at the end thereof the following: "224. Influence peddling in matters before the Department of the Treasury." SEC. 302. UNAUTHORIZED PRACTICE BEFORE THE DEPARTMENT OF THE TREASURY.
(a) Chapter 15 of title 18 of the United States Code is hereby amended by adding at the end thereof the following new section:
"292. UNAUTHORIZED PRACTICE BEFORE THE DEPARTMENT OF THE TREASURY
“Whoever as agent or attorney represents any person before any officer or employee of the Department of the Treasury in any matter before such Department without a license issued pursuant to regulations prescribed by the Secretary of the Treasury under the Act of July 7, 1884 (5 U. S. C., sec. 261), and receives any money or other thing of value for himself or another as a fee for such representation shall, unless a license is not required under such regulations, be fined not more than $10,000 or imprisoned not more than one year, or both.”
(b) The analysis of chapter 15 of title 18 of the United States Code is hereby amended by adding at the end thereof the following: “292. Unauthorized practice before the Department of the Treasury." SEC. 303. ACTIONS FOR RECOVERY OF INTERNAL REVENUE TAXES_JURY TRIAL.
(a) CLARIFICATION OF EXISTING LAW AS TO JURY TRIAL.
(1) Nothing in Reorganization Plan Numbered 1 of 1952 shall be construed to impair any right or remedy, including trial by jury, to recover any internalrevenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority, or any sum alleged to have been excessive or in any manner wrongfully collected under the interual-revenue laws.
(2) For the purpose of any action to recover any such tax, penalty, or sum, all statutes, rules, and regulations referring to the collector of internal revenue shall be deemed to refer to the officer whose act or acts referred to in paragraph (1) gave rise to such action. The venue of any such action shall be the same as under existing law.
(b) EXTENSION OF JURISDICTION OF DISTRICT COURTS.-So much of subsection (a) of section 1346 of title 28 of the United States Code as precedes paragraph (2) thereof is hereby amended to read as follows:
“(a) The district courts shall have original jurisdiction, concurrent with the Court of Claims of:
“(1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully
collected under the internal-revenue laws;". (c) EXTENSION OF JURY TRIAL.
(1) Section 2402 of title 28 of the United States Code is hereby amended to read as follows:
"& 2402. JURY TRIAL IN ACTIONS AGAINST UNITED STATES
“Any action against the United States under section 1346 of this title shall be tried by the court without a jury, except that any action under paragraph (1) of subsection (a) of such section shall, if demand is made therefor by any party to the action, be tried by the court with a jury.”
(2) The analysis of chapter 161 of title 28 of the United States Code is hereby amended by striking out the word “denied” in the line which reads: “2402. Jury trial denied in action against United States.”. SEC. 304. CLARIFICATION OF SECTION 281 OF TITLE 18.
Section 281 of title 18 of the United States Code is hereby amended by inserting after “before any department, agency, court martial, officer, or any civil, military, or naval commission,” the following: “or in any judicial proceedings, civil or criminal (except as trial or appellate counsel)”.
SUMMARY STATEMENTS CONCERNING THE PROVISIONS OF H. R. 7893
Section 101. Disallowance of certain deductions
Subsection (a) of section 101 would allow as deductions only those business and income producing expenses, otherwise proper, which are substantiated in accordance with regulations prescribed by the Secretary.
At the present time many courts follow the doctrine laid down in Cohan v. Commissioner (39 Fed (2d) 540), under which the Court will approximate an amount allowable as a deduction, where it is reasonable to suppose that
some expenses were incurred, even though the amount claimed is unsupported by vouchers, bookkeeping entries, or any notation oí any kind. This requires the Bureau to make estimates of allowable deductions, and requires the courts to review such estimates. According to top field officials of the Bureau, this estimating process creates a frequent opportunity for improper pressures aud is a significant source of corruption.
This section would disallow expenses which are not substantiated in accordance with regulations prescribed by the Secretary, and so would provide a sanction to enforce the requirement that taxpayers keep adequate books and records.
The section only applies to business and income producing expenses. It is customary for careful businessmen and investors to keep records of such expenses in any event. It is in this area that the major abuses such as exaggerated travel and entertainment expenses, occur. The provision would make no change in (xisting law as to deductions for other items such as charitable contributions and taxes, since there has not been evidence of flagrant abuse in these fields. Section 102. Loans to political committees
Section 102 would eliminate any tax benefit for a worthless loan to a political committee, or similar organization, by anyone other than a recognized lending institution. Rather than permit any question about what so far seems to have been a minor problem and to insure that it does not become a major one, this section will provide that such a loan, whether it is bona fide or not, cannot give rise to a tax deduction if a loss occurs. Section 103. Records and financial statement
This section would amend section 54 of the Internal Revenue Code to require every income taxpayer to keep and retain such records, to the extent and in the manner prescribed in regulations, as shall be sufficient to establish the amount, nature, and source of the gross income, the deductions, the credits, and the other matters which may enter into the computation of income subject to tax.
At the present time, section 54 states in broad language that the taxpayer shall keep such records as the Commissioner may require. This provision would amend section 54 to specify the types of information such records should contain by including in the law language which is now found in the regulations under section 54.
It is supported by these considerations: (1) It will give express statutory sanction to the requirements for adequate books and records and other information of deductions and losses now contained in the regulations. This section will provide the taxpayer with a clear directive thatCongress means for him to keep reasonable and adequate books and records, and so will assist field officers of the Bureau in enforcing these requirements and make it easier to prosecute thes who willfully fail to keep proper records and supply information required by law or regulations. Section 104. Information at source
This section would amend section 147 of the Internal Revenue Code to require businesses which make payments in money or in services, or in facilities to, or for the benefit of any officer, employee, partner, or shareholder, in excess of $200 annually to furnish to the Bureau of Internal Revenue such information with respect to these benefits as may be required under regulations. - Te growing practice of furnishing tax-free benefits in various forms (such as country-club memberships, housing, yachts, domestic help, and so forth) to executives of businesses is reaching such proportions that detailed information as to such benefits appears necessary in order to be informed of the nature and scope of the problem presented. The provision would not change present substantive law. It would simply clarify the Commissioner's authority to get the information. The major abuse in this area is thought to occur among the officers and stockholders in closely held corporations, as well as top executives in publicly held corporations. This authority to require additional information returns is not intended to limit in any way the present powers of the Bureau to require information from corporations. Section 105. Additions to tax for failure to disclose information as to gross income
This section would impose a civil penalty for failure to disclose the nature and sources of gross income. A taxpayer who either willfully refuses or through ne ligence is unable to establish the nature and sources of his income, greatly Hindars and makes more expensive the proper auditing of tax returns. To offset the added expense of the Bureau, in developing at length facts which are made