26 U.S.C. § 45K (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 1 / Section 45K: Credit for producing fuel from a nonconventional source
Credit for producing fuel from a nonconventional source
Status: in_force

(a) Allowance of credit

For purposes of section 38, the nonconventional source production credit determined under this section for the taxable year is an amount equal to—

(1) $3, multiplied by

(2) the barrel-of-oil equivalent of qualified fuels—

(A) sold by the taxpayer to an unrelated person during the taxable year, and

(B) the production of which is attributable to the taxpayer.

(b) Limitations and adjustments

(1) Phaseout of credit

The amount of the credit allowable under subsection (a) shall be reduced by an amount which bears the same ratio to the amount of the credit (determined without regard to this paragraph) as—

(A) the amount by which the reference price for the calendar year in which the sale occurs exceeds $23.50, bears to

(B) $6.

(2) Credit and phaseout adjustment based on inflation

The $3 amount in subsection (a) and the $23.50 and $6 amounts in paragraph (1) shall each be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale occurs. In the case of gas from a tight formation, the $3 amount in subsection (a) shall not be adjusted.

(3) Credit reduced for grants, tax-exempt bonds, and subsidized energy financing

(A) In general

The amount of the credit allowable under subsection (a) with respect to any project for any taxable year (determined after the application of paragraphs (1) and (2)) shall be reduced by the amount which is the product of the amount so determined for such year and a fraction—

(i) the numerator of which is the sum, for the taxable year and all prior taxable years, of—

(I) grants provided by the United States, a State, or a political subdivision of a State for use in connection with the project,

(II) proceeds of any issue of State or local government obligations used to provide financing for the project the interest on which is exempt from tax under section 103, and

(III) the aggregate amount of subsidized energy financing (within the meaning of section 48(a)(4)(C)) provided in connection with the project, and

(ii) the denominator of which is the aggregate amount of additions to the capital account for the project for the taxable year and all prior taxable years.

(B) Amounts determined at close of year

The amounts under subparagraph (A) for any taxable year shall be determined as of the close of the taxable year.

(4) Credit reduced for energy credit

The amount allowable as a credit under subsection (a) with respect to any project for any taxable year (determined after the application of paragraphs (1), (2), and (3)) shall be reduced by the excess of—

(A) the aggregate amount allowed under section 38 for the taxable year or any prior taxable year by reason of the energy percentage with respect to property used in the project, over

(B) the aggregate amount recaptured with respect to the amount described in subparagraph (A)—

(i) under section 49(b) or 50(a) for the taxable year or any prior taxable year, or

(ii) under this paragraph for any prior taxable year.

The amount recaptured under section 49(b) or 50(a) with respect to any property shall be appropriately reduced to take into account any reduction in the credit allowed by this section by reason of the preceding sentence.

(5) Credit reduced for enhanced oil recovery credit

The amount allowable as a credit under subsection (a) with respect to any project for any taxable year (determined after application of paragraphs (1), (2), (3), and (4)) shall be reduced by the excess (if any) of—

(A) the aggregate amount allowed under section 38 for the taxable year and any prior taxable year by reason of any enhanced oil recovery credit determined under section 43 with respect to such project, over

(B) the aggregate amount recaptured with respect to the amount described in subparagraph (A) under this paragraph for any prior taxable year.

(c) Definition of qualified fuels

For purposes of this section—

(1) In general

The term "qualified fuels" means—

(A) oil produced from shale and tar sands,

(B) gas produced from—

(i) geopressured brine, Devonian shale, coal seams, or a tight formation, or

(ii) biomass, and

(C) liquid, gaseous, or solid synthetic fuels produced from coal (including lignite), including such fuels when used as feedstocks.

(2) Gas from geopressured brine, etc.

(A) In general

Except as provided in subparagraph (B), the determination of whether any gas is produced from geopressured brine, Devonian shale, coal seams, or a tight formation shall be made in accordance with section 503 of the Natural Gas Policy Act of 1978 (as in effect before the repeal of such section).

(B) Special rules for gas from tight formations

The term "gas produced from a tight formation" shall only include gas from a tight formation—

(i) which, as of April 20, 1977, was committed or dedicated to interstate commerce (as defined in section 2(18) of the Natural Gas Policy Act of 1978, as in effect on the date of the enactment of this clause), or

(ii) which is produced from a well drilled after such date of enactment.

(3) Biomass

The term "biomass" means any organic material other than—

(A) oil and natural gas (or any product thereof), and

(B) coal (including lignite) or any product thereof.

(d) Other definitions and special rules

For purposes of this section—

(1) Only production within the United States taken into account

Sales shall be taken into account under this section only with respect to qualified fuels the production of which is within—

(A) the United States (within the meaning of section 638(1)), or

(B) a possession of the United States (within the meaning of section 638(2)).

(2) Computation of inflation adjustment factor and reference price

(A) In general

The Secretary shall, not later than April 1 of each calendar year, determine and publish in the Federal Register the inflation adjustment factor and the reference price for the preceding calendar year in accordance with this paragraph.

(B) Inflation adjustment factor

The term "inflation adjustment factor" means, with respect to a calendar year, a fraction the numerator of which is the GNP implicit price deflator for the calendar year and the denominator of which is the GNP implicit price deflator for calendar year 1979. The term "GNP implicit price deflator" means the first revision of the implicit price deflator for the gross national product as computed and published by the Department of Commerce.

(C) Reference price

The term "reference price" means with respect to a calendar year the Secretary's estimate of the annual average wellhead price per barrel for all domestic crude oil the price of which is not subject to regulation by the United States.

(3) Production attributable to the taxpayer

In the case of a property or facility in which more than 1 person has an interest, except to the extent provided in regulations prescribed by the Secretary, production from the property or facility (as the case may be) shall be allocated among such persons in proportion to their respective interests in the gross sales from such property or facility.

(4) Gas from geopressured brine, Devonian shale, coal seams, or a tight formation

The amount of the credit allowable under subsection (a) shall be determined without regard to any production attributable to a property from which gas from Devonian shale, coal seams, geopressured brine, or a tight formation was produced in marketable quantities before January 1, 1980.

(5) Barrel-of-oil equivalent

The term "barrel-of-oil equivalent" with respect to any fuel means that amount of such fuel which has a Btu content of 5.8 million; except that in the case of qualified fuels described in subparagraph (C) of subsection (c)(1), the Btu content shall be determined without regard to any material from a source not described in such subparagraph.

(6) Barrel defined

The term "barrel" means 42 United States gallons.

(7) Related persons

Persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b). In the case of a corporation which is a member of an affiliated group of corporations filing a consolidated return, such corporation shall be treated as selling qualified fuels to an unrelated person if such fuels are sold to such a person by another member of such group.

(8) Pass-thru in the case of estates and trusts

Under regulations prescribed by the Secretary, rules similar to the rules of subsection (d) of section 52 shall apply.

(e) Application of section

This section shall apply with respect to qualified fuels—

(1) which are—

(A) produced from a well drilled after December 31, 1979, and before January 1, 1993, or

(B) produced in a facility placed in service after December 31, 1979, and before January 1, 1993, and

(2) which are sold before January 1, 2003.

(f) Extension for certain facilities

(1) In general

In the case of a facility for producing qualified fuels described in subparagraph (B)(ii) or (C) of subsection (c)(1)—

(A) for purposes of subsection (e)(1)(B), such facility shall be treated as being placed in service before January 1, 1993, if such facility is placed in service before July 1, 1998, pursuant to a binding written contract in effect before January 1, 1997, and

(B) if such facility is originally placed in service after December 31, 1992, paragraph (2) of subsection (e) shall be applied with respect to such facility by substituting "January 1, 2008" for "January 1, 2003".

(2) Special rule

Paragraph (1) shall not apply to any facility which produces coke or coke gas unless the original use of the facility commences with the taxpayer.

(g) Extension for facilities producing coke or coke gas

Notwithstanding subsection (e)—

(1) In general

In the case of a facility for producing coke or coke gas (other than from petroleum based products) which was placed in service before January 1, 1993, or after June 30, 1998, and before January 1, 2010, this section shall apply with respect to coke and coke gas produced in such facility and sold during the period—

(A) beginning on the later of January 1, 2006, or the date that such facility is placed in service, and

(B) ending on the date which is 4 years after the date such period began.

(2) Special rules

In determining the amount of credit allowable under this section solely by reason of this subsection—

(A) Daily limit

The amount of qualified fuels sold during any taxable year which may be taken into account by reason of this subsection with respect to any facility shall not exceed an average barrel-of-oil equivalent of 4,000 barrels per day. Days before the date the facility is placed in service shall not be taken into account in determining such average.

(B) Extension period to commence with unadjusted credit amount

For purposes of applying subsection (b)(2) to the $3 amount in subsection (a), in the case of fuels sold after 2005, subsection (d)(2)(B) shall be applied by substituting "2004" for "1979".

(C) Denial of double benefit

This subsection shall not apply to any facility producing qualified fuels for which a credit was allowed under this section for the taxable year or any preceding taxable year by reason of subsection (f).

(D) Nonapplication of phaseout

Subsection (b)(1) shall not apply.

(E) Coordination with section 45

No credit shall be allowed with respect to any coke or coke gas which is produced using steel industry fuel (as defined in section 45(c)(7)) as feedstock if a credit is allowed to any taxpayer under section 45 with respect to the production of such steel industry fuel.

(Added Pub. L. 96–223, title II, §231(a), Apr. 2, 1980, 94 Stat. 268, §44D; amended Pub. L. 97–34, title VI §611(a), Aug. 13, 1981, 95 Stat. 339; Pub. L. 97–354, §5(a)(1), Oct. 19, 1982, 96 Stat. 1692; Pub. L. 97–448, title II, §202(a), Jan. 12, 1983, 96 Stat. 2396; renumbered §29 and amended Pub. L. 98–369, div. A, title IV, §§471(c), 474(h), title VI, §612(e)(1), title VII, §722(d)(1), (2), July 18, 1984, 98 Stat. 826, 831, 912, 973; Pub. L. 99–514, title VII, §701(c)(3), title XVIII, §1879(c)(1), Oct. 22, 1986, 100 Stat. 2340, 2906; Pub. L. 100–647, title VI, §6302, Nov. 10, 1988, 102 Stat. 3755; Pub. L. 101–508, title XI, §§11501(a), (b)(1), (c)(1), 11813(b)(1), 11816, Nov. 5, 1990, 104 Stat. 1388–479, 1388–550, 1388–558; Pub. L. 102–486, title XIX, §1918, Oct. 24, 1992, 106 Stat. 3025; Pub. L. 104–188, title I, §§1205(d)(3), 1207(a), Aug. 20, 1996, 110 Stat. 1776; renumbered §45K and amended Pub. L. 109–58, title XIII, §§1321(a), 1322(a)(1), (3)(E), (F), (b), Aug. 8, 2005, 119 Stat. 1010–1012; Pub. L. 109–135, title IV, §§402(g), 412(l), Dec. 21, 2005, 119 Stat. 2611, 2637; Pub. L. 109–432, div. A, title II, §211(a), (b), Dec. 20, 2006, 120 Stat. 2947, 2948; Pub. L. 110–343, div. B, title I, §108(d)(2), Oct. 3, 2008, 122 Stat. 3821; Pub. L. 113–295, div. A, title II, §210(a), Dec. 19, 2014, 128 Stat. 4031.)

Inflation Adjusted Items for Certain Tax Years

For inflation adjustment of certain items in this section, see Internal Revenue Notices listed in a table below.

Editorial Notes

References in Text

Section 503 of the Natural Gas Policy Act of 1978 (as in effect before the repeal of such section), referred to in subsec. (c)(2)(A), was classified to section 3413 of Title 15, Commerce and Trade, prior to repeal by Pub. L. 101–60, §3(b)(5), July 26, 1989, 103 Stat. 159, effective Jan. 1, 1993.

Section 2(18) of the Natural Gas Policy Act of 1978, referred to in subsec. (c)(2)(B)(i), is classified to section 3301(18) of Title 15, Commerce and Trade.

The date of the enactment of this clause, and such date of enactment, referred to in subsec. (c)(2)(B), probably mean the date of enactment of Pub. L. 101–508, which amended subsec. (c)(2)(B) of this section generally, and which was approved Nov. 5, 1990.

Amendments

2014—Subsec. (g)(2)(E). Pub. L. 113–295 amended subpar. (E) generally. Prior to amendment, text read as follows: "No credit shall be allowed with respect to any qualified fuel which is steel industry fuel (as defined in section 45(c)(7)) if a credit is allowed to the taxpayer for such fuel under section 45."

2008—Subsec. (g)(2)(E). Pub. L. 110–343 added subpar. (E).

2006—Subsec. (g)(1). Pub. L. 109–432, §211(b), inserted "(other than from petroleum based products)" after "producing coke or coke gas" in introductory provisions.

Subsec. (g)(2)(D). Pub. L. 109–432, §211(a), added subpar. (D).

2005—Pub. L. 109–58, §1322(a)(1), renumbered section 29 of this title as this section.

Subsec. (a). Pub. L. 109–135, §402(g), struck out "if the taxpayer elects to have this section apply," after "For purposes of section 38," in introductory provisions.

Pub. L. 109–58, §1322(a)(3)(E), substituted "For purposes of section 38, if the taxpayer elects to have this section apply, the nonconventional source production credit determined under this section for the taxable year is" for "There shall be allowed as a credit against the tax imposed by this chapter for the taxable year" in introductory provisions.

Subsec. (b)(6). Pub. L. 109–58, §1322(a)(3)(F), struck out heading and text of par. (6). Text read as follows: "The credit allowed by subsection (a) for any taxable year shall not exceed the excess (if any) of—

"(A) the regular tax for the taxable year reduced by the sum of the credits allowable under subpart A and section 27, over

"(B) the tentative minimum tax for the taxable year."

Subsec. (c)(2)(A). Pub. L. 109–58, §1322(b)(1)(A), inserted "(as in effect before the repeal of such section)" after "1978".

Subsecs. (e), (f). Pub. L. 109–58, §1322(b)(1)(B), redesignated subsecs. (f) and (g) as (e) and (f), respectively, and struck out former subsec. (e), which related to application of section with the Natural Gas Policy Act of 1978.

Subsec. (g). Pub. L. 109–135, §412(l)(1), substituted "subsection (e)" for "subsection (f)" in introductory provisions.

Pub. L. 109–58, §1322(b)(1)(B), redesignated subsec. (h) as (g).

Subsec. (g)(1)(A). Pub. L. 109–58, §1322(b)(2)(A), substituted "subsection (e)(1)(B)" for "subsection (f)(1)(B)".

Subsec. (g)(1)(B). Pub. L. 109–58, §1322(b)(2)(B), substituted "subsection (e)" for "subsection (f)".

Subsec. (g)(2)(C). Pub. L. 109–135, §412(l)(2), substituted "subsection (f)" for "subsection (g)".

Subsec. (h). Pub. L. 109–58, §1322(b)(1)(B), redesignated subsec. (h) as (g).

Pub. L. 109–58, §1321(a), added subsec. (h).

1996—Subsec. (b)(6)(A). Pub. L. 104–188, §1205(d)(3), substituted "section 27" for "sections 27 and 28".

Subsec. (g)(1)(A). Pub. L. 104–188, §1207(a), substituted "July 1, 1998" for "January 1, 1997" and "January 1, 1997" for "January 1, 1996".

1992—Subsec. (g). Pub. L. 102–486 added subsec. (g).

1990—Subsec. (b)(3)(A)(i)(III). Pub. L. 101–508, §11813(b)(1)(A), substituted "section 48(a)(4)(C)" for "section 48(l)(11)(C)".

Subsec. (b)(4). Pub. L. 101–508, §11813(b)(1)(B), substituted "section 49(b) or 50(a)" for "section 47" in two places.

Subsec. (b)(5), (6). Pub. L. 101–508, §11501(c)(1), added par. (5) and redesignated former par. (5) as (6).

Subsec. (c)(1)(B) to (E). Pub. L. 101–508, §11816(a), inserted "and" at end of subpar. (B), substituted a period for a comma at end of subpar. (C), and struck out subpar. (D) which related to qualifying processed wood fuels, and subpar. (E) which related to steam produced from solid agricultural byproducts (not including timber byproducts).

Subsec. (c)(2)(B). Pub. L. 101–508, §11501(b)(1), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: "The term 'gas produced from a tight formation' shall only include—

"(i) gas the price of which is regulated by the United States, and

"(ii) gas for which the maximum lawful price applicable under the Natural Gas Policy Act of 1978 is at least 150 percent of the then applicable price under section 103 of such Act."

Subsec. (c)(3). Pub. L. 101–508, §11813(b)(1)(C), amended par. (3) generally. Prior to amendment, par. (3) read as follows: "The term 'biomass' means any organic material which is an alternate substance (as defined in section 48(l)(3)(B)) other than coal (including lignite) or any product of such coal."

Subsec. (c)(4). Pub. L. 101–508, §11816(b)(1), struck out par. (4) "Qualifying processed wood fuel" which read as follows:

"(A) In general.—The term 'qualifying processed wood fuel' means any processed solid wood fuel (other than charcoal, fireplace products, or a product used for ornamental or recreational purposes) which has a Btu content per unit of volume or weight, determined without regard to any nonwood elements, which is at least 40 percent greater per unit of volume or weight than the Btu content of the wood from which it is produced (determined immediately before the processing).

"(B) Election.—A taxpayer shall elect, at such time and in such manner as the Secretary by regulations may prescribe, as to whether Btu content per unit shall be determined for purposes of this paragraph on a volume or weight basis. Any such election—

"(i) shall apply to all production from a facility; and

"(ii) shall be effective for the taxable year with respect to which it is made and for all subsequent taxable years and, once made, may be revoked only with the consent of the Secretary."

Subsec. (c)(5). Pub. L. 101–508, §11816(b)(1), struck out par. (5) "Agricultural byproduct steam" which read as follows: "Steam produced from solid agricultural byproducts which is used by the taxpayer in his trade or business shall be treated as having been sold by the taxpayer to an unrelated person on the date on which it is used."

Subsec. (d)(4). Pub. L. 101–508, §11816(b)(2), amended par. (4) generally, striking out "Special rules applicable to" before "Gas" in heading, redesignating former subpar. (A) as par. (4), striking out subpar. (B) which related to the reference price and application of phaseout for Devonian shale, and making minor changes in phraseology.

