302
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect at the beginning of the first
calendar quarter beginning more than 180 days after the
date of the enactment of this Act.
SEC. 704. FERMENTED MATERIAL FROM ANY BREWERY
MAY BE RECEIVED AT A DISTILLED SPIRITS
PLANT.
(a) IN GENERAL.—Paragraph (2) of section 5222(b)
(relating to production, receipt, removal, and use of distill-
ing materials) is amended to read as follows:
‘‘(2) beer conveyed without payment of tax
from brewery premises, beer which has been lawfully
removed from brewery premises upon determination
of tax, or’’.
(b) CLARIFICATION OF AUTHORITY TO PERMIT RE-
MOVAL OF BEER WITHOUT PAYMENT OF TAX FOR USE
AS DISTILLING MATERIAL.—Section 5053 (relating to ex-
emptions) is amended by redesignating subsection (f) as
subsection (i) and by inserting after subsection (e) the fol-
lowing new subsection:
‘‘(f) REMOVAL
FOR USE
AS DISTILLING MATE-
RIAL.—Subject to such regulations as the Secretary may
prescribe, beer may be removed from a brewery without
payment of tax to any distilled spirits plant for use as
distilling material.’’
303
(c) CLARIFICATION
OF REFUND
AND CREDIT
OF
TAX.—Section 5056 (relating to refund and credit of tax,
or relief from liability) is amended—
(1) by redesignating subsection (c) as sub-
section (d) and by inserting after subsection (b) the
following new subsection:
‘‘(c) BEER RECEIVED
AT
A DISTILLED SPIRITS
PLANT.—Any tax paid by any brewer on beer produced
in the United States may be refunded or credited to the
brewer, without interest, or if the tax has not been paid,
the brewer may be relieved of liability therefor, under reg-
ulations as the Secretary may prescribe, if such beer is
received on the bonded premises of a distilled spirits plant
pursuant to the provisions of section 5222(b)(2), for use
in the production of distilled spirits.’’, and
(2) by striking ‘‘or rendering unmerchantable’’
in subsection (d) (as so redesignated) and inserting
‘‘rendering unmerchantable, or receipt on the bond-
ed premises of a distilled spirits plant’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect at the beginning of the first
calendar quarter beginning more than 180 days after the
date of the enactment of this Act.
304
SEC. 705. REPEAL OF REQUIREMENT FOR WHOLESALE
DEALERS IN LIQUORS TO POST SIGN.
(a) IN GENERAL.—Section 5115 (relating to sign re-
quired on premises) is hereby repealed.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 5681 is amended
by striking ‘‘, and every wholesale dealer in liquors,’’
and by striking ‘‘section 5115(a) or’’.
(2) Subsection (c) of section 5681 is amend-
ed—
(A) by striking ‘‘or wholesale liquor estab-
lishment, on which no sign required by section
5115(a) or’’ and inserting ‘‘on which no sign
required by’’, and
(B) by striking ‘‘or wholesale liquor estab-
lishment, or who’’ and inserting ‘‘or who’’.
(3) The table of sections for subpart D of part
II of subchapter A of chapter 51 is amended by
striking the item relating to section 5115.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
305
SEC. 706. REFUND OF TAX TO WINE RETURNED TO BOND
NOT LIMITED TO UNMERCHANTABLE WINE.
(a) IN GENERAL.—Subsection (a) of section 5044
(relating to refund of tax on unmerchantable wine) is
amended by striking ‘‘as unmerchantable’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 5361 is amended by striking
‘‘unmerchantable’’.
(2) The section heading for section 5044 is
amended by striking ‘‘UNMERCHANTABLE’’.
(3) The item relating to section 5044 in the
table of sections for subpart C of part I of sub-
chapter A of chapter 51 is amended by striking
‘‘unmerchantable’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect at the beginning of the first
calendar quarter beginning more than 180 days after the
date of the enactment of this Act.
SEC. 707. USE OF ADDITIONAL AMELIORATING MATERIAL
IN CERTAIN WINES.
(a) IN GENERAL.—Subparagraph (D) of section
5384(b)(2) (relating to ameliorated fruit and berry wines)
is amended by striking ‘‘loganberries, currants, or goose-
berries,’’ and inserting ‘‘any fruit or berry with a natural
fixed acid of 20 parts per thousand or more (before any
correction of such fruit or berry)’’.
