I

104TH CONGRESS

2D SESSION H. R. 4256

To amend the Internal Revenue Code of 1986 to provide for the abatement

of interest on deficiencies attributable to certain partnership items.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 27, 1996

Mr. LAUGHLIN introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

for the abatement of interest on deficiencies attributable

to certain partnership items.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. ABATEMENT OF INTEREST ON DEFICIENCIES

4 ATTRIBUTABLE TO CERTAIN PARTNERSHIP

5 ITEMS.

6 (a) IN GENERAL.—Section 6404 of the Internal Rev7 enue Code of 1986 is amended by redesignating sub8 sections (f) and (g) as subsections (g) and (h), respec9 tively, and by inserting after subsection (e) the following

10 new subsection:
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1 ‘‘(f) ABATEMENT OF INTEREST ATTRIBUTABLE TO

2 CERTAIN PARTNERSHIP ITEMS.—

3 ‘‘(1) IN GENERAL.—In the case of any assess4 ment of interest on any deficiency in income tax at5 tributable to a partnership item, the Secretary shall

6 abate such portion, if any, of such interest which

7 constitutes suspended partnership item interest.

8 ‘‘(2) SUSPENDED PARTNERSHIP ITEM INTER9 EST.—For purposes of this subsection, the term

10 ‘suspended partnership item interest’ means interest

11 accruing for the period during which a judicial pro12 ceeding is pending pursuant to section 6226 with re13 spect to the deficiency referred to in paragraph (1),

14 but only to the extent that, during the pendency of

15 such proceeding, a non-indictable criminal investiga16 tion is also pending.

17 ‘‘(3) NON-INDICTABLE CRIMINAL INVESTIGA18 TION.—For purposes of this subsection, the term

19 ‘non-indictable criminal investigation’ means an in20 vestigation by the Internal Revenue Service, the De21 partment of Justice, or a grand jury, of any poten22 tial criminal violation of United States tax laws in23 volving matters related to the partnership which is

24 the subject of the judicial proceeding referred to in

25 paragraph (2), if such investigation does not result
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1 in the indictment of any partner in such partner2 ship.

3 ‘‘(4) PENDENCY OF NON-INDICTABLE CRIMINAL

4 INVESTIGATION.—For purposes of this subsection, a

5 non-indictable criminal investigation shall be deemed

6 pending—

7 ‘‘(A) from the date of the Internal Revenue

8 Service or the Department of Justice authorizes

9 such investigation,

10 ‘‘(B) to the last date on which each person

11 under investigation either has been indicted or

12 has been notified in writing that such investiga13 tion of him or her has terminated.

14 ‘‘(5) CONVERTED PARTNERSHIP ITEMS.—A

15 partnership item subsequently converted to or other16 wise treated as a nonpartnership item shall nonethe17 less be deemed a partnership item for purposes of

18 paragraph (1).’’.

19 (b) EFFECTIVE DATE.—The amendment made by

20 subsection (a) shall apply to interest on deficiencies in in21 come tax attributable to—

22 (1) partnership items, and

23 (2) partnership items subsequently converted to

24 or otherwise treated as nonpartnership items,
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1 with respect to a partnership which is the subject of a

2 judicial proceeding under section 6226 of the Internal

3 Revenue Code of 1986 pending on or commencing after

4 the date of the enactment of this Act.

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