Subsec. (d)(5), (6). Pub. L. 101–508, §11816(b)(3), (4), redesignated par. (6) as (5), substituted "subparagraph (C)" for "subparagraph (C), (D), or (E)", and struck out former par. (5) which read as follows: "In the case of a facility for the production of—

"(A) qualifying processed wood fuel,

or

"(B) steam from solid agricultural byproducts,

paragraph (1) of subsection (b) shall not apply with respect to the amount of the credit allowable under subsection (a) for fuels sold during the 3-year period beginning on the date the facility is placed in service."

Subsec. (d)(7) to (9). Pub. L. 101–508, §11816(b)(3), redesignated pars. (7) to (9) as (6) to (8), respectively.

Subsec. (f). Pub. L. 101–508, §11816(b)(5), amended subsec. (f) generally, redesignating former par. (1) as subsec. (f), making minor changes in phraseology, substituting par. (2) for former par. (1)(B) which read as follows: "which are sold after December 31, 1979, and before January 1, 2003.", and striking out former par. (2) which related to special rules applicable to qualified processed wood and solid agricultural byproduct steam.

Subsec. (f)(1)(A)(i), (ii). Pub. L. 101–508, §11501(a)(1), substituted "1993" for "1991".

Subsec. (f)(1)(B). Pub. L. 101–508, §11501(a)(2), substituted "2003" for "2001".

1988—Subsec. (f)(1)(A)(i), (ii). Pub. L. 100–647 substituted "1991" for "1990".

1986—Subsec. (b)(5). Pub. L. 99–514, §701(c)(3), amended par. (5) generally. Prior to amendment, par. (5) read as follows: "The credit allowed by subsection (a) for a taxable year shall not exceed the taxpayer's tax liability for the taxable year (as defined in section 26(b)), reduced by the sum of the credits allowable under subpart A and sections 27 and 28."

Subsec. (d)(8). Pub. L. 99–514, §1879(c)(1), inserted provision directing that a corporation which is a member of an affiliated group of corporations filing a consolidated return shall be treated as selling qualified fuels to an unrelated person if such fuels are sold to such person by another member of such group.

1984—Pub. L. 98–369, §471(c), renumbered section 44D of this title as this section.

Subsec. (b)(1)(A). Pub. L. 98–369, §722(d)(1), substituted "in which the sale occurs" for "in which the taxable year begins".

Subsec. (b)(2). Pub. L. 98–369, §722(d)(2), substituted "in which the sale occurs" for "in which a taxable year begins".

Subsec. (b)(5). Pub. L. 98–369, §612(e)(1), substituted "section 26(b)" for "section 25(b)".

Pub. L. 98–369, §474(h), amended par. (5) generally, substituting "shall not exceed the taxpayer's tax liability for the taxable year (as defined in section 25(b)), reduced by the sum of the credits allowable under subpart A and sections 27 and 28" for "shall not exceed the tax imposed by this chapter for such taxable year, reduced by the sum of the credits allowable under a section of this subpart having a lower number or letter designation than this section, other than the credits allowable by sections 31, 39, and 43. For purposes of the preceding sentence, the term 'tax imposed by this chapter' shall not include any tax treated as not imposed by this chapter under the last sentence of section 53(a)".

1983—Subsec. (f)(1)(B), (2)(A)(i). Pub. L. 97–448 substituted "December 31, 1979" for "December 3, 1979".

1982—Subsec. (d)(9). Pub. L. 97–354 substituted "Pass-thru in the case of estates and trusts" for "Pass-through in the case of subchapter S corporations, etc." in par. heading, and substituted provisions relating to the applicability of rules similar to rules of subsec. (d) of section 52 for provisions relating to the applicability of rules similar to rules of subsecs. (d) and (e) of section 52.

1981—Subsec. (e). Pub. L. 97–34 substituted provisions respecting application with the Natural Gas Policy Act of 1978 for prior provision reading "If the taxpayer makes an election under section 107(d) of the Natural Gas Policy Act of 1978 to have subsections (a) and (b) of section 107 of that Act, and subtitle B of title I of that Act, apply with respect to gas described in subsection (c)(1)(B)(i) produced from any well on a property, then the credit allowable by subsection (a) shall not be allowed with respect to any gas produced on that property."

Statutory Notes and Related Subsidiaries

Effective Date of 2014 Amendment

Amendment by Pub. L. 113–295 effective as if included in the provisions of the Energy Improvement and Extension Act of 2008, Pub. L. 110–343, div. B, to which such amendment relates, see section 210(h) of Pub. L. 113–295, set out as a note under section 45 of this title.

Effective Date of 2008 Amendment

Amendment by Pub. L. 110–343 applicable to fuel produced and sold after Sept. 30, 2008, see section 108(e) of Pub. L. 110–343, set out as a note under section 45 of this title.

Effective Date of 2006 Amendment

Pub. L. 109–432, div. A, title II, §211(c), Dec. 20, 2006, 120 Stat. 2948, provided that: "The amendments made by this section [amending this section] shall take effect as if included in section 1321 of the Energy Policy Act of 2005 [Pub. L. 109–58]."

Effective Date of 2005 Amendments

Amendment by section 402(g) of Pub. L. 109–135 effective as if included in the provision of the Energy Policy Act of 2005, Pub. L. 109–58, to which such amendment relates, see section 402(m)(1) of Pub. L. 109–135, set out as an Effective and Termination Dates of 2005 Amendments note under section 23 of this title.

Pub. L. 109–58, title XIII, §1321(b), Aug. 8, 2005, 119 Stat. 1011, provided that: "The amendment made by this section [amending this section] shall apply to fuel produced and sold after December 31, 2005, in taxable years ending after such date."

Pub. L. 109–58, title XIII, §1322(c), Aug. 8, 2005, 119 Stat. 1012, provided that:

"(1) In general.—Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 30, 38, 43, 45, 45I, 53, 55, 613A, and 772 of this title and renumbering section 29 of this title as this section] shall apply to credits determined under the Internal Revenue Code of 1986 for taxable years ending after December 31, 2005.

"(2) Subsection (b).—The amendments made by subsection (b) [amending this section] shall take effect on the date of the enactment of this Act [Aug. 8, 2005]."

Effective Date of 1996 Amendment

Pub. L. 104–188, title I, §1205(e), Aug. 20, 1996, 110 Stat. 1776, provided that: "The amendments made by this section [amending this section and sections 30, 38, 39, 45C, 53, 55, and 280C of this title] shall apply to amounts paid or incurred in taxable years ending after June 30, 1996."

Pub. L. 104–188, title I, §1207(b), Aug. 20, 1996, 110 Stat. 1776, provided that: "The amendment made by this section [amending this section] shall take effect on the date of the enactment of this Act [Aug. 20, 1996]."

Effective Date of 1990 Amendment

Pub. L. 101–508, title XI, §11501(b)(2), Nov. 5, 1990, 104 Stat. 1388–479, provided that: "The amendment made by paragraph (1) [amending this section] shall apply to gas produced after December 31, 1990."

Pub. L. 101–508, title XI, §11501(c)(2), Nov. 5, 1990, 104 Stat. 1388–480, provided that: "The amendment made by paragraph (1) [amending this section] shall apply to taxable years beginning after December 31, 1990."

Pub. L. 101–508, title XI, §11813(c), Nov. 5, 1990, 104 Stat. 1388–555, provided that:

"(1) In general.—Except as provided in paragraph (2), the amendments made by this section [enacting section 50 of this title and amending this section and sections 38, 42, 46 to 49, 52, 55, 108, 145, 147, 168, 170, 179, 196, 280F, 312, 465, 469, 861, 865, 1016, 1033, 1245, 1274A, 1371, 1388 and 1503 of this title] shall apply to property placed in service after December 31, 1990.

"(2) Exceptions.—The amendments made by this section shall not apply to—

"(A) any transition property (as defined in section 49(e) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of this Act [Nov. 5, 1990]),

"(B) any property with respect to which qualified progress expenditures were previously taken into account under section 46(d) of such Code (as so in effect), and

"(C) any property described in section 46(b)(2)(C) of such Code (as so in effect)."

Pub. L. 101–508, title XI, §11821(a), Nov. 5, 1990, 104 Stat. 1388–558, provided that: "Except as otherwise provided in this part, the amendments made by this part [part I (§§11801–11821) of subtitle H of title XI of Pub. L. 101–508, see Tables for classification] shall take effect on the date of the enactment of this Act [Nov. 5, 1990]."

Effective Date of 1986 Amendment

Amendment by section 701(c)(3) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 701(f) of Pub. L. 99–514, set out as an Effective Date note under section 55 of this title.

Pub. L. 99–514, title XVIII, §1879(c)(2), Oct. 22, 1986, 100 Stat. 2906, provided that: "The amendment made by paragraph (1) [amending this section] shall take effect as if included in the amendments made by section 231 of Public Law 96–223 [see Effective Date note below]."

Effective Date of 1984 Amendment

Amendment by section 474(h) of Pub. L. 98–369 applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from such years, see section 475(a) of Pub. L. 98–369, set out as a note under section 21 of this title.

Amendment by section 612(e)(1) of Pub. L. 98–369 applicable to interest paid or accrued after Dec. 31, 1984, on indebtedness incurred after Dec. 31, 1984, see section 612(g) of Pub. L. 98–369, set out as an Effective Date note under section 25 of this title.

Pub. L. 98–369, title VII, §722(d)(3), July 18, 1984, 98 Stat. 974, provided that: "The amendments made by this subsection [amending this section] shall apply to taxable years ending after December 31, 1979."

Effective Date of 1983 Amendment

Amendment by Pub. L. 97–448 effective, except as otherwise provided, as if it had been included in the provision of the Crude Oil Windfall Profit Tax Act of 1980, Pub. L. 96–223 to which such amendment relates, see section 203(a) of Pub. L. 97–448, set out as a note under section 6652 of this title.

Effective Date of 1982 Amendment

Amendment by Pub. L. 97–354 applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Pub. L. 97–354, set out as an Effective Date note under section 1361 of this title.

Effective Date of 1981 Amendment

Pub. L. 97–34, title VI, §611(b), Aug. 13, 1981, 95 Stat. 339, provided that: "The amendment made by this section [amending this section] shall apply to taxable years ending after December 31, 1979."

Effective Date

Pub. L. 96–223, title II, §231(c), Apr. 2, 1980, 94 Stat. 272, provided that: "The amendments made by this section [enacting this section and amending section 6096 of this title] shall apply to taxable years ending after December 31, 1979."

Savings Provision

Pub. L. 101–508, title XI, §11821(b), Nov. 5, 1990, 104 Stat. 1388–558, provided that: "If—

"(1) any provision amended or repealed by this part [part I (§§11801–11821) of subtitle H of title XI of Pub. L. 101–508, see Tables for classification] applied to—

"(A) any transaction occurring before the date of the enactment of this Act [Nov. 5, 1990],

"(B) any property acquired before such date of enactment, or

"(C) any item of income, loss, deduction, or credit taken into account before such date of enactment, and

"(2) the treatment of such transaction, property, or item under such provision would (without regard to the amendments made by this part) affect liability for tax for periods ending after such date of enactment,

nothing in the amendments made by this part shall be construed to affect the treatment of such transaction, property, or item for purposes of determining liability for tax for periods ending after such date of enactment."

Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States

For applicability of amendment by section 701(c)(3) of Pub. L. 99–514 notwithstanding any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes any amendment by title I of Pub. L. 100–647 be treated as if it had been included in the provision of Pub. L. 99–514 to which such amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100–647, set out as a note under section 861 of this title.

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 Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.

Inflation Adjusted Items and Reference Price for Certain Years

Provisions relating to inflation adjustment of items in this section and reference price for certain years were contained in the following:

2023—Internal Revenue Notice 2024–51.

2022—Internal Revenue Notice 2023–49.

2021—Internal Revenue Notice 2022–17.

2020—Internal Revenue Notice 2021–29.

2019—Internal Revenue Notice 2020–28.

2018—Internal Revenue Notice 2019–28.

2017—Internal Revenue Notice 2018–32.

2016—Internal Revenue Notice 2017–24.

2015—Internal Revenue Notice 2016–43.

2014—Internal Revenue Notice 2015–45.

2013—Internal Revenue Notice 2014–25.

2012—Internal Revenue Notice 2013–25.

2011—Internal Revenue Notice 2012–30.

2010—Internal Revenue Notice 2011–30.

2009—Internal Revenue Notice 2010–31.

2008—Internal Revenue Notice 2009–32.

2007—Internal Revenue Notice 2008–44.

2006—Internal Revenue Notice 2007–38.
26 U.S.C. § 7874 (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 80 / Subchapter C / Section 7874: Rules relating to expatriated entities and their foreign parents
Rules relating to expatriated entities and their foreign parents
Status: in_force

(a) Tax on inversion gain of expatriated entities

(1) In general

The taxable income of an expatriated entity for any taxable year which includes any portion of the applicable period shall in no event be less than the inversion gain of the entity for the taxable year.

(2) Expatriated entity

For purposes of this subsection—

(A) In general

The term "expatriated entity" means—

(i) the domestic corporation or partnership referred to in subparagraph (B)(i) with respect to which a foreign corporation is a surrogate foreign corporation, and

(ii) any United States person who is related (within the meaning of section 267(b) or 707(b)(1)) to a domestic corporation or partnership described in clause (i).

(B) Surrogate foreign corporation

A foreign corporation shall be treated as a surrogate foreign corporation if, pursuant to a plan (or a series of related transactions)—

(i) the entity completes after March 4, 2003, the direct or indirect acquisition of substantially all of the properties held directly or indirectly by a domestic corporation or substantially all of the properties constituting a trade or business of a domestic partnership,

(ii) after the acquisition at least 60 percent of the stock (by vote or value) of the entity is held—

(I) in the case of an acquisition with respect to a domestic corporation, by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation, or

(II) in the case of an acquisition with respect to a domestic partnership, by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partnership, and

(iii) after the acquisition the expanded affiliated group which includes the entity does not have substantial business activities in the foreign country in which, or under the law of which, the entity is created or organized, when compared to the total business activities of such expanded affiliated group.

An entity otherwise described in clause (i) with respect to any domestic corporation or partnership trade or business shall be treated as not so described if, on or before March 4, 2003, such entity acquired directly or indirectly more than half of the properties held directly or indirectly by such corporation or more than half of the properties constituting such partnership trade or business, as the case may be.

(3) Coordination with subsection (b)

A corporation which is treated as a domestic corporation under subsection (b) shall not be treated as a surrogate foreign corporation for purposes of paragraph (2)(A).

(b) Inverted corporations treated as domestic corporations

Notwithstanding section 7701(a)(4), a foreign corporation shall be treated for purposes of this title as a domestic corporation if such corporation would be a surrogate foreign corporation if subsection (a)(2) were applied by substituting "80 percent" for "60 percent".

(c) Definitions and special rules

(1) Expanded affiliated group

The term "expanded affiliated group" means an affiliated group as defined in section 1504(a) but without regard to section 1504(b)(3), except that section 1504(a) shall be applied by substituting "more than 50 percent" for "at least 80 percent" each place it appears.

(2) Certain stock disregarded

There shall not be taken into account in determining ownership under subsection (a)(2)(B)(ii)—

(A) stock held by members of the expanded affiliated group which includes the foreign corporation, or

(B) stock of such foreign corporation which is sold in a public offering related to the acquisition described in subsection (a)(2)(B)(i).

(3) Plan deemed in certain cases

If a foreign corporation acquires directly or indirectly substantially all of the properties of a domestic corporation or partnership during the 4-year period beginning on the date which is 2 years before the ownership requirements of subsection (a)(2)(B)(ii) are met, such actions shall be treated as pursuant to a plan.

(4) Certain transfers disregarded

The transfer of properties or liabilities (including by contribution or distribution) shall be disregarded if such transfers are part of a plan a principal purpose of which is to avoid the purposes of this section.

(5) Special rule for related partnerships

For purposes of applying subsection (a)(2)(B)(ii) to the acquisition of a trade or business of a domestic partnership, except as provided in regulations, all partnerships which are under common control (within the meaning of section 482) shall be treated as 1 partnership.

(6) Regulations

The Secretary shall prescribe such regulations as may be appropriate to determine whether a corporation is a surrogate foreign corporation, including regulations—

(A) to treat warrants, options, contracts to acquire stock, convertible debt interests, and other similar interests as stock, and

(B) to treat stock as not stock.

(d) Other definitions

For purposes of this section—

(1) Applicable period

The term "applicable period" means the period—

(A) beginning on the first date properties are acquired as part of the acquisition described in subsection (a)(2)(B)(i), and

(B) ending on the date which is 10 years after the last date properties are acquired as part of such acquisition.

(2) Inversion gain

The term "inversion gain" means the income or gain recognized by reason of the transfer during the applicable period of stock or other properties by an expatriated entity, and any income received or accrued during the applicable period by reason of a license of any property by an expatriated entity—

(A) as part of the acquisition described in subsection (a)(2)(B)(i), or

(B) after such acquisition if the transfer or license is to a foreign related person.

Subparagraph (B) shall not apply to property described in section 1221(a)(1) in the hands of the expatriated entity.

(3) Foreign related person

The term "foreign related person" means, with respect to any expatriated entity, a foreign person which—

(A) is related (within the meaning of section 267(b) or 707(b)(1)) to such entity, or

(B) is under the same common control (within the meaning of section 482) as such entity.

(e) Special rules

(1) Credits not allowed against tax on inversion gain

Credits (other than the credit allowed by section 901) shall be allowed against the tax imposed by this chapter on an expatriated entity for any taxable year described in subsection (a) only to the extent such tax exceeds the product of—

(A) the amount of the inversion gain for the taxable year, and

(B) the highest rate of tax specified in section 11(b).

For purposes of determining the credit allowed by section 901, inversion gain shall be treated as from sources within the United States.

(2) Special rules for partnerships

In the case of an expatriated entity which is a partnership—

(A) subsection (a)(1) shall apply at the partner rather than the partnership level,

(B) the inversion gain of any partner for any taxable year shall be equal to the sum of—

(i) the partner's distributive share of inversion gain of the partnership for such taxable year, plus

(ii) gain recognized for the taxable year by the partner by reason of the transfer during the applicable period of any partnership interest of the partner in such partnership to the surrogate foreign corporation, and

(C) the highest rate of tax specified in the rate schedule applicable to the partner under this chapter shall be substituted for the rate of tax referred to in paragraph (1).