306
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect at the beginning of the first
calendar quarter beginning more than 180 days after the
date of the enactment of this Act.
SEC. 708. DOMESTICALLY PRODUCED BEER MAY BE WITH-
DRAWN FREE OF TAX FOR USE OF FOREIGN
EMBASSIES, LEGATIONS, ETC.
(a) IN GENERAL.—Section 5053 (relating to exemp-
tions) is amended by inserting after subsection (f) the fol-
lowing new subsection:
‘‘(g) REMOVALS FOR USE OF FOREIGN EMBASSIES,
LEGATIONS, ETC.—
‘‘(1) IN GENERAL.—Subject to such regulations
as the Secretary may prescribe—
‘‘(A) beer may be withdrawn from the
brewery without payment of tax for transfer to
any customs bonded warehouse for entry pend-
ing withdrawal therefrom as provided in sub-
paragraph (B), and
‘‘(B) beer entered into any customs bonded
warehouse under subparagraph (A) may be
withdrawn for consumption in the United
States by, and for the official and family use of,
such foreign governments, organizations, and
307
individuals as are entitled to withdraw imported
beer from such warehouses free of tax.
Beer transferred to any customs bonded warehouse
under subparagraph (A) shall be entered, stored,
and accounted for in such warehouse under such
regulations and bonds as the Secretary may pre-
scribe, and may be withdrawn therefrom by such
governments, organizations, and individuals free of
tax under the same conditions and procedures as im-
ported beer.
‘‘(2) OTHER RULES TO APPLY.—Rules similar
to the rules of paragraphs (2) and (3) of section
5362(e) of such section shall apply for purposes of
this subsection.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect at the beginning of the first
calendar quarter beginning more than 180 days after the
date of the enactment of this Act.
SEC. 709. BEER MAY BE WITHDRAWN FREE OF TAX FOR
DESTRUCTION.
(a) IN GENERAL.—Section 5053 is amended by in-
serting after subsection (g) the following new subsection:
‘‘(h) REMOVALS
FOR DESTRUCTION.—Subject to
such regulations as the Secretary may prescribe, beer may
309
‘‘SEC. 5418. BEER IMPORTED IN BULK.
‘‘Beer imported or brought into the United States in
bulk containers may, under such regulations as the Sec-
retary may prescribe, be withdrawn from customs custody
and transferred in such bulk containers to the premises
of a brewery without payment of the internal revenue tax
imposed on such beer. The proprietor of a brewery to
which such beer is transferred shall become liable for the
tax on the beer withdrawn from customs custody under
this section upon release of the beer from customs custody,
and the importer, or the person bringing such beer into
the United States, shall thereupon be relieved of the liabil-
ity for such tax.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such part II is amended by adding at the end thereof
the following new item:
‘‘Sec. 5418. Beer imported in bulk.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect at the beginning of the first
calendar quarter beginning more than 180 days after the
date of the enactment of this Act.
310
Subtitle B—Other Excise Tax
Provisions
SEC. 721. AUTHORITY TO GRANT EXEMPTIONS FROM REG-
ISTRATION REQUIREMENTS.
(a) IN GENERAL.—The first sentence of section 4222
(relating to registration) is amended to read as follows:
‘‘Except as provided in subsection (b), section 4221 shall
not apply with respect to the sale of any article by or to
any person who is required by the Secretary to be reg-
istered under this section and who is not so registered.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to sales after the 180th day
after the date of the enactment of this Act.
SEC. 722. REPEAL OF EXPIRED PROVISIONS.
(a) PIGGY-BACK TRAILERS.—Section 4051 is amend-
ed by striking subsection (d) and by redesignating sub-
section (e) as subsection (d).
(b) DEEP SEABED MINING.—
(1) Subchapter F of chapter 36 (relating to tax
on removal of hard mineral resources from deep sea-
bed) is hereby repealed.
(2) The table of subchapters for chapter 36 is
amended by striking the item relating to subchapter
F.
311
TITLE VIII—ADMINISTRATIVE
PROVISIONS
Subtitle A—General Provisions
SEC. 801. USE OF REPRODUCTIONS OF RETURNS STORED
IN DIGITAL IMAGE FORMAT.
(a) IN GENERAL.—Paragraph (2) of section 6103(p)
(relating to procedure and recordkeeping) is amended by
adding at the end thereof the following new subparagraph:
‘‘(D) REPRODUCTION
FROM
DIGITAL
IM-
AGES.—For purposes of this paragraph, the
term ‘reproduction’ includes a reproduction
from digital images.’’