(3) Coordination with section 172 and minimum tax

Rules similar to the rules of paragraphs (3) and (4) of section 860E(a) shall apply for purposes of subsection (a).

(4) Statute of limitations

(A) In general

The statutory period for the assessment of any deficiency attributable to the inversion gain of any taxpayer for any pre-inversion year shall not expire before the expiration of 3 years from the date the Secretary is notified by the taxpayer (in such manner as the Secretary may prescribe) of the acquisition described in subsection (a)(2)(B)(i) to which such gain relates and such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.

(B) Pre-inversion year

For purposes of subparagraph (A), the term "pre-inversion year" means any taxable year if—

(i) any portion of the applicable period is included in such taxable year, and

(ii) such year ends before the taxable year in which the acquisition described in subsection (a)(2)(B)(i) is completed.

(f) Special rule for treaties

Nothing in section 894 or 7852(d) or in any other provision of law shall be construed as permitting an exemption, by reason of any treaty obligation of the United States heretofore or hereafter entered into, from the provisions of this section.

(g) Regulations

The Secretary shall provide such regulations as are necessary to carry out this section, including regulations providing for such adjustments to the application of this section as are necessary to prevent the avoidance of the purposes of this section, including the avoidance of such purposes through—

(1) the use of related persons, pass-through or other noncorporate entities, or other intermediaries, or

(2) transactions designed to have persons cease to be (or not become) members of expanded affiliated groups or related persons.

(Added Pub. L. 108–357, title VIII, §801(a), Oct. 22, 2004, 118 Stat. 1562; amended Pub. L. 109–135, title IV, §403(u), Dec. 21, 2005, 119 Stat. 2628; Pub. L. 115–97, title I, §13001(b)(1)(C), Dec. 22, 2017, 131 Stat. 2096.)

Editorial Notes

Amendments

2017—Subsec. (e)(1)(B). Pub. L. 115–97 substituted "section 11(b)" for "section 11(b)(1)".

2005—Subsec. (a)(3). Pub. L. 109–135 reenacted heading without change and amended text generally. Prior to amendment, text read as follows: "Paragraph (1) shall not apply to any entity which is treated as a domestic corporation under subsection (b)."

Statutory Notes and Related Subsidiaries

Effective Date of 2017 Amendment

Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 13001(c)(1) of Pub. L. 115–97, set out as a note under section 11 of this title.

Effective Date of 2005 Amendment

Amendment by Pub. L. 109–135 effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

Effective Date

Pub. L. 108–357, title VIII, §801(c), Oct. 22, 2004, 118 Stat. 1566, provided that: "The amendments made by this section [enacting this section] shall apply to taxable years ending after March 4, 2003."
26 U.S.C. § 7428 (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 76 / Section 7428: Declaratory judgments relating to status and classification of organizations under section 501(c)(3), etc.
Declaratory judgments relating to status and classification of organizations under section 501(c)(3), etc.
Status: in_force

(a) Creation of remedy

In a case of actual controversy involving—

(1) a determination by the Secretary—

(A) with respect to the initial qualification or continuing qualification of an organization as an organization described in section 501(c)(3) which is exempt from tax under section 501(a) or as an organization described in section 170(c)(2),

(B) with respect to the initial classification or continuing classification of an organization as a private foundation (as defined in section 509(a)),

(C) with respect to the initial classification or continuing classification of an organization as a private operating foundation (as defined in section 4942(j)(3)),

(D) with respect to the initial classification or continuing classification of a cooperative as an organization described in section 521(b) which is exempt from tax under section 521(a), or

(E) with respect to the initial qualification or continuing qualification of an organization as an organization described in section 501(c) (other than paragraph (3)) or 501(d) and exempt from tax under section 501(a), or

(2) a failure by the Secretary to make a determination with respect to an issue referred to in paragraph (1),

upon the filing of an appropriate pleading, the United States Tax Court, the United States Court of Federal Claims, or the district court of the United States for the District of Columbia may make a declaration with respect to such initial qualification or continuing qualification or with respect to such initial classification or continuing classification. Any such declaration shall have the force and effect of a decision of the Tax Court or a final judgment or decree of the district court or the Court of Federal Claims, as the case may be, and shall be reviewable as such. For purposes of this section, a determination with respect to a continuing qualification or continuing classification includes any revocation of or other change in a qualification or classification.

(b) Limitations

(1) Petitioner

A pleading may be filed under this section only by the organization the qualification or classification of which is at issue.

(2) Exhaustion of administrative remedies

A declaratory judgment or decree under this section shall not be issued in any proceeding unless the Tax Court, the Court of Federal Claims, or the district court of the United States for the District of Columbia determines that the organization involved has exhausted administrative remedies available to it within the Internal Revenue Service. An organization requesting the determination of an issue referred to in subsection (a)(1) shall be deemed to have exhausted its administrative remedies with respect to a failure by the Secretary to make a determination with respect to such issue at the expiration of 270 days after the date on which the request for such determination was made if the organization has taken, in a timely manner, all reasonable steps to secure such determination.

(3) Time for bringing action

If the Secretary sends by certified or registered mail notice of his determination with respect to an issue referred to in subsection (a)(1) to the organization referred to in paragraph (1), no proceeding may be initiated under this section by such organization unless the pleading is filed before the 91st day after the date of such mailing.

(4) Nonapplication for certain revocations

No action may be brought under this section with respect to any revocation of status described in section 6033(j)(1).

(c) Validation of certain contributions made during pendency of proceedings

(1) In general

If—

(A) the issue referred to in subsection (a)(1) involves the revocation of a determination that the organization is described in section 170(c)(2),

(B) a proceeding under this section is initiated within the time provided by subsection (b)(3), and

(C) either—

(i) a decision of the Tax Court has become final (within the meaning of section 7481), or

(ii) a judgment of the district court of the United States for the District of Columbia has been entered, or

(iii) a judgment of the Court of Federal Claims has been entered,

and such decision or judgment, as the case may be, determines that the organization was not described in section 170(c)(2),

then, notwithstanding such decision or judgment, such organization shall be treated as having been described in section 170(c)(2) for purposes of section 170 for the period beginning on the date on which the notice of the revocation was published and ending on the date on which the court first determined in such proceeding that the organization was not described in section 170(c)(2).

(2) Limitation

Paragraph (1) shall apply only—

(A) with respect to individuals, and only to the extent that the aggregate of the contributions made by any individual to or for the use of the organization during the period specified in paragraph (1) does not exceed $1,000 (for this purpose treating a husband and wife as one contributor), and

(B) with respect to organizations described in section 170(c)(2) which are exempt from tax under section 501(a) (for this purpose excluding any such organization with respect to which there is pending a proceeding to revoke the determination under section 170(c)(2)).

(3) Exception

This subsection shall not apply to any individual who was responsible, in whole or in part, for the activities (or failures to act) on the part of the organization which were the basis for the revocation.

(d) Subpoena power for district court for District of Columbia

In any action brought under this section in the district court of the United States for the District of Columbia, a subpoena requiring the attendance of a witness at a trial or hearing may be served at any place in the United States.

(Added Pub. L. 94–455, title XIII, §1306(a), Oct. 4, 1976, 90 Stat. 1717; amended Pub. L. 95–600, title VII, §701(dd)(2), Nov. 6, 1978, 92 Stat. 2924; Pub. L. 97–164, title I, §152, Apr. 2, 1982, 96 Stat. 46; Pub. L. 98–369, div. A, title X, §1033(b), July 18, 1984, 98 Stat. 1039; Pub. L. 108–357, title III, §317(a), Oct. 22, 2004, 118 Stat. 1470; Pub. L. 109–280, title XII, §1223(c), Aug. 17, 2006, 120 Stat. 1091; Pub. L. 114–113, div. Q, title IV, §406(a), Dec. 18, 2015, 129 Stat. 3120; Pub. L. 115–141, div. U, title IV, §401(a)(325)(A), (B), Mar. 23, 2018, 132 Stat. 1199, 1200.)

Editorial Notes

Prior Provisions

A prior section 7428 was renumbered 7437 of this title.

Amendments

2018—Subsec. (a). Pub. L. 115–141, §401(a)(325)(B), substituted "or the Court of Federal Claims" for "or the Claims Court" in concluding provisions.

Pub. L. 115–141, §401(a)(325)(A), substituted "United States Court of Federal Claims" for "United States Claims Court" in concluding provisions.

Subsecs. (b)(2), (c)(1)(C)(iii). Pub. L. 115–141, §401(a)(325)(B), substituted "Court of Federal Claims" for "Claims Court".

2015—Subsec. (a)(1)(E). Pub. L. 114–113 added subpar. (E).

2006—Subsec. (b)(4). Pub. L. 109–280, which directed addition of par. (4) at the end of section 7428(b), without specifying the act to be amended, was executed by making the addition at the end of subsec. (b) of this section, which is section 7428 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress.

2004—Subsec. (a)(1)(D). Pub. L. 108–357 added subpar. (D).

1984—Subsec. (d). Pub. L. 98–369 added subsec. (d).

1982—Subsecs. (a), (b)(2), (c)(1)(C)(iii). Pub. L. 97–164 substituted "Claims Court" for "Court of Claims".

1978—Subsec. (a). Pub. L. 95–600 inserted provision relating to change in qualification or classification.

Statutory Notes and Related Subsidiaries

Effective Date of 2015 Amendment

Pub. L. 114–113, div. Q, title IV, §406(b), Dec. 18, 2015, 129 Stat. 3120, provided that: "The amendments made by this section [amending this section] shall apply to pleadings filed after the date of the enactment of this Act [Dec. 18, 2015]."

Effective Date of 2006 Amendment

Amendment by Pub. L. 109–280 applicable to notices and returns with respect to annual periods beginning after 2006, see section 1223(f) of Pub. L. 109–280, set out as a note under section 6033 of this title.

Effective Date of 2004 Amendment

Pub. L. 108–357, title III, §317(b), Oct. 22, 2004, 118 Stat. 1470, provided that: "The amendments made by this section [amending this section] shall apply with respect to pleadings filed after the date of the enactment of this Act [Oct. 22, 2004]."

Effective Date of 1984 Amendment

Amendment by Pub. L. 98–369 applicable with respect to inquiries and examinations beginning after Dec. 31, 1984, see section 1033(d) of Pub. L. 98–369, set out as an Effective Date note under section 7611 of this title.

Effective Date of 1982 Amendment

Amendment by Pub. L. 97–164 effective Oct. 1, 1982, see section 402 of Pub. L. 97–164, set out as a note under section 171 of Title 28, Judiciary and Judicial Procedure.

Effective Date of 1978 Amendment

Amendment by Pub. L. 95–600 effective as if included in this section at the time section was added to this title, see section 701(dd)(3) of Pub. L. 95–600, set out as a note under section 7476 of this title.

Effective Date

Pub. L. 94–455, title XIII, §1306(c), Oct. 4, 1976, 90 Stat. 1720, provided that: "The amendments made by this section [enacting this section and amending sections 7451, 7459, 7470, and 7482 of this title, enacting section 1507 of Title 28, Judiciary and Judicial Procedure, and amending sections 1346 and 2201 of Title 28] shall apply with respect to pleadings filed with the United States Tax Court, the district court of the United States for the District of Columbia, or the United States Court of Claims more than 6 months after the date of the enactment of this Act [Oct. 4, 1976] but only with respect to determinations (or requests for determinations) made after January 1, 1976."
26 U.S.C. § 6203 (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 63 / Section 6203: Method of assessment
Method of assessment
Status: in_force

The assessment shall be made by recording the liability of the taxpayer in the office of the Secretary in accordance with rules or regulations prescribed by the Secretary. Upon request of the taxpayer, the Secretary shall furnish the taxpayer a copy of the record of the assessment.

(Aug. 16, 1954, ch. 736, 68A Stat. 768; Pub. L. 94–455, title XIX, §1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

Editorial Notes

Amendments

1976—Pub. L. 94–455 struck out "or his delegate" after "Secretary" wherever appearing.
26 U.S.C. § 2654 (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 13 / Section 2654: Special rules
Special rules
Status: in_force

(a) Basis adjustment

(1) In general

Except as provided in paragraph (2), if property is transferred in a generation-skipping transfer, the basis of such property shall be increased (but not above the fair market value of such property) by an amount equal to that portion of the tax imposed by section 2601 with respect to the transfer which is attributable to the excess of the fair market value of such property over its adjusted basis immediately before the transfer. The preceding shall be applied after any basis adjustment under section 1015 with respect to the transfer.

(2) Certain transfers at death

If property is transferred in a taxable termination which occurs at the same time as and as a result of the death of an individual, the basis of such property shall be adjusted in a manner similar to the manner provided under section 1014(a); except that, if the inclusion ratio with respect to such property is less than 1, any increase or decrease in basis shall be limited by multiplying such increase or decrease (as the case may be) by the inclusion ratio.

(b) Certain trusts treated as separate trusts

For purposes of this chapter—

(1) the portions of a trust attributable to transfers from different transferors shall be treated as separate trusts, and

(2) substantially separate and independent shares of different beneficiaries in a trust shall be treated as separate trusts.

Except as provided in the preceding sentence, nothing in this chapter shall be construed as authorizing a single trust to be treated as 2 or more trusts. For purposes of this subsection, a trust shall be treated as part of an estate during any period that the trust is so treated under section 645.

(c) Disclaimers

For provisions relating to the effect of a qualified disclaimer for purposes of this chapter, see section 2518.

(d) Limitation on personal liability of trustee

A trustee shall not be personally liable for any increase in the tax imposed by section 2601 which is attributable to the fact that—

(1) section 2642(c) (relating to exemption of certain nontaxable gifts) does not apply to a transfer to the trust which was made during the life of the transferor and for which a gift tax return was not filed, or

(2) the inclusion ratio with respect to the trust is greater than the amount of such ratio as computed on the basis of the return on which was made (or was deemed made) an allocation of the GST exemption to property transferred to such trust.

The preceding sentence shall not apply if the trustee has knowledge of facts sufficient reasonably to conclude that a gift tax return was required to be filed or that the inclusion ratio was erroneous.

(Added Pub. L. 99–514, title XIV, §1431(a), Oct. 22, 1986, 100 Stat. 2727; amended Pub. L. 100–647, title I, §1014(g)(12), (13), Nov. 10, 1988, 102 Stat. 3565, 3566; Pub. L. 101–239, title VII, §7811(j)(2), Dec. 19, 1989, 103 Stat. 2411; Pub. L. 105–206, title VI, §6013(a)(4)(B), July 22, 1998, 112 Stat. 819; Pub. L. 113–295, div. A, title II, §221(a)(95)(B)(iii), Dec. 19, 2014, 128 Stat. 4051.)

Editorial Notes

Amendments

2014—Subsec. (a)(1). Pub. L. 113–295 struck out "(computed without regard to section 2604)" after "section 2601".

1998—Subsec. (b). Pub. L. 105–206 inserted at end "For purposes of this subsection, a trust shall be treated as part of an estate during any period that the trust is so treated under section 645."

1989—Subsec. (a)(1). Pub. L. 101–239 inserted at end "The preceding shall be applied after any basis adjustment under section 1015 with respect to the transfer."

1988—Subsec. (a)(2). Pub. L. 100–647, §1014(g)(12), inserted "or decrease" after "any increase" and "or decrease (as the case may be)" after "such increase".

Subsec. (b). Pub. L. 100–647, §1014(g)(13), substituted "Certain trusts" for "Separate shares" in heading and amended text generally. Prior to amendment, text read as follows: "Substantially separate and independent shares of different beneficiaries in a trust shall be treated as separate trusts."

Statutory Notes and Related Subsidiaries

Effective Date of 2014 Amendment

Amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

Effective Date of 1998 Amendment

Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates (see section 1305 of Pub. L. 105–34), see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

Effective Date of 1989 Amendment

Amendment by Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title.

Effective Date of 1988 Amendment

Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.

Effective Date

Section applicable to generation-skipping transfers (within the meaning of section 2611 of this title) made after Oct. 22, 1986, except as otherwise provided, see section 1433 of Pub. L. 99–514, set out as a note under section 2601 of this title.
26 U.S.C. § 6048 (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 61 / Section 6048: Information with respect to certain foreign trusts
Information with respect to certain foreign trusts
Status: in_force

(a) Notice of certain events

(1) General rule

On or before the 90th day (or such later day as the Secretary may prescribe) after any reportable event, the responsible party shall provide written notice of such event to the Secretary in accordance with paragraph (2).

(2) Contents of notice

The notice required by paragraph (1) shall contain such information as the Secretary may prescribe, including—

(A) the amount of money or other property (if any) transferred to the trust in connection with the reportable event, and

(B) the identity of the trust and of each trustee and beneficiary (or class of beneficiaries) of the trust.

(3) Reportable event

For purposes of this subsection—

(A) In general

The term "reportable event" means—

(i) the creation of any foreign trust by a United States person,

(ii) the transfer of any money or property (directly or indirectly) to a foreign trust by a United States person, including a transfer by reason of death, and

(iii) the death of a citizen or resident of the United States if—

(I) the decedent was treated as the owner of any portion of a foreign trust under the rules of subpart E of part I of subchapter J of chapter 1, or

(II) any portion of a foreign trust was included in the gross estate of the decedent.

(B) Exceptions

(i) Fair market value sales

Subparagraph (A)(ii) shall not apply to any transfer of property to a trust in exchange for consideration of at least the fair market value of the transferred property. For purposes of the preceding sentence, consideration other than cash shall be taken into account at its fair market value and the rules of section 679(a)(3) shall apply.

(ii) Deferred compensation and charitable trusts

Subparagraph (A) shall not apply with respect to a trust which is—

(I) described in section 402(b), 404(a)(4), or 404A, or

(II) determined by the Secretary to be described in section 501(c)(3).

(4) Responsible party

For purposes of this subsection, the term "responsible party" means—

(A) the grantor in the case of the creation of an inter vivos trust,

(B) the transferor in the case of a reportable event described in paragraph (3)(A)(ii) other than a transfer by reason of death, and

(C) the executor of the decedent's estate in any other case.

(b) United States owner of foreign trust

(1) In general

If, at any time during any taxable year of a United States person, such person is treated as the owner of any portion of a foreign trust under the rules of subpart E of part I of subchapter J of chapter 1, such person shall submit such information as the Secretary may prescribe with respect to such trust for such year and shall be responsible to ensure that—

(A) such trust makes a return for such year which sets forth a full and complete accounting of all trust activities and operations for the year, the name of the United States agent for such trust, and such other information as the Secretary may prescribe, and

(B) such trust furnishes such information as the Secretary may prescribe to each United States person (i) who is treated as the owner of any portion of such trust or (ii) who receives (directly or indirectly) any distribution from the trust.

(2) Trusts not having United States agent

(A) In general

If the rules of this paragraph apply to any foreign trust, the determination of amounts required to be taken into account with respect to such trust by a United States person under the rules of subpart E of part I of subchapter J of chapter 1 shall be determined by the Secretary.

(B) United States agent required

The rules of this paragraph shall apply to any foreign trust to which paragraph (1) applies unless such trust agrees (in such manner, subject to such conditions, and at such time as the Secretary shall prescribe) to authorize a United States person to act as such trust's limited agent solely for purposes of applying sections 7602, 7603, and 7604 with respect to—

(i) any request by the Secretary to examine records or produce testimony related to the proper treatment of amounts required to be taken into account under the rules referred to in subparagraph (A), or

(ii) any summons by the Secretary for such records or testimony.

The appearance of persons or production of records by reason of a United States person being such an agent shall not subject such persons or records to legal process for any purpose other than determining the correct treatment under this title of the amounts required to be taken into account under the rules referred to in subparagraph (A). A foreign trust which appoints an agent described in this subparagraph shall not be considered to have an office or a permanent establishment in the United States, or to be engaged in a trade or business in the United States, solely because of the activities of such agent pursuant to this subsection.

(C) Other rules to apply

Rules similar to the rules of paragraphs (2) and (4) of section 6038A(e) shall apply for purposes of this paragraph.

(c) Reporting by United States beneficiaries of foreign trusts

(1) In general

If any United States person receives (directly or indirectly) during any taxable year of such person any distribution from a foreign trust, such person shall make a return with respect to such trust for such year which includes—

(A) the name of such trust,

(B) the aggregate amount of the distributions so received from such trust during such taxable year, and

(C) such other information as the Secretary may prescribe.

(2) Inclusion in income if records not provided

(A) In general

If adequate records are not provided to the Secretary to determine the proper treatment of any distribution from a foreign trust, such distribution shall be treated as an accumulation distribution includible in the gross income of the distributee under chapter 1. To the extent provided in regulations, the preceding sentence shall not apply if the foreign trust elects to be subject to rules similar to the rules of subsection (b)(2)(B).

(B) Application of accumulation distribution rules

For purposes of applying section 668 in a case to which subparagraph (A) applies, the applicable number of years for purposes of section 668(a) shall be ½ of the number of years the trust has been in existence.

(d) Special rules

(1) Determination of whether United States person makes transfer or receives distribution

For purposes of this section, in determining whether a United States person makes a transfer to, or receives a distribution from, a foreign trust, the fact that a portion of such trust is treated as owned by another person under the rules of subpart E of part I of subchapter J of chapter 1 shall be disregarded.

(2) Domestic trusts with foreign activities

To the extent provided in regulations, a trust which is a United States person shall be treated as a foreign trust for purposes of this section and section 6677 if such trust has substantial activities, or holds substantial property, outside the United States.

(3) Time and manner of filing information

Any notice or return required under this section shall be made at such time and in such manner as the Secretary shall prescribe.

(4) Modification of return requirements

The Secretary is authorized to suspend or modify any requirement of this section if the Secretary determines that the United States has no significant tax interest in obtaining the required information.

(5) United States person's return must be consistent with trust return or Secretary notified of inconsistency

Rules similar to the rules of section 6034A(c) shall apply to items reported by a trust under subsection (b)(1)(B) and to United States persons referred to in such subsection.

(Added Pub. L. 87–834, §7(f), Oct. 16, 1962, 76 Stat. 987; amended Pub. L. 94–455, title X, §1013(d)(1), (e)(3), (4), title XIX, §1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1616, 1834; Pub. L. 97–248, title III, §341(b), Sept. 3, 1982, 96 Stat. 635; Pub. L. 104–188, title I, §1901(a), Aug. 20, 1996, 110 Stat. 1904; Pub. L. 105–34, title X, §1027(b), title XVI, §1601(i)(1), Aug. 5, 1997, 111 Stat. 926, 1092; Pub. L. 111–147, title V, §534(a), Mar. 18, 2010, 124 Stat. 114.)

Editorial Notes

Amendments

2010—Subsec. (b)(1). Pub. L. 111–147 inserted "shall submit such information as the Secretary may prescribe with respect to such trust for such year and" before "shall be responsible to ensure" in introductory provisions.

1997—Subsec. (b). Pub. L. 105–34, §1601(i)(1), substituted "owner" for "grantor" in heading.

Subsec. (d)(5). Pub. L. 105–34, §1027(b), added par. (5).

1996—Pub. L. 104–188 amended section generally, substituting provisions calling for improved information reporting on foreign trusts for provisions calling for the filing of returns as to foreign trusts, prescribing the form and contents of such returns, and requiring annual returns for foreign trusts with one or more United States beneficiaries.

1982—Subsec. (a). Pub. L. 97–248 inserted "(or on or before such later day as the Secretary may by regulations prescribe)" after "the 90th day".

1976—Pub. L. 94–455, §1013(e)(4), struck out "creation of or transfer to" after "Returns as to" in section catchline.

Subsec. (b). Pub. L. 94–455, §1906(b)(13)(A), struck out "or his delegate" after "Secretary".

Subsecs. (c), (d). Pub. L. 94–455, §1013(d)(1), (e)(3), added subsec. (c), redesignated former subsec. (c) as (d), and in subsec. (d) struck out cross reference to section 643(d) for definition of "foreign trust created by a United States person".

Statutory Notes and Related Subsidiaries

Effective Date of 2010 Amendment

Pub. L. 111–147, title V, §534(b), Mar. 18, 2010, 124 Stat. 115, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Mar. 18, 2010]."

Effective Date of 1997 Amendment

Amendment by section 1027(b) of Pub. L. 105–34 applicable to returns of beneficiaries and owners filed after Aug. 5, 1997, see section 1027(c) of Pub. L. 105–34, set out as a note under section 6034A of this title.

Amendment by section 1601(i)(1) of Pub. L. 105–34 effective as if included in the provisions of the Small Business Job Protection Act of 1996, Pub. L. 104–188, to which it relates, see section 1601(j) of Pub. L. 105–34, set out as a note under section 23 of this title.

Effective Date of 1996 Amendment

Pub. L. 104–188, title I, §1901(d), Aug. 20, 1996, 110 Stat. 1908, provided that:

"(1) Reportable events.—To the extent related to subsection (a) of section 6048 of the Internal Revenue Code of 1986, as amended by this section, the amendments made by this section [amending this section and sections 6677 and 6724 of this title] shall apply to reportable events (as defined in such section 6048) occurring after the date of the enactment of this Act [Aug. 20, 1996].

"(2) Grantor trust reporting.—To the extent related to subsection (b) of such section 6048, the amendments made by this section shall apply to taxable years of United States persons beginning after December 31, 1995.

"(3) Reporting by united states beneficiaries.—To the extent related to subsection (c) of such section 6048, the amendments made by this section shall apply to distributions received after the date of the enactment of this Act."

Effective Date of 1982 Amendment

Amendment by Pub. L. 97–248 applicable to returns filed after Sept. 3, 1982, see section 341(c) of Pub. L. 97–248, set out as a note under section 6046 of this title.
26 U.S.C. § 5552 (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 51 / Subchapter I / Section 5552: Installation of meters, tanks, and other apparatus
Installation of meters, tanks, and other apparatus
Status: in_force

The Secretary is authorized to require at distilled spirits plants, breweries, and at any other premises established pursuant to this chapter as in his judgment may be deemed advisable, the installation of meters, tanks, pipes, or any other apparatus for the purpose of protecting the revenue, and such meters, tanks, and pipes and all necessary labor incident thereto shall be at the expense of the person on whose premises the installation is required. Any such person refusing or neglecting to install such apparatus when so required by the Secretary shall not be permitted to conduct business on such premises.

(Added Pub. L. 85–859, title II, §201, Sept. 2, 1958, 72 Stat. 1395; amended Pub. L. 94–455, title XIX, §1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

Editorial Notes

Prior Provisions

A prior section 5552, act Aug. 16, 1954, ch. 736, 68A Stat. 680, consisted of provisions similar to those comprising this section, prior to the general revision of this chapter by Pub. L. 85–859.

For application to vinegar plants of provisions of prior section 5552 relating to installation of meters, tanks, and other apparatus, see also sections 5503 and 5505(e) of this title.

Amendments

1976—Pub. L. 94–455 struck out "or his delegate" after "Secretary" wherever appearing.
26 U.S.C. § 1253 (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 1 / Section 1253: Transfers of franchises, trademarks, and trade names
Transfers of franchises, trademarks, and trade names
Status: in_force

(a) General rule

A transfer of a franchise, trademark, or trade name shall not be treated as a sale or exchange of a capital asset if the transferor retains any significant power, right, or continuing interest with respect to the subject matter of the franchise, trademark, or trade name.

(b) Definitions

For purposes of this section—

(1) Franchise

The term "franchise" includes an agreement which gives one of the parties to the agreement the right to distribute, sell, or provide goods, services, or facilities, within a specified area.

(2) Significant power, right, or continuing interest

The term "significant power, right, or continuing interest" includes, but is not limited to, the following rights with respect to the interest transferred:

(A) A right to disapprove any assignment of such interest, or any part thereof.

(B) A right to terminate at will.

(C) A right to prescribe the standards of quality of products used or sold, or of services furnished, and of the equipment and facilities used to promote such products or services.

(D) A right to require that the transferee sell or advertise only products or services of the transferor.

(E) A right to require that the transferee purchase substantially all of his supplies and equipment from the transferor.

(F) A right to payments contingent on the productivity, use, or disposition of the subject matter of the interest transferred, if such payments constitute a substantial element under the transfer agreement.

(3) Transfer

The term "transfer" includes the renewal of a franchise, trademark, or trade name.

(c) Treatment of contingent payments by transferor

Amounts received or accrued on account of a transfer, sale, or other disposition of a franchise, trademark, or trade name which are contingent on the productivity, use, or disposition of the franchise, trademark, or trade name transferred shall be treated as amounts received or accrued from the sale or other disposition of property which is not a capital asset.

(d) Treatment of payments by transferee

(1) Contingent serial payments

(A) In general

Any amount described in subparagraph (B) which is paid or incurred during the taxable year on account of a transfer, sale, or other disposition of a franchise, trademark, or trade name shall be allowed as a deduction under section 162(a) (relating to trade or business expenses).

(B) Amounts to which paragraph applies

An amount is described in this subparagraph if it—

(i) is contingent on the productivity, use, or disposition of the franchise, trademark, or trade name, and

(ii) is paid as part of a series of payments—

(I) which are payable not less frequently than annually throughout the entire term of the transfer agreement, and

(II) which are substantially equal in amount (or payable under a fixed formula).

(2) Other payments

Any amount paid or incurred on account of a transfer, sale, or other disposition of a franchise, trademark, or trade name to which paragraph (1) does not apply shall be treated as an amount chargeable to capital account.

(3) Renewals, etc.

For purposes of determining the term of a transfer agreement under this section, there shall be taken into account all renewal options (and any other period for which the parties reasonably expect the agreement to be renewed).

(Added Pub. L. 91–172, title V, §516(c)(1), Dec. 30, 1969, 83 Stat. 647; amended Pub. L. 94–455, title XIX, §1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 101–239, title VII, §7622(a)–(c), Dec. 19, 1989, 103 Stat. 2377; Pub. L. 101–508, title XI, §11701(i), Nov. 5, 1990, 104 Stat. 1388–508; Pub. L. 103–66, title XIII, §13261(c), Aug. 10, 1993, 107 Stat. 539; Pub. L. 104–188, title I, §1704(t)(47), Aug. 20, 1996, 110 Stat. 1889; Pub. L. 108–357, title VIII, §886(b)(3), Oct. 22, 2004, 118 Stat. 1641.)

Editorial Notes

Amendments

2004—Subsec. (e). Pub. L. 108–357 struck out heading and text of subsec. (e). Text read as follows: "This section shall not apply to the transfer of a franchise to engage in professional football, basketball, baseball, or other professional sport."

1996—Subsec. (d)(4). Pub. L. 104–188 provided that section 11701(i) of Pub. L. 101–508 shall be applied as if "subsection" appeared instead of "section" in the material proposed to be stricken. See 1990 Amendment note below.

1993—Subsec. (d)(2) to (5). Pub. L. 103–66 added pars. (2) and (3) and struck out former pars. (2) relating to deduction of certain payments for transfer of a franchise, trademark, or trade name not treated as sale or exchange of capital asset, (3) relating to treatment of amounts paid or incurred on account of transfer, sale, or other disposition of a franchise, trademark, or trade name to which pars. (1) and (2) did not apply, (4) relating to renewals for purposes of determining term of transfer agreement under this section or period of amortization under this subtitle, and (5) relating to rules applicable to this subsection.

1990—Subsec. (d)(4). Pub. L. 101–508, §11701(i), which directed the substitution of "under this section or any period of amortization under this subtitle for any payment described in this section" for "or any period of amortization under this section", was executed by making the substitution for "or any period of amortization under this subsection". See 1996 Amendment note above.

1989—Subsec. (d)(1). Pub. L. 101–239, §7622(a), substituted "serial payments" for "payments" in heading and amended text generally. Prior to amendment, text read as follows: "Amounts paid or incurred during the taxable year on account of a transfer, sale, or other disposition of a franchise, trademark, or trade name which are contingent on the productivity, use, or disposition of the franchise, trademark, or trade name transferred shall be allowed as a deduction under section 162(a) (relating to trade or business expenses)."

Subsec. (d)(2). Pub. L. 101–239, §7622(b), designated existing provisions as subpar. (A), inserted subpar. heading, redesignated former subpars. (A) to (C) as cls. (i) to (iii), respectively, and former cls. (i) and (ii) of former subpar. (B) as subcls. (I) and (II), respectively, of cl. (ii), and added subpar. (B).

Subsec. (d)(3) to (5). Pub. L. 101–239, §7622(c), added pars. (3) to (5).

1976—Subsec. (d)(2)(C). Pub. L. 94–455 struck out "or his delegate" after "Secretary".

Statutory Notes and Related Subsidiaries

Effective Date of 2004 Amendment

Amendment by Pub. L. 108–357 applicable to property acquired after Oct. 22, 2004, see section 886(c)(1) of Pub. L. 108–357, set out as a note under section 197 of this title.

Effective Date of 1993 Amendment

Amendment by Pub. L. 103–66 applicable, except as otherwise provided, with respect to property acquired after Aug. 10, 1993, see section 13261(g) of Pub. L. 103–66, set out as an Effective Date note under section 197 of this title.

Effective Date of 1990 Amendment

Amendment by Pub. L. 101–508 effective, except as otherwise provided, as if included in the provision of the Revenue Reconciliation Act of 1989, Pub. L. 101–239, title VII, to which such amendment relates, see section 11701(n) of Pub. L. 101–508, set out as a note under section 42 of this title.

Effective Date of 1989 Amendment

Amendment by Pub. L. 101–239 applicable to transfers after Oct. 2, 1989, but not applicable to any transfer pursuant to a written binding contract in effect on Oct. 2, 1989, and at all times thereafter before the transfer, see section 7622(c)[(e)] of Pub. L. 101–239, set out as a note under section 167 of this title.

Effective Date

Section applicable to transfers after Dec. 31, 1969, except that subsec. (d)(1) shall, at the election of the taxpayer (made at such time and in such manner as the Secretary or his delegate may by regulations prescribe), apply to transfers before Jan. 1, 1970, but only with respect to payments made in taxable years ending after Dec. 31, 1969, and beginning before Jan. 1, 1980, see section 516(d)(3) of Pub. L. 91–172, set out as a note under section 1001 of this title.
26 U.S.C. § 4291 (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 33 / Section 4291: Cases where persons receiving payment must collect tax
Cases where persons receiving payment must collect tax
Status: in_force

Except as otherwise provided in section 4263(a), every person receiving any payment for facilities or services on which a tax is imposed upon the payor thereof under this chapter shall collect the amount of the tax from the person making such payment.

(Aug. 16, 1954, ch. 736, 68A Stat. 511; July 25, 1956, ch. 725, §4(c), 70 Stat. 646; Pub. L. 85–859, title I, §131(g), Sept. 2, 1958, 72 Stat. 1287; Pub. L. 89–44, title III, §305(a), June 21, 1965, 79 Stat. 148; Pub. L. 91–258, title II, §205(c)(3), May 21, 1970, 84 Stat. 242.)

Editorial Notes

Amendments

1970—Pub. L. 91–258 substituted "section 4263(a)" for "section 4264(a)".

1965—Pub. L. 89–44 struck out reference to section 4231 and struck out sentence referring to tax imposed on life memberships by section 4241.

1958—Pub. L. 85–859 substituted "Except as otherwise provided in sections 3241 and 4262(a)" for "Except as provided in section 4264(a)".

1956—Act July 25, 1956, inserted "Except as provided in section 4264(a)", and struck out provisions which related to collection of tax where payment specified in section 4261 was made outside the United States for a prepaid order, exchange order, or similar order.

Statutory Notes and Related Subsidiaries

Effective Date of 1970 Amendment

Amendment by Pub. L. 91–258 effective on July 1, 1970, see section 211(a) of Pub. L. 91–258, set out as a note under section 4041 of this title.

Effective Date of 1965 Amendment

Pub. L. 89–44, title VII, §701(b)(1), June 21, 1965, 79 Stat. 156, provided that:

"(A) The amendments made by sections 301 and 305 [repealing sections 4231 to 4234 and 4241 to 4243 of this title and amending this section and section 6040 of this title] insofar as they relate to the taxes imposed by section 4231 of the Code, shall apply with respect to admissions, services, or uses after noon, December 31, 1965.