(b) STUDY.—The Comptroller General of the United
States shall conduct a study of available digital image
technology for the purpose of determining the extent to
which reproductions of documents stored using that tech-
nology accurately reflect the data on the original document
and the appropriate period for retaining the original docu-
ment. Not later than 1 year after the date of the enact-
ment of this Act, a report on the results of such study
shall be submitted to the Committee on Ways and Means
of the House of Representatives and the Committee on
Finance of the Senate.
312
SEC. 802. REPEAL OF AUTHORITY TO DISCLOSE WHETHER
PROSPECTIVE JUROR HAS BEEN AUDITED.
(a) IN GENERAL.—Subsection (h) of section 6103
(relating to disclosure to certain Federal officers and em-
ployees for purposes of tax administration, etc.) is amend-
ed by striking paragraph (5) and by redesignating para-
graph (6) as paragraph (5).
(b) CONFORMING AMENDMENT.—Paragraph (4) of
section 6103(p) is amended by striking ‘‘(h)(6)’’ each
place it appears and inserting ‘‘(h)(5)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to judicial proceedings pending on,
or commenced after, the date of the enactment of this Act.
SEC. 803. REPEAL OF SPECIAL AUDIT PROVISIONS FOR
SUBCHAPTER S ITEMS.
(a) GENERAL RULE.—Subchapter D of chapter 63
(relating to tax treatment of subchapter S items) is hereby
repealed.
(b) CONSISTENT TREATMENT REQUIRED.—Section
6037 (relating to return of S corporation) is amended by
adding at the end thereof the following new subsection:
‘‘(c) SHAREHOLDER’S RETURN MUST BE CONSIST-
ENT WITH CORPORATE RETURN OR SECRETARY NOTI-
FIED OF INCONSISTENCY.—
‘‘(1) IN GENERAL.—A shareholder of an S cor-
poration shall, on such shareholder’s return, treat a
313
subchapter S item in a manner which is consistent
with the treatment of such item on the corporate
return.
‘‘(2) NOTIFICATION OF INCONSISTENT TREAT-
MENT.—
‘‘(A) IN
GENERAL.—In the case of any
subchapter S item, if—
‘‘(i)(I) the corporation has filed a re-
turn but the shareholder’s treatment on
his return is (or may be) inconsistent with
the treatment of the item on the corporate
return, or
‘‘(II) the corporation has not filed a
return, and
‘‘(ii) the shareholder files with the
Secretary a statement identifying the in-
consistency,
paragraph (1) shall not apply to such item.
‘‘(B) SHAREHOLDER
RECEIVING
INCOR-
RECT
INFORMATION.—A shareholder shall be
treated as having complied with clause (ii) of
subparagraph (A) with respect to a subchapter
S item if the shareholder—
‘‘(i) demonstrates to the satisfaction
of the Secretary that the treatment of the
314
subchapter S item on the shareholder’s re-
turn is consistent with the treatment of the
item on the schedule furnished to the
shareholder by the corporation, and
‘‘(ii) elects to have this paragraph
apply with respect to that item.
‘‘(3) EFFECT OF FAILURE TO NOTIFY.—In any
case—
‘‘(A) described in subparagraph (A)(i)(I)
of paragraph (2), and
‘‘(B) in which the shareholder does not
comply with subparagraph (A)(ii) of paragraph
(2),
any adjustment required to make the treatment of
the items by such shareholder consistent with the
treatment of the items on the corporate return shall
be treated as arising out of mathematical or clerical
errors and assessed according to section 6213(b)(1).
Paragraph (2) of section 6213(b) shall not apply to
any assessment referred to in the preceding sen-
tence.
‘‘(4) SUBCHAPTER S ITEM.—For purposes of
this subsection, the term ‘subchapter S item’ means
any item of an S corporation to the extent that reg-
ulations prescribed by the Secretary provide that, for
315
purposes of this subtitle, such item is more appro-
priately determined at the corporation level than at
the shareholder level.
‘‘(5) ADDITION TO TAX FOR FAILURE TO COM-
PLY WITH SECTION.—
‘‘For addition to tax in the case of a shareholder’s
negligence in connection with, or disregard of, the
requirements of this section, see part II of sub-
chapter A of chapter 68.’’