"(B) The amendments made by sections 301 and 305 insofar as they relate to the taxes imposed by section 4241 of the Code, shall apply with respect to—

"(i) dues and membership fees attributable to periods beginning on or after January 1, 1966;

"(ii) initiation fees (other than initiation fees to which clause (iii) applies) and amounts paid for life memberships attributable to memberships beginning on or after January 1, 1966;

"(iii) initiation fees paid on or after July 1, 1965, to a new club or organization which first makes its facilities available to members on or after such date; and

"(iv) in the case of amounts described in section 4243(b) of the Code, 3-year periods beginning on or after January 1, 1966."

Effective Date of 1958 Amendment

Amendment by Pub. L. 85–859 effective on first day of first calendar quarter which begins more than 60 days after Sept. 2, 1958, see section 1(c) of Pub. L. 85–859, Sept. 2, 1958, 72 Stat. 1275.

Effective Date of 1956 Amendment

Amendment by act July 25, 1956, applicable to amounts paid on or after first day of first month which begins more than sixty days after July 25, 1956, for transportation commencing on or after such first day, see section 6 of act July 25, 1956, set out as a note under section 4261 of this title.
26 U.S.C. § 1311 (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 1 / Section 1311: Correction of error
Correction of error
Status: in_force

(a) General rule

If a determination (as defined in section 1313) is described in one or more of the paragraphs of section 1312 and, on the date of the determination, correction of the effect of the error referred to in the applicable paragraph of section 1312 is prevented by the operation of any law or rule of law, other than this part and other than section 7122 (relating to compromises), then the effect of the error shall be corrected by an adjustment made in the amount and in the manner specified in section 1314.

(b) Conditions necessary for adjustment

(1) Maintenance of an inconsistent position

Except in cases described in paragraphs (3) (B) and (4) of section 1312, an adjustment shall be made under this part only if—

(A) in case the amount of the adjustment would be credited or refunded in the same manner as an overpayment under section 1314, there is adopted in the determination a position maintained by the Secretary, or

(B) in case the amount of the adjustment would be assessed and collected in the same manner as a deficiency under section 1314, there is adopted in the determination a position maintained by the taxpayer with respect to whom the determination is made,

and the position maintained by the Secretary in the case described in subparagraph (A) or maintained by the taxpayer in the case described in subparagraph (B) is inconsistent with the erroneous inclusion, exclusion, omission, allowance, disallowance, recognition, or nonrecognition, as the case may be.

(2) Correction not barred at time of erroneous action

(A) Determination described in section 1312(3)(B)

In the case of a determination described in section 1312(3)(B) (relating to certain exclusions from income), adjustment shall be made under this part only if assessment of a deficiency for the taxable year in which the item is includible or against the related taxpayer was not barred, by any law or rule of law, at the time the Secretary first maintained, in a notice of deficiency sent pursuant to section 6212 or before the Tax Court, that the item described in section 1312(3)(B) should be included in the gross income of the taxpayer for the taxable year to which the determination relates.

(B) Determination described in section 1312(4)

In the case of a determination described in section 1312(4) (relating to disallowance of certain deductions and credits), adjustment shall be made under this part only if credit or refund of the overpayment attributable to the deduction or credit described in such section which should have been allowed to the taxpayer or related taxpayer was not barred, by any law or rule of law, at the time the taxpayer first maintained before the Secretary or before the Tax Court, in writing, that he was entitled to such deduction or credit for the taxable year to which the determination relates.

(3) Existence of relationship

In case the amount of the adjustment would be assessed and collected in the same manner as a deficiency (except for cases described in section 1312(3)(B)), the adjustment shall not be made with respect to a related taxpayer unless he stands in such relationship to the taxpayer at the time the latter first maintains the inconsistent position in a return, claim for refund, or petition (or amended petition) to the Tax Court for the taxable year with respect to which the determination is made, or if such position is not so maintained, then at the time of the determination.

(Aug. 16, 1954, ch. 736, 68A Stat. 337; Pub. L. 94–455, title XIX, §§1901(a)(142), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1788, 1834.)

Editorial Notes

Amendments

1976—Subsec. (b)(2). Pub. L. 94–455, §§1901(a)(142), 1906(b)(13)(A), struck out "or his delegate" after "Secretary" and "of the United States" after "Tax Court" wherever appearing.

Subsec. (b)(3). Pub. L. 94–455, §1901(a)(142), struck out "of the United States" after "Tax Court".

Statutory Notes and Related Subsidiaries

Effective Date of 1976 Amendment

Amendment by section 1901(a)(142) of Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.
26 U.S.C. § 5701 (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 52 / Section 5701: Rate of tax
Rate of tax
Status: in_force

(a) Cigars

On cigars, manufactured in or imported into the United States, there shall be imposed the following taxes:

(1) Small cigars

On cigars, weighing not more than 3 pounds per thousand, $50.33 per thousand;

(2) Large cigars

On cigars weighing more than 3 pounds per thousand, a tax equal to 52.75 percent of the price for which sold but not more than 40.26 cents per cigar.

Cigars not exempt from tax under this chapter which are removed but not intended for sale shall be taxed at the same rate as similar cigars removed for sale.

(b) Cigarettes

On cigarettes, manufactured in or imported into the United States, there shall be imposed the following taxes:

(1) Small cigarettes

On cigarettes, weighing not more than 3 pounds per thousand, $50.33 per thousand;

(2) Large cigarettes

On cigarettes, weighing more than 3 pounds per thousand, $105.69 per thousand; except that, if more than 6½ inches in length, they shall be taxable at the rate prescribed for cigarettes weighing not more than 3 pounds per thousand, counting each 2¾ inches, or fraction thereof, of the length of each as one cigarette.

(c) Cigarette papers

On cigarette papers, manufactured in or imported into the United States, there shall be imposed a tax of 3.15 cents for each 50 papers or fractional part thereof; except that, if cigarette papers measure more than 6½ inches in length, they shall be taxable at the rate prescribed, counting each 2¾ inches, or fraction thereof, of the length of each as one cigarette paper.

(d) Cigarette tubes

On cigarette tubes, manufactured in or imported into the United States, there shall be imposed a tax of 6.30 cents for each 50 tubes or fractional part thereof, except that if cigarette tubes measure more than 6½ inches in length, they shall be taxable at the rate prescribed, counting each 2¾ inches, or fraction thereof, of the length of each as one cigarette tube.

(e) Smokeless tobacco

On smokeless tobacco, manufactured in or imported into the United States, there shall be imposed the following taxes:

(1) Snuff

On snuff, $1.51 per pound and a proportionate tax at the like rate on all fractional parts of a pound.

(2) Chewing tobacco

On chewing tobacco, 50.33 cents per pound and a proportionate tax at the like rate on all fractional parts of a pound.

(f) Pipe tobacco

On pipe tobacco, manufactured in or imported into the United States, there shall be imposed a tax of $2.8311 cents per pound (and a proportionate tax at the like rate on all fractional parts of a pound).

(g) Roll-your-own tobacco

On roll-your-own tobacco, manufactured in or imported into the United States, there shall be imposed a tax of $24.78 per pound (and a proportionate tax at the like rate on all fractional parts of a pound).

(h) Imported tobacco products and cigarette papers and tubes

The taxes imposed by this section on tobacco products and cigarette papers and tubes imported into the United States shall be in addition to any import duties imposed on such articles, unless such import duties are imposed in lieu of internal revenue tax.

(Aug. 16, 1954, ch. 736, 68A Stat. 705; Mar. 30, 1955, ch. 18, §3(a)(9), 69 Stat. 14; Mar. 29, 1956, ch. 115, §3(a)(9), 70 Stat. 66; Pub. L. 85–12, §3(a)(7), Mar. 29, 1957, 71 Stat. 9; Pub. L. 85–475, §3(a)(7), June 30, 1958, 72 Stat. 259; Pub. L. 85–859, title II, §202, Sept. 2, 1958, 72 Stat. 1414; Pub. L. 86–75, §3(a)(7), June 30, 1959, 73 Stat. 157; Pub. L. 86–564, title II, §202(a)(9), June 30, 1960, 74 Stat. 290; Pub. L. 86–779, §1, Sept. 14, 1960, 74 Stat. 998; Pub. L. 87–72, §3(a)(9), June 30, 1961, 75 Stat. 193; Pub. L. 87–508, §3(a)(8), June 28, 1962, 76 Stat. 114; Pub. L. 88–52, §3(a)(9), June 29, 1963, 77 Stat. 72; Pub. L. 88–348, §2(a)(9), June 30, 1964, 78 Stat. 237; Pub. L. 89–44, title V, §§501(f), 502(a), June 21, 1965, 79 Stat. 150; Pub. L. 90–240, §4(a), Jan. 2, 1968, 81 Stat. 776; Pub. L. 94–455, title XIX, §1905(a)(24), title XXI, §2128(a), Oct. 4, 1976, 90 Stat. 1821, 1921; Pub. L. 97–248, title II, §283(a), Sept. 3, 1982, 96 Stat. 568; Pub. L. 99–272, title XIII, §13202(a), Apr. 7, 1986, 100 Stat. 311; Pub. L. 100–647, title V, §5061(a), Nov. 10, 1988, 102 Stat. 3679; Pub. L. 101–508, title XI, §11202(a)–(f), Nov. 5, 1990, 104 Stat. 1388–419; Pub. L. 105–33, title IX, §9302(a)–(g)(1), (h)(3), Aug. 5, 1997, 111 Stat. 671, 672, 674; Pub. L. 111–3, title VII, §701(a)–(g), Feb. 4, 2009, 123 Stat. 106, 107; Pub. L. 115–141, div. U, title IV, §401(a)(250), Mar. 23, 2018, 132 Stat. 1196.)

Editorial Notes

Amendments

2018—Subsec. (e). Pub. L. 115–141 substituted "manufactured" for "manufacturered" in introductory provisions.

2009—Subsec. (a)(1). Pub. L. 111–3, §701(a)(1), substituted "$50.33 per thousand" for "$1.828 cents per thousand ($1.594 cents per thousand on cigars removed during 2000 or 2001)".

Subsec. (a)(2). Pub. L. 111–3, §701(a)(2), (3), substituted "52.75 percent" for "20.719 percent (18.063 percent on cigars removed during 2000 or 2001)" and "40.26 cents per cigar" for "$48.75 per thousand ($42.50 per thousand on cigars removed during 2000 or 2001)".

Subsec. (b)(1). Pub. L. 111–3, §701(b)(1), substituted "$50.33 per thousand" for "$19.50 per thousand ($17 per thousand on cigarettes removed during 2000 or 2001)".

Subsec. (b)(2). Pub. L. 111–3, §701(b)(2), substituted "$105.69 per thousand" for "$40.95 per thousand ($35.70 per thousand on cigarettes removed during 2000 or 2001)".

Subsec. (c). Pub. L. 111–3, §701(c), substituted "3.15 cents" for "1.22 cents (1.06 cents on cigarette papers removed during 2000 or 2001)".

Subsec. (d). Pub. L. 111–3, §701(d), substituted "6.30 cents" for "2.44 cents (2.13 cents on cigarette tubes removed during 2000 or 2001)".

Subsec. (e)(1). Pub. L. 111–3, §701(e)(1), substituted "$1.51" for "58.5 cents (51 cents on snuff removed during 2000 or 2001)".

Subsec. (e)(2). Pub. L. 111–3, §701(e)(2), substituted "50.33 cents" for "19.5 cents (17 cents on chewing tobacco removed during 2000 or 2001)".

Subsec. (f). Pub. L. 111–3, §701(f), substituted "$2.8311 cents" for "$1.0969 cents (95.67 cents on pipe tobacco removed during 2000 or 2001)".

Subsec. (g). Pub. L. 111–3, §701(g), substituted "$24.78" for "$1.0969 cents (95.67 cents on roll-your-own tobacco removed during 2000 or 2001)".

1997—Subsec. (a)(1). Pub. L. 105–33, §9302(b)(1), substituted "$1.828 cents per thousand ($1.594 cents per thousand on cigars removed during 2000 or 2001)" for "$1.125 cents per thousand (93.75 cents per thousand on cigars removed during 1991 or 1992)".

Subsec. (a)(2). Pub. L. 105–33, §9302(b)(2), substituted "equal to 20.719 percent (18.063 percent on cigars removed during 2000 or 2001) of the price for which sold but not more than $48.75 per thousand ($42.50 per thousand on cigars removed during 2000 or 2001)." for "equal to—

"(A) 10.625 percent of the price for which sold but not more than $25 per thousand on cigars removed during 1991 or 1992, and

"(B) 12.75 percent of the price for which sold but not more than $30 per thousand on cigars removed after 1992."

Subsec. (b)(1). Pub. L. 105–33, §9302(a)(1), substituted "$19.50 per thousand ($17 per thousand on cigarettes removed during 2000 or 2001)" for "$12 per thousand ($10 per thousand on cigarettes removed during 1991 or 1992)".

Subsec. (b)(2). Pub. L. 105–33, §9302(a)(2), substituted "$40.95 per thousand ($35.70 per thousand on cigarettes removed during 2000 or 2001)" for "$25.20 per thousand ($21 per thousand on cigarettes removed during 1991 or 1992)".

Subsec. (c). Pub. L. 105–33, §9302(h)(3), substituted "On cigarette papers," for "On each book or set of cigarette papers containing more than 25 papers,".

Pub. L. 105–33, §9302(c), substituted "1.22 cents (1.06 cents on cigarette papers removed during 2000 or 2001)" for "0.75 cent (0.625 cent on cigarette papers removed during 1991 or 1992)".

Subsec. (d). Pub. L. 105–33, §9302(d), substituted "2.44 cents (2.13 cents on cigarette tubes removed during 2000 or 2001)" for "1.5 cents (1.25 cents on cigarette tubes removed during 1991 or 1992)".

Subsec. (e)(1). Pub. L. 105–33, §9302(e)(1), substituted "58.5 cents (51 cents on snuff removed during 2000 or 2001)" for "36 cents (30 cents on snuff removed during 1991 or 1992)".

Subsec. (e)(2). Pub. L. 105–33, §9302(e)(2), substituted "19.5 cents (17 cents on chewing tobacco removed during 2000 or 2001)" for "12 cents (10 cents on chewing tobacco removed during 1991 or 1992)".

Subsec. (f). Pub. L. 105–33, §9302(f), substituted "$1.0969 cents (95.67 cents on pipe tobacco removed during 2000 or 2001)" for "67.5 cents (56.25 cents on pipe tobacco removed during 1991 or 1992)".

Subsecs. (g), (h). Pub. L. 105–33, §9302(g)(1), added subsec. (g) and redesignated former subsec. (g) as (h).

1990—Subsec. (a)(1). Pub. L. 101–508, §11202(a)(1), substituted "$1.125 cents per thousand (93.75 cents per thousand on cigars removed during 1991 or 1992)" for "75 cents per thousand".

Subsec. (a)(2). Pub. L. 101–508, §11202(a)(2), substituted "equal to—" and subpars. (A) and (B) for "equal to 8½ percent of the wholesale price, but not more than $20 per thousand."

Subsec. (b)(1). Pub. L. 101–508, §11202(b)(1), substituted "$12 per thousand ($10 per thousand on cigarettes removed during 1991 or 1992)" for "$8 per thousand".

Subsec. (b)(2). Pub. L. 101–508, §11202(b)(2), substituted "$25.20 per thousand ($21 per thousand on cigarettes removed during 1991 or 1992)" for "$16.80 per thousand".

Subsec. (c). Pub. L. 101–508, §11202(c), substituted "0.75 cent (0.625 cent on cigarette papers removed during 1991 or 1992)" for "½ cent".

Subsec. (d). Pub. L. 101–508, §11202(d), substituted "1.5 cents (1.25 cents on cigarette tubes removed during 1991 or 1992)" for "1 cent".

Subsec. (e)(1). Pub. L. 101–508, §11202(e)(1), substituted "36 cents (30 cents on snuff removed during 1991 or 1992)" for "24 cents".

Subsec. (e)(2). Pub. L. 101–508, §11202(e)(2), substituted "12 cents (10 cents on chewing tobacco removed during 1991 or 1992)" for "8 cents".

Subsec. (f). Pub. L. 101–508, §11202(f), substituted "67.5 cents (56.25 cents on pipe tobacco removed during 1991 or 1992)" for "45 cents".

1988—Subsecs. (f), (g). Pub. L. 100–647 added subsec. (f) and redesignated former subsec. (f) as (g).

1986—Subsecs. (e), (f). Pub. L. 99–272 added subsec. (e) and redesignated former subsec. (e) as (f).

1982—Subsec. (b)(1). Pub. L. 97–248, §283(a)(1), substituted "$8" for "$4".

Subsec. (b)(2). Pub. L. 97–248, §283(a)(2), substituted "$16.80" for "$8.40".

1976—Subsec. (a). Pub. L. 94–455, §2128(a), substituted provisions setting a tax of 8½ percent of the wholesale price, but not more than $20 per thousand, on cigars weighing more than 3 pounds per thousand for provisions setting the tax according to a graduated table running from $2.50 per thousand for large cigars if removed to retail at not more than 2½ cents each to $20 per thousand if removed to retail at more than 20 cents each, and struck out provisions that, in determining the retail price, for tax purposes, regard be had to the ordinary retail price of a single cigar in its principal market, exclusive of any State or local taxes imposed on cigars as a commodity, and that, for purposes of that determination, the amount of State or local tax excluded from the retail price be the actual tax imposed, except that, if the combined taxes resulted in a numerical figure ending in a fraction of a cent, the amount so excluded would be rounded to the next highest full cent unless such rounding would result in a tax lower than the tax which would be imposed in the absence of State or local tax.

Subsec. (e). Pub. L. 94–455, §1905(a)(24), inserted ", unless such import duties are imposed in lieu of internal revenue tax" after "such articles".

1968—Subsec. (a). Pub. L. 90–240 provided that the amount of State and local tax excluded from the retail price be the actual tax imposed, except that, if the combined taxes result in a numerical figure ending in a fraction of a cent, the amount so excluded be rounded to the next highest full cent unless such rounding would result in a tax lower than the tax which would be imposed in the absence of State and local taxes.

1965—Pub. L. 89–44, §502(a), struck out subsec. (a) relating to tobacco and redesignated subsecs. (b) to (f) as subsecs. (a) to (e), respectively.

Subsec. (b)(1). Pub. L. 89–44, §501(f), removed the July 1, 1965, time limit for the $4 per thousand rate as well as the provision for imposition of a $3.50 rate on and after July 1, 1965.

1964—Subsec. (c)(1). Pub. L. 88–348 substituted "July 1, 1965" for "July 1, 1964" in two places.

1963—Subsec. (c)(1). Pub. L. 88–52 substituted "July 1, 1964" for "July 1, 1963" in two places.

1962—Subsec. (c)(1). Pub. L. 87–508 substituted "July 1, 1963" for "July 1, 1962" in two places.

1961—Subsec. (c)(1). Pub. L. 87–72 substituted "July 1, 1962" for "July 1, 1961" in two places.

1960—Subsec. (b). Pub. L. 86–779 substituted "imposed on cigars as a commodity" for "imposed on the retail sales of cigars".

Subsec. (c)(1). Pub. L. 86–564 substituted "July 1, 1961" for "July 1, 1960" in two places.

1959—Subsec. (c)(1). Pub. L. 86–75 substituted "July 1, 1960" for "July 1, 1959" in two places.

1958—Subsec. (b). Pub. L. 85–859 provided that in determining the retail price, for tax purposes, regard shall be had to the ordinary retail price of a single cigar in its principal market, exclusive of any State or local taxes imposed on the retail sale of cigars, and required cigars not exempt from tax under this chapter which are removed but not intended for sale to be taxed at the same rate as similar cigars removed for sale.

Subsec. (c)(1). Pub. L. 85–475 substituted "July 1, 1959" for "July 1, 1958" in two places.

Subsec. (d). Pub. L. 85–859 substituted "On each book or set of cigarette papers containing more than 25 papers, manufactured in or imported into the United States, there shall be imposed" for "On cigarette papers, manufactured in or imported into the United States, there shall be imposed, on each package, book, or set containing more than 25 papers".

Subsec. (f). Pub. L. 85–859 substituted "imposed by this section on tobacco products and cigarette papers and tubes imported into the United States" for "imposed on articles by this section".

1957—Subsec. (c)(1). Pub. L. 85–12 substituted "July 1, 1958" for "April 1, 1957" in two places.

1956—Subsec. (c)(1). Act Mar. 29, 1956, substituted "April 1, 1957" for "April 1, 1956" in two places.

1955—Subsec. (c)(1). Act Mar. 30, 1955, substituted "April 1, 1956" for "April 1, 1955" in two places.

Statutory Notes and Related Subsidiaries

Effective Date of 2009 Amendment

Except as otherwise provided, amendment by Pub. L. 111–3 effective Apr. 1, 2009, see section 3 of Pub. L. 111–3, set out as an Effective Date note under section 1396 of Title 42, The Public Health and Welfare.

Pub. L. 111–3, title VII, §701(i), Feb. 4, 2009, 123 Stat. 108, provided that: "The amendments made by this section [amending this section] shall apply to articles removed (as defined in section 5702(j) of the Internal Revenue Code of 1986) after March 31, 2009."

Effective Date of 1997 Amendment

Pub. L. 105–33, title IX, §9302(i), Aug. 5, 1997, 111 Stat. 674, provided that:

"(1) In general.—The amendments made by this section [enacting section 5754 of this title and amending this section and sections 5702, 5704, 5712, 5713, 5721, 5722, and 5761 to 5763 of this title] shall apply to articles removed (as defined in section 5702(k) [now section 5702(j)] of the Internal Revenue Code of 1986, as amended by this section) after December 31, 1999.

"(2) Transitional rule.—Any person who—

"(A) on the date of the enactment of this Act [Aug. 5, 1997] is engaged in business as a manufacturer of roll-your-own tobacco or as an importer of tobacco products or cigarette papers and tubes, and

"(B) before January 1, 2000, submits an application under subchapter B of chapter 52 of such Code to engage in such business,

may, notwithstanding such subchapter B, continue to engage in such business pending final action on such application. Pending such final action, all provisions of such chapter 52 shall apply to such applicant in the same manner and to the same extent as if such applicant were a holder of a permit under such chapter 52 to engage in such business."

Effective Date of 1990 Amendment

Pub. L. 101–508, title XI, §11202(h), Nov. 5, 1990, 104 Stat. 1388–420, provided that: "The amendments made by this section [amending this section and section 5702 of this title] shall apply with respect to articles removed after December 31, 1990."

Effective Date of 1988 Amendment

Pub. L. 100–647, title V, §5061(d), Nov. 10, 1988, 102 Stat. 3680, provided that:

"(1) In general.—The amendments made by this section [amending this section and section 5702 of this title] shall apply to pipe tobacco removed (within the meaning of section 5702(k) [now section 5702(j)] of the 1986 Code) after December 31, 1988.

"(2) Transitional rule.—Any person who—

"(A) on the date of the enactment of this Act [Nov. 10, 1988], is engaged in business as a manufacturer of pipe tobacco, and

"(B) before January 1, 1989, submits an application under subchapter B of chapter 52 of the 1986 Code to engage in such business,

may, notwithstanding such subchapter B, continue to engage in such business pending final action on such application. Pending such final action, all provisions of chapter 52 of the 1986 Code shall apply to such applicant in the same manner and to the same extent as if such applicant were a holder of a permit to manufacture pipe tobacco under such chapter 52."

Effective Date of 1986 Amendment

Pub. L. 99–272, title XIII, §13202(c), Apr. 7, 1986, 100 Stat. 312, as amended by Pub. L. 99–514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that:

"(1) In general.—The amendments made by this section [amending this section and section 5702 of this title] shall apply to smokeless tobacco removed after June 30, 1986.

"(2) Transitional rule.—Any person who—

"(A) on the date of the enactment of this Act [Apr. 7, 1986], is engaged in business as a manufacturer of smokeless tobacco, and

"(B) before July 1, 1986, submits an application under subchapter B of chapter 52 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] to engage in such business,

may, notwithstanding such subchapter B, continue to engage in such business pending final action on such application. Pending such final action, all provisions of chapter 52 of such Code shall apply to such applicant in the same manner and to the same extent as if such applicant were a holder of a permit to manufacture smokless [sic] tobacco under such chapter 52."

Effective Date of 1982 Amendment

Pub. L. 97–248, title II, §283(c), Sept. 3, 1982, 96 Stat. 569, as amended by Pub. L. 99–107, §2, Sept. 30, 1985, 99 Stat. 479; Pub. L. 99–155, §2(a), Nov. 14, 1985, 99 Stat. 814; Pub. L. 99–181, §1, Dec. 13, 1985, 99 Stat. 1172; Pub. L. 99–189, §1, Dec. 18, 1985, 99 Stat. 1184; Pub. L. 99–201, §1, Dec. 23, 1985, 99 Stat. 1665; Pub. L. 99–272, title XIII, §13201(a), Apr. 7, 1986, 100 Stat. 311, provided that: "The amendment made by subsection (a) [amending this section] shall apply with respect to cigarettes removed after December 31, 1982."

[Pub. L. 99–272, title XIII, §13201(b), Apr. 7, 1986, 100 Stat. 311, provided that: "For purposes of all Federal and State laws, the amendment made by subsection (a) [amending section 283(c) of Pub. L. 97–248, set out above] shall be treated as having taken effect on March 14, 1986."]

Effective Date of 1976 Amendment

Amendment by section 1905(a)(24) of Pub. L. 94–455 effective on first day of first month which begins more than 90 days after Oct. 4, 1976, see section 1905(d) of Pub. L. 94–455, set out as a note under section 5005 of this title.

Pub. L. 94–455, title XXI, §2128(e), Oct. 4, 1976, 90 Stat. 1921, provided that: "The amendments made by this section [amending this section and sections 5702 and 5741 of this title] shall take effect on the first month which begins more than 90 days after the date of the enactment of this Act [Oct. 4, 1976]."

Effective Date of 1968 Amendment

Pub. L. 90–240, §4(b), Jan. 2, 1968, 81 Stat. 776, provided that: "The amendment made by subsection (a) [amending this section] shall apply to the removal of cigars on or after the first day of the first calendar quarter which begins more than 30 days after the date of the enactment of this Act [Jan. 2, 1968]."

Effective Date of 1965 Amendment

Pub. L. 89–44, title VII, §701(d), June 21, 1965, 79 Stat. 157, provided that: "The amendments made by section 501 [repealing sections 5063 and 5707 of this title and provisions formerly set out below and amending this section and sections 5001, 5022, 5041, and 5051 of this title] shall apply on and after July 1, 1965. The amendments made by section 502 [striking out subchapter D of chapter 52 of this title and redesignating subchapters E, F, and G as subchapters D, E, and F respectively, and amending this section and sections 5702, 5704, 5711, 5741, 5753, 5762, and 5763 of this title] shall apply on and after January 1, 1966."

Effective Date of 1960 Amendment

Pub. L. 86–779, §2, Sept. 14, 1960, 74 Stat. 998, provided that: "The amendment made by the first section of this Act [amending this section] shall apply with respect to cigars removed on or after the ninth day of the first month which begins after the date of the enactment of this Act [Sept. 14, 1960]."

Effective Date of 1958 Amendment

Amendment by Pub. L. 85–859 effective Sept. 3, 1958, see section 210(a)(1) of Pub. L. 85–859, set out as a note under section 5001 of this title.

Coordination With Tobacco Industry Settlement Agreement

Pub. L. 105–33, title IX, §9302(k), as added by Pub. L. 105–34, title XVI, §1604(f)(3), Aug. 5, 1997, 111 Stat. 1099, which provided that the increase in excise taxes collected as a result of the amendments made by subsections (a), (e), and (g) of section 9302 of Pub. L. 105–33 (amending this section and section 5702 of this title) were to be credited against the total payments made by parties pursuant to Federal legislation implementing the tobacco industry settlement agreement of June 20, 1997, was repealed by Pub. L. 105–78, title V, §519, Nov. 13, 1997, 111 Stat. 1519.

Floor Stocks Taxes

Pub. L. 111–3, title VII, §701(h), Feb. 4, 2009, 123 Stat. 107, provided that:

"(1) Imposition of tax.—On tobacco products (other than cigars described in section 5701(a)(2) of the Internal Revenue Code of 1986) and cigarette papers and tubes manufactured in or imported into the United States which are removed before April 1, 2009, and held on such date for sale by any person, there is hereby imposed a tax in an amount equal to the excess of—

"(A) the tax which would be imposed under section 5701 of such Code on the article if the article had been removed on such date, over

"(B) the prior tax (if any) imposed under section 5701 of such Code on such article.

"(2) Credit against tax.—Each person shall be allowed as a credit against the taxes imposed by paragraph (1) an amount equal to $500. Such credit shall not exceed the amount of taxes imposed by paragraph (1) on April 1, 2009, for which such person is liable.

"(3) Liability for tax and method of payment.—

"(A) Liability for tax.—A person holding tobacco products, cigarette papers, or cigarette tubes on April 1, 2009, to which any tax imposed by paragraph (1) applies shall be liable for such tax.

"(B) Method of payment.—The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations.

"(C) Time for payment.—The tax imposed by paragraph (1) shall be paid on or before August 1, 2009.

"(4) Articles in foreign trade zones.—Notwithstanding the Act of June 18, 1934 (commonly known as the Foreign Trade Zone Act, 48 Stat. 998, 19 U.S.C. 81a et seq.) or any other provision of law, any article which is located in a foreign trade zone on April 1, 2009, shall be subject to the tax imposed by paragraph (1) if—

"(A) internal revenue taxes have been determined, or customs duties liquidated, with respect to such article before such date pursuant to a request made under the 1st proviso of section 3(a) of such Act [19 U.S.C. 81c(a)], or

"(B) such article is held on such date under the supervision of an officer of the United States Customs and Border Protection of the Department of Homeland Security pursuant to the 2d proviso of such section 3(a).

"(5) Definitions.—For purposes of this subsection—

"(A) In general.—Any term used in this subsection which is also used in section 5702 of the Internal Revenue Code of 1986 shall have the same meaning as such term has in such section.

"(B) Secretary.—The term 'Secretary' means the Secretary of the Treasury or the Secretary's delegate.

"(6) Controlled groups.—Rules similar to the rules of section 5061(e)(3) of such Code shall apply for purposes of this subsection.

"(7) Other laws applicable.—All provisions of law, including penalties, applicable with respect to the taxes imposed by section 5701 of such Code shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1), to the same extent as if such taxes were imposed by such section 5701. The Secretary may treat any person who bore the ultimate burden of the tax imposed by paragraph (1) as the person to whom a credit or refund under such provisions may be allowed or made."

Pub. L. 105–33, title IX, §9302(j), Aug. 5, 1997, 111 Stat. 675, as amended by Pub. L. 106–554, §1(a)(7) [title III, §315(a)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A–643, provided that:

"(1) Imposition of tax.—On cigarettes manufactured in or imported into the United States which are removed before any tax increase date, and held on such date for sale by any person, there is hereby imposed a tax in an amount equal to the excess of—

"(A) the tax which would be imposed under section 5701 of the Internal Revenue Code of 1986 on the article if the article had been removed on such date, over

"(B) the prior tax (if any) imposed under section 5701 of such Code on such article.

"(2) Authority to exempt cigarettes held in vending machines.—To the extent provided in regulations prescribed by the Secretary, no tax shall be imposed by paragraph (1) on cigarettes held for retail sale on any tax increase date, by any person in any vending machine. If the Secretary provides such a benefit with respect to any person, the Secretary may reduce the $500 amount in paragraph (3) with respect to such person.

"(3) Credit against tax.—Each person shall be allowed as a credit against the taxes imposed by paragraph (1) an amount equal to $500. Such credit shall not exceed the amount of taxes imposed by paragraph (1) on any tax increase date, for which such person is liable.

"(4) Liability for tax and method of payment.—

"(A) Liability for tax.—A person holding cigarettes on any tax increase date, to which any tax imposed by paragraph (1) applies shall be liable for such tax.

"(B) Method of payment.—The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations.

"(C) Time for payment.—The tax imposed by paragraph (1) shall be paid on or before April 1 following any tax increase date.

"(5) Articles in foreign trade zones.—Notwithstanding the Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a) and any other provision of law, any article which is located in a foreign trade zone on any tax increase date, shall be subject to the tax imposed by paragraph (1) if—

"(A) internal revenue taxes have been determined, or customs duties liquidated, with respect to such article before such date pursuant to a request made under the 1st proviso of section 3(a) of such Act [19 U.S.C. 81c(a)], or

"(B) such article is held on such date under the supervision of a customs officer pursuant to the 2d proviso of such section 3(a).

"(6) Definitions.—For purposes of this subsection—

"(A) In general.—Terms used in this subsection which are also used in section 5702 of the Internal Revenue Code of 1986 shall have the respective meanings such terms have in such section, as amended by this Act.

"(B) Tax increase date.—The term 'tax increase date' means January 1, 2000, and January 1, 2002.

"(C) Secretary.—The term 'Secretary' means the Secretary of the Treasury or the Secretary's delegate.

"(7) Controlled groups.—Rules similar to the rules of section 5061(e)(3) of such Code shall apply for purposes of this subsection.

"(8) Other laws applicable.—All provisions of law, including penalties, applicable with respect to the taxes imposed by section 5701 of such Code shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1), to the same extent as if such taxes were imposed by such section 5701. The Secretary may treat any person who bore the ultimate burden of the tax imposed by paragraph (1) as the person to whom a credit or refund under such provisions may be allowed or made."

Pub. L. 101–508, title XI, §11202(i), Nov. 5, 1990, 104 Stat. 1388–420, provided that:

"(1) Imposition of tax.—On cigarettes manufactured in or imported into the United States which are removed before any tax-increase date and held on such date for sale by any person, there shall be imposed the following taxes:

"(A) Small cigarettes.—On cigarettes, weighing not more than 3 pounds per thousand, $2 per thousand.

"(B) Large cigarettes.—On cigarettes weighing more than 3 pounds per thousand, $4.20 per thousand; except that, if more than 6½ inches in length, they shall be taxable at the rate prescribed for cigarettes weighing not more than 3 pounds per thousand, counting each 2¾ inches, or fraction thereof, of the length of each as one cigarette.

"(2) Exception for certain amounts of cigarettes.—

"(A) In general.—No tax shall be imposed by paragraph (1) on cigarettes held on any tax-increase date by any person if—

"(i) the aggregate number of cigarettes held by such person on such date does not exceed 30,000, and

"(ii) such person submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this subparagraph.

For purposes of this subparagraph, in the case of cigarettes measuring more than 6½ inches in length, each 2¾ inches (or fraction thereof) of the length of each shall be counted as one cigarette.

"(B) Authority to exempt cigarettes held in vending machines.—To the extent provided in regulations prescribed by the Secretary, no tax shall be imposed by paragraph (1) on cigarettes held for retail sale on any tax-increase date by any person in any vending machine. If the Secretary provides such a benefit with respect to any person, the Secretary may reduce the 30,000 amount in subparagraph (A) and the $60 amount in paragraph (3) with respect to such person.

"(3) Credit against tax.—Each person shall be allowed as a credit against the taxes imposed by paragraph (1) an amount equal to $60. Such credit shall not exceed the amount of taxes imposed by paragraph (1) for which such person is liable.

"(4) Liability for tax and method of payment.—

"(A) Liability for tax.—A person holding cigarettes on any tax-increase date to which any tax imposed by paragraph (1) applies shall be liable for such tax.

"(B) Method of payment.—The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations.

"(C) Time for payment.—The tax imposed by paragraph (1) shall be paid on or before the 1st June 30 following the tax-increase date.

"(5) Definitions.—For purposes of this subsection—

"(A) Tax-increase date.—The term 'tax-increase date' means January 1, 1991, and January 1, 1993.

"(B) Other definitions.—Terms used in this subsection which are also used in section 5702 of the Internal Revenue Code of 1986 shall have the respective meanings such terms have in such section.

"(C) Secretary.—The term 'Secretary' means the Secretary of the Treasury or his delegate.

"(6) Controlled groups.—Rules similar to the rules of section 11201(e)(6) [Pub. L. 101–508, set out in a note under section 5001 of this title] shall apply for purposes of this subsection.

"(7) Other laws applicable.—All provisions of law, including penalties, applicable with respect to the taxes imposed by section 5701 of such Code shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1), to the same extent as if such taxes were imposed by such section 5701."

Pub. L. 100–647, title V, §5061(e), Nov. 10, 1988, 102 Stat. 3680, provided that:

"(1) Imposition of tax.—On pipe tobacco manufactured in or imported into the United States which is removed before January 1, 1989, and held on such date for sale by any person, there is hereby imposed a tax of 45 cents per pound (and a proportionate tax at the like rate on all fractional parts of a pound).

"(2) Liability for tax and method of payment.—

"(A) Liability for tax.—A person holding pipe tobacco on January 1, 1989, to which the tax imposed by paragraph (1) applies shall be liable for such tax.

"(B) Method of payment.—The tax imposed by paragraph (1) shall be treated as a tax imposed by section 5701 of the 1986 Code and shall be due and payable on February 14, 1989, in the same manner as the tax imposed by such section is payable with respect to pipe tobacco removed on or after January 1, 1989.

"(C) Treatment of pipe tobacco in foreign trade zones.—Notwithstanding the Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a) or any other provision of law, pipe tobacco which is located in a foreign trade zone on January 1, 1989, shall be subject to the tax imposed by paragraph (1) and shall be treated for purposes of this subsection as held on such date for sale if—

"(i) internal revenue taxes have been determined, or customs duties liquidated, with respect to such pipe tobacco before such date pursuant to a request made under the first proviso of section 3(a) of such Act [19 U.S.C. 81c(a)], or

"(ii) such pipe tobacco is held on such date under the supervision of a customs officer pursuant to the second proviso of such section 3(a).

"Under regulations prescribed by the Secretary of the Treasury or his delegate, provisions similar to sections 5706 and 5708 of the 1986 Code shall apply to pipe tobacco with respect to which tax is imposed by paragraph (1) by reason of this subparagraph.

"(3) Pipe tobacco.—For purposes of this subsection, the term 'pipe tobacco' shall have the meaning given to such term by subsection (o) [now subsection (n)] of section 5702 of the 1986 Code.

"(4) Exception where liability does not exceed $1,000.—No tax shall be imposed by paragraph (1) on any person if the tax which would but for this paragraph be imposed on such person does not exceed $1,000. For purposes of the preceding sentence, all persons who are treated as a single taxpayer under section 5061(e)(3) of the 1986 Code shall be treated as 1 person."

Pub. L. 97–248, title II, §283(b), Sept. 3, 1982, 96 Stat. 568, as amended by Pub. L. 97–448, title III, §306(a)(14), Jan. 12, 1983, 96 Stat. 2405; Pub. L. 99–514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that:

"(1) Imposition of tax.—On cigarettes manufactured in or imported into the United States which are removed before January 1, 1983, and held on such date for sale by any person, there shall be imposed the following taxes:

"(A) Small cigarettes.—On cigarettes, weighing not more than 3 pounds per thousand, $4 per thousand;

"(B) Large cigarettes.—On cigarettes, weighing more than 3 pounds per thousand, $8.40 per thousand; except that, if more than 6½ inches in length, they shall be taxable at the rate prescribed for cigarettes weighing not more than 3 pounds per thousand, counting each 2¾ inches, or fraction thereof, of the length of each as one cigarette.

"(2) Liability for tax and method of payment.—

"(A) Liability for tax.—A person holding cigarettes on January 1, 1983, to which any tax imposed by paragraph (1) applies shall be liable for such tax.

"(B) Method of payment.—The tax imposed by paragraph (1) shall be treated as a tax imposed under section 5701 and shall be due and payable on February 17, 1983 in the same manner as the tax imposed under such section is payable with respect to cigarettes removed on January 1, 1983.

"(3) Cigarette.—For purposes of this subsection, the term 'cigarette' shall have the meaning given to such term by subsection (b) of section 5702 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954].

"(4) Exception for retailers.—The taxes imposed by paragraph (1) shall not apply to cigarettes in retail stocks held on January 1, 1983, at the place where intended to be sold at retail."
26 U.S.C. § 36B (2024) — Title 26: INTERNAL REVENUE CODE / Chapter 1 / Section 36B: Refundable credit for coverage under a qualified health plan
Refundable credit for coverage under a qualified health plan
Status: in_force

(a) In general

In the case of an applicable taxpayer, there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the premium assistance credit amount of the taxpayer for the taxable year.

(b) Premium assistance credit amount

For purposes of this section—

(1) In general

The term "premium assistance credit amount" means, with respect to any taxable year, the sum of the premium assistance amounts determined under paragraph (2) with respect to all coverage months of the taxpayer occurring during the taxable year.

(2) Premium assistance amount

The premium assistance amount determined under this subsection with respect to any coverage month is the amount equal to the lesser of—

(A) the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer's spouse, or any dependent (as defined in section 152) of the taxpayer and which were enrolled in through an Exchange established by the State under 1311 1 of the Patient Protection and Affordable Care Act, or

(B) the excess (if any) of—

(i) the adjusted monthly premium for such month for the applicable second lowest cost silver plan with respect to the taxpayer, over

(ii) an amount equal to 1/12 of the product of the applicable percentage and the taxpayer's household income for the taxable year.

(3) Other terms and rules relating to premium assistance amounts

For purposes of paragraph (2)—

(A) Applicable percentage

(i) In general

Except as provided in clause (ii), the applicable percentage for any taxable year shall be the percentage such that the applicable percentage for any taxpayer whose household income is within an income tier specified in the following table shall increase, on a sliding scale in a linear manner, from the initial premium percentage to the final premium percentage specified in such table for such income tier:

In the case of household income (expressed as a percent of poverty line) within the following income tier:The initial premium percentage is—The final premium percentage is—

Up to 133%
2.0%
2.0%

133% up to 150%
3.0%
4.0%

150% up to 200%
4.0%
6.3%

200% up to 250%
6.3%
8.05%

250% up to 300%
8.05%
9.5%

300% up to 400%
9.5%
9.5%.

(ii) Indexing

(I) In general

Subject to subclause (II), in the case of taxable years beginning in any calendar year after 2014, the initial and final applicable percentages under clause (i) (as in effect for the preceding calendar year after application of this clause) shall be adjusted to reflect the excess of the rate of premium growth for the preceding calendar year over the rate of income growth for the preceding calendar year.

(II) Additional adjustment

Except as provided in subclause (III), in the case of any calendar year after 2018, the percentages described in subclause (I) shall, in addition to the adjustment under subclause (I), be adjusted to reflect the excess (if any) of the rate of premium growth estimated under subclause (I) for the preceding calendar year over the rate of growth in the consumer price index for the preceding calendar year.

(III) Failsafe

Subclause (II) shall apply for any calendar year only if the aggregate amount of premium tax credits under this section and cost-sharing reductions under section 1402 of the Patient Protection and Affordable Care Act for the preceding calendar year exceeds an amount equal to 0.504 percent of the gross domestic product for the preceding calendar year.

(iii) Temporary percentages for 2021 through 2025

In the case of a taxable year beginning after December 31, 2020, and before January 1, 2026—

(I) clause (ii) shall not apply for purposes of adjusting premium percentages under this subparagraph, and

(II) the following table shall be applied in lieu of the table contained in clause (i):

In the case of household income (expressed as a percent of poverty line) within the following income tier:The initial premium percentage is—The final premium percentage is—

Up to 150.0 percent
0.0
0.0

150.0 percent up to 200.0 percent
0.0
2.0

200.0 percent up to 250.0 percent
2.0
4.0

250.0 percent up to 300.0 percent
4.0
6.0

300.0 percent up to 400.0 percent
6.0
8.5

400.0 percent and higher
8.5
8.5

(B) Applicable second lowest cost silver plan

The applicable second lowest cost silver plan with respect to any applicable taxpayer is the second lowest cost silver plan of the individual market in the rating area in which the taxpayer resides which—

(i) is offered through the same Exchange through which the qualified health plans taken into account under paragraph (2)(A) were offered, and

(ii) provides—

(I) self-only coverage in the case of an applicable taxpayer—

(aa) whose tax for the taxable year is determined under section 1(c) 2 (relating to unmarried individuals other than surviving spouses and heads of households) and who is not allowed a deduction under section 151 for the taxable year with respect to a dependent, or

(bb) who is not described in item (aa) but who purchases only self-only coverage, and

(II) family coverage in the case of any other applicable taxpayer.

If a taxpayer files a joint return and no credit is allowed under this section with respect to 1 of the spouses by reason of subsection (e), the taxpayer shall be treated as described in clause (ii)(I) unless a deduction is allowed under section 151 for the taxable year with respect to a dependent other than either spouse and subsection (e) does not apply to the dependent.

(C) Adjusted monthly premium

The adjusted monthly premium for an applicable second lowest cost silver plan is the monthly premium which would have been charged (for the rating area with respect to which the premiums under paragraph (2)(A) were determined) for the plan if each individual covered under a qualified health plan taken into account under paragraph (2)(A) were covered by such silver plan and the premium was adjusted only for the age of each such individual in the manner allowed under section 2701 of the Public Health Service Act. In the case of a State participating in the wellness discount demonstration project under section 2705(d) of the Public Health Service Act, the adjusted monthly premium shall be determined without regard to any premium discount or rebate under such project.

(D) Additional benefits

If—

(i) a qualified health plan under section 1302(b)(5) of the Patient Protection and Affordable Care Act offers benefits in addition to the essential health benefits required to be provided by the plan, or

(ii) a State requires a qualified health plan under section 1311(d)(3)(B) of such Act to cover benefits in addition to the essential health benefits required to be provided by the plan,

the portion of the premium for the plan properly allocable (under rules prescribed by the Secretary of Health and Human Services) to such additional benefits shall not be taken into account in determining either the monthly premium or the adjusted monthly premium under paragraph (2).

(E) Special rule for pediatric dental coverage

For purposes of determining the amount of any monthly premium, if an individual enrolls in both a qualified health plan and a plan described in section 1311(d)(2)(B)(ii)(I) 2 of the Patient Protection and Affordable Care Act for any plan year, the portion of the premium for the plan described in such section that (under regulations prescribed by the Secretary) is properly allocable to pediatric dental benefits which are included in the essential health benefits required to be provided by a qualified health plan under section 1302(b)(1)(J) of such Act shall be treated as a premium payable for a qualified health plan.

(c) Definition and rules relating to applicable taxpayers, coverage months, and qualified health plan

For purposes of this section—

(1) Applicable taxpayer

(A) In general

The term "applicable taxpayer" means, with respect to any taxable year, a taxpayer whose household income for the taxable year equals or exceeds 100 percent but does not exceed 400 percent of an amount equal to the poverty line for a family of the size involved.

(B) Special rule for certain individuals lawfully present in the United States

If—

(i) a taxpayer has a household income which is not greater than 100 percent of an amount equal to the poverty line for a family of the size involved, and

(ii) the taxpayer is an alien lawfully present in the United States, but is not eligible for the medicaid program under title XIX of the Social Security Act by reason of such alien status,

the taxpayer shall, for purposes of the credit under this section, be treated as an applicable taxpayer with a household income which is equal to 100 percent of the poverty line for a family of the size involved.

(C) Married couples must file joint return

If the taxpayer is married (within the meaning of section 7703) at the close of the taxable year, the taxpayer shall be treated as an applicable taxpayer only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year.

(D) Denial of credit to dependents

No credit shall be allowed under this section to any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins.

(E) Temporary rule for 2021 through 2025

In the case of a taxable year beginning after December 31, 2020, and before January 1, 2026, subparagraph (A) shall be applied without regard to "but does not exceed 400 percent".

(2) Coverage month

For purposes of this subsection—

(A) In general

The term "coverage month" means, with respect to an applicable taxpayer, any month if—

(i) as of the first day of such month the taxpayer, the taxpayer's spouse, or any dependent of the taxpayer is covered by a qualified health plan described in subsection (b)(2)(A) that was enrolled in through an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act, and

(ii) the premium for coverage under such plan for such month is paid by the taxpayer (or through advance payment of the credit under subsection (a) under section 1412 of the Patient Protection and Affordable Care Act).

(B) Exception for minimum essential coverage

(i) In general

The term "coverage month" shall not include any month with respect to an individual if for such month the individual is eligible for minimum essential coverage other than eligibility for coverage described in section 5000A(f)(1)(C) (relating to coverage in the individual market).

(ii) Minimum essential coverage

The term "minimum essential coverage" has the meaning given such term by section 5000A(f).

(C) Special rule for employer-sponsored minimum essential coverage

For purposes of subparagraph (B)—

(i) Coverage must be affordable

Except as provided in clause (iii), an employee shall not be treated as eligible for minimum essential coverage if such coverage—

(I) consists of an eligible employer-sponsored plan (as defined in section 5000A(f)(2)), and

(II) the employee's required contribution (within the meaning of section 5000A(e)(1)(B)) with respect to the plan exceeds 9.5 percent of the applicable taxpayer's household income.

 This clause shall also apply to an individual who is eligible to enroll in the plan by reason of a relationship the individual bears to the employee.

(ii) Coverage must provide minimum value

Except as provided in clause (iii), an employee shall not be treated as eligible for minimum essential coverage if such coverage consists of an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) and the plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs.

(iii) Employee or family must not be covered under employer plan

Clauses (i) and (ii) shall not apply if the employee (or any individual described in the last sentence of clause (i)) is covered under the eligible employer-sponsored plan or the grandfathered health plan.

(iv) Indexing

In the case of plan years beginning in any calendar year after 2014, the Secretary shall adjust the 9.5 percent under clause (i)(II) in the same manner as the percentages are adjusted under subsection (b)(3)(A)(ii).

(3) Definitions and other rules

(A) Qualified health plan

The term "qualified health plan" has the meaning given such term by section 1301(a) of the Patient Protection and Affordable Care Act, except that such term shall not include a qualified health plan which is a catastrophic plan described in section 1302(e) of such Act.

(B) Grandfathered health plan

The term "grandfathered health plan" has the meaning given such term by section 1251 of the Patient Protection and Affordable Care Act.

(4) Special rules for qualified small employer health reimbursement arrangements

(A) In general

The term "coverage month" shall not include any month with respect to an employee (or any spouse or dependent of such employee) if for such month the employee is provided a qualified small employer health reimbursement arrangement which constitutes affordable coverage.

(B) Denial of double benefit

In the case of any employee who is provided a qualified small employer health reimbursement arrangement for any coverage month (determined without regard to subparagraph (A)), the credit otherwise allowable under subsection (a) to the taxpayer for such month shall be reduced (but not below zero) by the amount described in subparagraph (C)(i)(II) for such month.

(C) Affordable coverage

For purposes of subparagraph (A), a qualified small employer health reimbursement arrangement shall be treated as constituting affordable coverage for a month if—

(i) the excess of—

(I) the amount that would be paid by the employee as the premium for such month for self-only coverage under the second lowest cost silver plan offered in the relevant individual health insurance market, over

(II) 1/12 of the employee's permitted benefit (as defined in section 9831(d)(3)(C)) under such arrangement, does not exceed—

(ii) 1/12 of 9.5 percent of the employee's household income.

(D) Qualified small employer health reimbursement arrangement

For purposes of this paragraph, the term "qualified small employer health reimbursement arrangement" has the meaning given such term by section 9831(d)(2).

(E) Coverage for less than entire year

In the case of an employee who is provided a qualified small employer health reimbursement arrangement for less than an entire year, subparagraph (C)(i)(II) shall be applied by substituting "the number of months during the year for which such arrangement was provided" for "12".

(F) Indexing

In the case of plan years beginning in any calendar year after 2014, the Secretary shall adjust the 9.5 percent amount under subparagraph (C)(ii) in the same manner as the percentages are adjusted under subsection (b)(3)(A)(ii).

(d) Terms relating to income and families

For purposes of this section—

(1) Family size

The family size involved with respect to any taxpayer shall be equal to the number of individuals for whom the taxpayer is allowed a deduction under section 151 (relating to allowance of deduction for personal exemptions) for the taxable year.

(2) Household income

(A) Household income

The term "household income" means, with respect to any taxpayer, an amount equal to the sum of—

(i) the modified adjusted gross income of the taxpayer, plus

(ii) the aggregate modified adjusted gross incomes of all other individuals who—

(I) were taken into account in determining the taxpayer's family size under paragraph (1), and

(II) were required to file a return of tax imposed by section 1 for the taxable year.

(B) Modified adjusted gross income

The term "modified adjusted gross income" means adjusted gross income increased by—

(i) any amount excluded from gross income under section 911,

(ii) any amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax, and

(iii) an amount equal to the portion of the taxpayer's social security benefits (as defined in section 86(d)) which is not included in gross income under section 86 for the taxable year.

(3) Poverty line

(A) In general

The term "poverty line" has the meaning given that term in section 2110(c)(5) of the Social Security Act (42 U.S.C. 1397jj(c)(5)).

(B) Poverty line used

In the case of any qualified health plan offered through an Exchange for coverage during a taxable year beginning in a calendar year, the poverty line used shall be the most recently published poverty line as of the 1st day of the regular enrollment period for coverage during such calendar year.

(e) Rules for individuals not lawfully present

(1) In general

If 1 or more individuals for whom a taxpayer is allowed a deduction under section 151 (relating to allowance of deduction for personal exemptions) for the taxable year (including the taxpayer or his spouse) are individuals who are not lawfully present—

(A) the aggregate amount of premiums otherwise taken into account under clauses (i) and (ii) of subsection (b)(2)(A) shall be reduced by the portion (if any) of such premiums which is attributable to such individuals, and

(B) for purposes of applying this section, the determination as to what percentage a taxpayer's household income bears to the poverty level for a family of the size involved shall be made under one of the following methods:

(i) A method under which—

(I) the taxpayer's family size is determined by not taking such individuals into account, and

(II) the taxpayer's household income is equal to the product of the taxpayer's household income (determined without regard to this subsection) and a fraction—

(aa) the numerator of which is the poverty line for the taxpayer's family size determined after application of subclause (I), and

(bb) the denominator of which is the poverty line for the taxpayer's family size determined without regard to subclause (I).

(ii) A comparable method reaching the same result as the method under clause (i).

(2) Lawfully present

For purposes of this section, an individual shall be treated as lawfully present only if the individual is, and is reasonably expected to be for the entire period of enrollment for which the credit under this section is being claimed, a citizen or national of the United States or an alien lawfully present in the United States.

(3) Secretarial authority

The Secretary of Health and Human Services, in consultation with the Secretary, shall prescribe rules setting forth the methods by which calculations of family size and household income are made for purposes of this subsection. Such rules shall be designed to ensure that the least burden is placed on individuals enrolling in qualified health plans through an Exchange and taxpayers eligible for the credit allowable under this section.

(f) Reconciliation of credit and advance credit

(1) In general

The amount of the credit allowed under this section for any taxable year shall be reduced (but not below zero) by the amount of any advance payment of such credit under section 1412 of the Patient Protection and Affordable Care Act.

(2) Excess advance payments

(A) In general

If the advance payments to a taxpayer under section 1412 of the Patient Protection and Affordable Care Act for a taxable year exceed the credit allowed by this section (determined without regard to paragraph (1)), the tax imposed by this chapter for the taxable year shall be increased by the amount of such excess.

(B) Limitation on increase

(i) In general

In the case of a taxpayer whose household income is less than 400 percent of the poverty line for the size of the family involved for the taxable year, the amount of the increase under subparagraph (A) shall in no event exceed the applicable dollar amount determined in accordance with the following table (one-half of such amount in the case of a taxpayer whose tax is determined under section 1(c) 2 for the taxable year):

If the household income (expressed as a percent of poverty line) is:The applicable dollar amount is:

Less than 200%
$600

At least 200% but less than 300%
$1,500

At least 300% but less than 400%
$2,500.

(ii) Indexing of amount

In the case of any calendar year beginning after 2014, each of the dollar amounts in the table contained under clause (i) shall be increased by an amount equal to—

(I) such dollar amount, multiplied by

(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting "calendar year 2013" for "calendar year 2016" in subparagraph (A)(ii) thereof.

 If the amount of any increase under clause (i) is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.

(iii) Temporary modification of limitation on increase

In the case of any taxable year beginning in 2020, for any taxpayer who files for such taxable year an income tax return reconciling any advance payment of the credit under this section, the Secretary shall treat subparagraph (A) as not applying.

(3) Information requirement

Each Exchange (or any person carrying out 1 or more responsibilities of an Exchange under section 1311(f)(3) or 1321(c) of the Patient Protection and Affordable Care Act) shall provide the following information to the Secretary and to the taxpayer with respect to any health plan provided through the Exchange:

(A) The level of coverage described in section 1302(d) of the Patient Protection and Affordable Care Act and the period such coverage was in effect.

(B) The total premium for the coverage without regard to the credit under this section or cost-sharing reductions under section 1402 of such Act.

(C) The aggregate amount of any advance payment of such credit or reductions under section 1412 of such Act.

(D) The name, address, and TIN of the primary insured and the name and TIN of each other individual obtaining coverage under the policy.

(E) Any information provided to the Exchange, including any change of circumstances, necessary to determine eligibility for, and the amount of, such credit.

(F) Information necessary to determine whether a taxpayer has received excess advance payments.

(g) Special rule for individuals who receive unemployment compensation during 2021

(1) In general

For purposes of this section, in the case of a taxpayer who has received, or has been approved to receive, unemployment compensation for any week beginning during 2021, for the taxable year in which such week begins—

(A) such taxpayer shall be treated as an applicable taxpayer, and

(B) there shall not be taken into account any household income of the taxpayer in excess of 133 percent of the poverty line for a family of the size involved.

(2) Unemployment compensation

For purposes of this subsection, the term "unemployment compensation" has the meaning given such term in section 85(b).

(3) Evidence of unemployment compensation

For purposes of this subsection, a taxpayer shall not be treated as having received (or been approved to receive) unemployment compensation for any week unless such taxpayer provides self-attestation of, and such documentation as the Secretary shall prescribe which demonstrates, such receipt or approval.

(4) Clarification of rules remaining applicable

(A) Joint return requirement

Paragraph (1)(A) shall not affect the application of subsection (c)(1)(C).

(B) Household income and affordabillity 3

Paragraph (1)(B) shall not apply to any determination of household income for purposes of paragraph (2)(C)(i)(II) or (4)(C)(ii) of subsection (c) 4

(h) Regulations

The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this section, including regulations which provide for—

(1) the coordination of the credit allowed under this section with the program for advance payment of the credit under section 1412 of the Patient Protection and Affordable Care Act, and

(2) the application of subsection (f) where the filing status of the taxpayer for a taxable year is different from such status used for determining the advance payment of the credit.

(Added and amended Pub. L. 111–148, title I, §1401(a), title X, §§10105(a)–(c), 10108(h)(1), Mar. 23, 2010, 124 Stat. 213, 906, 914; Pub. L. 111–152, title I, §§1001(a), 1004(a)(1)(A), (2)(A), (c), Mar. 30, 2010, 124 Stat. 1030, 1034, 1035; Pub. L. 111–309, title II, §208(a), (b), Dec. 15, 2010, 124 Stat. 3291, 3292; Pub. L. 112–9, §4(a), Apr. 14, 2011, 125 Stat. 36; Pub. L. 112–10, div. B, title VIII, §1858(b)(1), Apr. 15, 2011, 125 Stat. 168; Pub. L. 112–56, title IV, §401(a), Nov. 21, 2011, 125 Stat. 734; Pub. L. 114–255, div. C, title XVIII, §18001(a)(3), Dec. 13, 2016, 130 Stat. 1341; Pub. L. 115–97, title I, §11002(d)(1)(E), Dec. 22, 2017, 131 Stat. 2060; Pub. L. 117–2, title IX, §§9661(a), (b), 9662(a), 9663(a), Mar. 11, 2021, 135 Stat. 182, 183; Pub. L. 117–169, title I, §12001(a), (b), Aug. 16, 2022, 136 Stat. 1905.)

Inflation Adjusted Items for Certain Years

For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.

Editorial Notes

References in Text

Sections 1251, 1301, 1302, 1311, 1321, 1402, and 1412 of the Patient Protection and Affordable Care Act, referred to in text, are classified to sections 18011, 18021, 18022, 18031, 18041, 18071, and 18082, respectively, of Title 42, The Public Health and Welfare.

Section 1(c), referred to in subsecs. (b)(3)(B)(ii)(I)(aa) and (f)(2)(B)(i), to be treated, for purposes of the rate of tax, as a reference to the corresponding rate bracket under section 1(j)(2)(C) of this title, see section 1(j)(2)(F) of this title.

Sections 2701 and 2705(d) of the Public Health Service Act, referred to in subsec. (b)(3)(C), are classified to sections 300gg and 300gg–4(d), respectively, of Title 42, The Public Health and Welfare. The reference to section 2705(d) probably should be a reference to section 2705(l), which relates to wellness program demonstration project and is classified to section 300gg–4(l) of Title 42.

Section 1311(d)(2)(B)(ii)(I) of the Patient Protection and Affordable Care Act, referred to in subsec. (b)(3)(E), probably means section 1311(d)(2)(B)(ii) of Pub. L. 111–148, which is classified to section 18031(d)(2)(B)(ii) of Title 42, The Public Health and Welfare, and which does not contain subclauses.

The Social Security Act, referred to in subsec. (c)(1)(B)(ii), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Title XIX of the Act is classified generally to subchapter XIX (§1396 et seq.) of chapter 7 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables.

Amendments

2022—Subsec. (b)(3)(A)(iii). Pub. L. 117–169, §12001(a), substituted "2021 through 2025" for "2021 and 2022" in heading and "after December 31, 2020, and before January 1, 2026" for "in 2021 or 2022" in introductory provisions.

Subsec. (c)(1)(E). Pub. L. 117–169, §12001(b), substituted "2021 through 2025" for "2021 and 2022" in heading and "after December 31, 2020, and before January 1, 2026" for "in 2021 or 2022" in text.

2021—Subsec. (b)(3)(A)(iii). Pub. L. 117–2, §9661(a), added cl. (iii).

Subsec. (c)(1)(E). Pub. L. 117–2, §9661(b), added subpar. (E).

Subsec. (f)(2)(B)(iii). Pub. L. 117–2, §9662(a), added cl. (iii).

Subsecs. (g), (h). Pub. L. 117–2, §9663(a), added subsec. (g) and redesignated former subsec. (g) as (h).

2017—Subsec. (f)(2)(B)(ii)(II). Pub. L. 115–97 substituted "for 'calendar year 2016' in subparagraph (A)(ii)" for "for 'calendar year 1992' in subparagraph (B)".

2016—Subsec. (c)(4). Pub. L. 114–255 added par. (4).

2011—Subsec. (c)(2)(D). Pub. L. 112–10 struck out subpar. (D). Prior to amendment, text read as follows: "The term 'coverage month' shall not include any month in which such individual has a free choice voucher provided under section 10108 of the Patient Protection and Affordable Care Act."

Subsec. (d)(2)(B)(iii). Pub. L. 112–56 added cl. (iii).

Subsec. (f)(2)(B)(i). Pub. L. 112–9 amended cl. (i) generally. Prior to amendment, cl. (i) consisted of text and a table limiting increase in amount recovered on reconciliation of health insurance tax credit and advance of that credit for households with income below 500 percent of Federal poverty line.

2010—Subsec. (b)(3)(A)(i). Pub. L. 111–152, §1001(a)(1)(A), substituted "for any taxable year shall be the percentage such that the applicable percentage for any taxpayer whose household income is within an income tier specified in the following table shall increase, on a sliding scale in a linear manner, from the initial premium percentage to the final premium percentage specified in such table for such income tier:" for "with respect to any taxpayer for any taxable year is equal to 2.8 percent, increased by the number of percentage points (not greater than 7) which bears the same ratio to 7 percentage points as—" in introductory provisions, inserted table, and struck out subcls. (I) and (II) which read as follows:

"(I) the taxpayer's household income for the taxable year in excess of 100 percent of the poverty line for a family of the size involved, bears to

"(II) an amount equal to 200 percent of the poverty line for a family of the size involved."

Subsec. (b)(3)(A)(ii). Pub. L. 111–152, §1001(a)(1)(B), added cl. (ii) and struck out former cl. (ii). Text read as follows: "If a taxpayer's household income for the taxable year equals or exceeds 100 percent, but not more than 133 percent, of the poverty line for a family of the size involved, the taxpayer's applicable percentage shall be 2 percent."

Pub. L. 111–148, §10105(a), substituted "equals or exceeds" for "is in excess of".

Subsec. (b)(3)(A)(iii). Pub. L. 111–152, §1001(a)(1)(B), struck out cl. (iii). Text read as follows: "In the case of taxable years beginning in any calendar year after 2014, the Secretary shall adjust the initial and final applicable percentages under clause (i), and the 2 percent under clause (ii), for the calendar year to reflect the excess of the rate of premium growth between the preceding calendar year and 2013 over the rate of income growth for such period."

Subsec. (c)(1)(A). Pub. L. 111–148, §10105(b), inserted "equals or" before "exceeds".

Subsec. (c)(2)(C)(i)(II). Pub. L. 111–152, §1001(a)(2)(A), substituted "9.5 percent" for "9.8 percent".

Subsec. (c)(2)(C)(iv). Pub. L. 111–152, §1001(a)(2), substituted "9.5 percent" for "9.8 percent" and "(b)(3)(A)(ii)" for "(b)(3)(A)(iii)".

Pub. L. 111–148, §10105(c), substituted "subsection (b)(3)(A)(iii)" for "subsection (b)(3)(A)(ii)".

Subsec. (c)(2)(D). Pub. L. 111–148, §10108(h)(1), added subpar. (D).

Subsec. (d)(2)(A)(i), (ii). Pub. L. 111–152, §1004(a)(1)(A), substituted "modified adjusted gross" for "modified gross".

Subsec. (d)(2)(B). Pub. L. 111–152, §1004(a)(2)(A), amended subpar. (B) generally. Prior to amendment, text read as follows: "The term 'modified gross income' means gross income—

"(i) decreased by the amount of any deduction allowable under paragraph (1), (3), (4), or (10) of section 62(a),

"(ii) increased by the amount of interest received or accrued during the taxable year which is exempt from tax imposed by this chapter, and

"(iii) determined without regard to sections 911, 931, and 933."

Subsec. (f)(2)(B). Pub. L. 111–309, §208(a), amended generally subpar. heading and cl. (i). Prior to amendment, text of cl. (i) read as follows: "In the case of an applicable taxpayer whose household income is less than 400 percent of the poverty line for the size of the family involved for the taxable year, the amount of the increase under subparagraph (A) shall in no event exceed $400 ($250 in the case of a taxpayer whose tax is determined under section 1(c) for the taxable year)."

Subsec. (f)(2)(B)(ii). Pub. L. 111–309, §208(b), inserted "in the table contained" after "each of the dollar amounts" in introductory provisions.

Subsec. (f)(3). Pub. L. 111–152, §1004(c), added par. (3).

Statutory Notes and Related Subsidiaries

Effective Date of 2022 Amendment

Pub. L. 117–169, title I, §12001(c), Aug. 16, 2022, 136 Stat. 1906, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2022."

Effective Date of 2021 Amendment

Pub. L. 117–2, title IX, §9661(c), Mar. 11, 2021, 135 Stat. 183, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2020."

Pub. L. 117–2, title IX, §9662(b), Mar. 11, 2021, 135 Stat. 183, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2019."

Pub. L. 117–2, title IX, §9663(b), Mar. 11, 2021, 135 Stat. 184, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2020."

Effective Date of 2017 Amendment

Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, set out as a note under section 1 of this title.

Effective Date of 2016 Amendment

Pub. L. 114–255, div. C, title XVIII, §18001(a)(7), Dec. 13, 2016, 130 Stat. 1343, provided that:

"(A) In general.—Except as otherwise provided in this paragraph, the amendments made by this subsection [amending this section, sections 106, 4980I, 6051, 6652, and 9831 of this title, and section 18081 of Title 42, The Public Health and Welfare] shall apply to years beginning after December 31, 2016.

"(B) Transition relief.—The relief under Treasury Notice 2015–17 shall be treated as applying to any plan year beginning on or before December 31, 2016.

"(C) Coordination with health insurance premium credit.—The amendments made by paragraph (3) [amending this section] shall apply to taxable years beginning after December 31, 2016.

"(D) Employee notice.—

"(i) In general.—The amendments made by paragraph (5) [amending section 6652 of this title] shall apply to notices with respect to years beginning after December 31, 2016.

"(ii) Transition relief.—For purposes of section 6652(o) of the Internal Revenue Code of 1986 (as added by this Act), a person shall not be treated as failing to provide a written notice as required by section 9831(d)(4) of such Code if such notice is so provided not later than 90 days after the date of the enactment of this Act [Dec. 13, 2016].

"(E) W–2 reporting.—The amendments made by paragraph (6)(A) [amending section 6051 of this title] shall apply to calendar years beginning after December 31, 2016.

"(F) Information provided by exchange subsidy applicants.—

"(i) In general.—The amendments made by paragraph (6)(B) [amending section 18081 of Title 42] shall apply to applications for enrollment made after December 31, 2016.

"(ii) Verification.—Verification under section 1411 of the Patient Protection and Affordable Care Act [42 U.S.C. 18081] of information provided under section 1411(b)(3)(B) of such Act shall apply with respect to months beginning after October 2016.

"(iii) Transitional relief.—In the case of an application for enrollment under section 1411(b) of the Patient Protection and Affordable Care Act [42 U.S.C. 18081(b)] made before April 1, 2017, the requirement of section 1411(b)(3)(B) of such Act shall be treated as met if the information described therein is provided not later than 30 days after the date on which the applicant receives the notice described in section 9831(d)(4) of the Internal Revenue Code of 1986."

Effective Date of 2011 Amendment

Pub. L. 112–56, title IV, §401(b), Nov. 21, 2011, 125 Stat. 734, provided that: "The amendments made by this section [amending this section] shall take effect on the date of the enactment of this Act [Nov. 21, 2011]."

Pub. L. 112–10, div. B, title VIII, §1858(d), Apr. 15, 2011, 125 Stat. 169, provided that: "The amendments made by this section [amending this section, sections 162, 4980H, and 6056 of this title, and section 218b of Title 29, Labor, and repealing section 139D of this title and section 18101 of Title 42, The Public Health and Welfare] shall take effect as if included in the provisions of, and the amendments made by, the provisions of the Patient Protection and Affordable Care Act [Pub. L. 111–148] to which they relate."

Pub. L. 112–9, §4(b), Apr. 14, 2011, 125 Stat. 37, provided that: "The amendment made by this section [amending this section] shall apply to taxable years ending after December 31, 2013."

Effective Date of 2010 Amendment

Pub. L. 111–309, title II, §208(c), Dec. 15, 2010, 124 Stat. 3292, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2013."

Pub. L. 111–148, title X, §10108(h)(2), Mar. 23, 2010, 124 Stat. 914, provided that: "The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2013."

Effective Date

Pub. L. 111–148, title I, §1401(e), Mar. 23, 2010, 124 Stat. 220, provided that: "The amendments made by this section [enacting this section and amending sections 280C and 6211 of this title and section 1324 of Title 31, Money and Finance] shall apply to taxable years ending after December 31, 2013."

Substantiation Requirements

Pub. L. 114–255, div. C, title XVIII, §18001(a)(8), Dec. 13, 2016, 130 Stat. 1343, provided that: "The Secretary of the Treasury (or his designee) may issue substantiation requirements as necessary to carry out this subsection [amending this section, sections 106, 4980I, 6051, 6652, and 9831 of this title, and section 18081 of Title 42, The Public Health and Welfare, and enacting provisions set out as a note under this section]."

No Impact on Social Security Trust Funds

Pub. L. 112–56, title IV, §401(c), Nov. 21, 2011, 125 Stat. 734, provided that:

"(1) Estimate of secretary.—The Secretary of the Treasury, or the Secretary's delegate, shall annually estimate the impact that the amendments made by subsection (a) [amending this section] have on the income and balances of the trust funds established under section 201 of the Social Security Act (42 U.S.C. 401).

"(2) Transfer of funds.—If, under paragraph (1), the Secretary of the Treasury or the Secretary's delegate estimates that such amendments have a negative impact on the income and balances of such trust funds, the Secretary shall transfer, not less frequently than quarterly, from the general fund an amount sufficient so as to ensure that the income and balances of such trust funds are not reduced as a result of such amendments."

1 So in original. Probably should be preceded by "section".

2 See References in Text note below.

3 So in original. Probably should be "affordability".

4 So in original. Probably should be followed by a period.