(c) CONFORMING AMENDMENTS.—
(1) Section 1366 is amended by striking sub-
section (g).
(2) Subsection (b) of section 6233 is amended
to read as follows:
‘‘(b) SIMILAR RULES IN CERTAIN CASES.—If a part-
nership return is filed for any taxable year but it is deter-
mined that there is no entity for such taxable year, to the
extent provided in regulations, rules similar to the rules
of subsection (a) shall apply.’’
(3) The table of subchapters for chapter 63 is
amended by striking the item relating to subchapter
D.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
316
SEC. 804. CLARIFICATION OF STATUTE OF LIMITATIONS.
(a) IN GENERAL.—Subsection (a) of section 6501
(relating to limitations on assessment and collection) is
amended by adding at the end thereof the following new
sentence: ‘‘For purposes of this chapter, the term ‘return’
means the return required to be filed by the taxpayer (and
does not include a return of any person from whom the
taxpayer has received an item of income, gain, loss, deduc-
tion, or credit).’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 805. CERTAIN NOTICES DISREGARDED UNDER PROVI-
SION INCREASING INTEREST RATE ON LARGE
CORPORATE UNDERPAYMENTS.
(a) GENERAL RULE.—Subparagraph (B) of section
6621(c)(2) (defining applicable date) is amended by add-
ing at the end thereof the following new clause:
‘‘(iii) EXCEPTION
FOR
LETTERS
OR
NOTICES
INVOLVING
SMALL
AMOUNTS.—
For purposes of this paragraph, any letter
or notice shall be disregarded if the
amount of the deficiency or proposed defi-
ciency (or the assessment or proposed as-
sessment) set forth in such letter or notice
is not greater than $100,000 (determined
317
by not taking into account any interest,
penalties, or additions to tax).’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply for purposes of determining in-
terest for periods after December 31, 1993.
Subtitle B—Tax Court Procedures
SEC. 811. OVERPAYMENT 
DETERMINATIONS 
OF 
TAX
COURT.
(a) APPEAL OF ORDER.—Paragraph (2) of section
6512(b) (relating to jurisdiction to enforce) is amended
by adding at the end the following new sentence: ‘‘An
order of the Tax Court disposing of a motion under this
paragraph shall be reviewable in the same manner as a
decision of the Tax Court, but only with respect to the
matters determined in such order.’’
(b) DENIAL OF JURISDICTION REGARDING CERTAIN
CREDITS AND REDUCTIONS.—Subsection (b) of section
6512 (relating to overpayment determined by Tax Court)
is amended by adding at the end the following new
paragraph:
‘‘(4) DENIAL
OF
JURISDICTION
REGARDING
CERTAIN
CREDITS
AND
REDUCTIONS.—The Tax
Court shall have no jurisdiction under this sub-
section to restrain or review any credit or reduction
made by the Secretary under section 6402.’’
318
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 812. AWARDING OF ADMINISTRATIVE COSTS.
(a) RIGHT TO APPEAL TAX COURT DECISION.—Sub-
section (f) of section 7430 (relating to right of appeal)
is amended by adding at the end the following new
paragraph:
‘‘(3) APPEAL
OF
TAX
COURT
DECISION.—An
order of the Tax Court disposing of a petition under
paragraph (2) shall be reviewable in the same man-
ner as a decision of the Tax Court, but only with re-
spect to the matters determined in such order.’’
(b) PERIOD FOR APPLYING TO IRS FOR COSTS.—
Subsection (b) of section 7430 (relating to limitations) is
amended by adding at the end the following new
paragraph:
‘‘(5) PERIOD FOR APPLYING TO IRS FOR AD-
MINISTRATIVE
COSTS.—An award may be made
under subsection (a) by the Internal Revenue Serv-
ice for reasonable administrative costs only if the
prevailing party files an application with the Inter-
nal Revenue Service for such costs before the 91st
day after the date on which the final decision of the
319
Internal Revenue Service as to the determination of
the tax, interest, or penalty is mailed to such party.’’
(c) PERIOD FOR PETITIONING OF TAX COURT FOR
REVIEW OF DENIAL OF COSTS.—Paragraph (2) of section
7430(f) (relating to right of appeal) is amended—
(1) by striking ‘‘appeal to’’ and inserting ‘‘the
filing of a petition for review with’’, and
(2) by adding at the end the following new sen-
tence: ‘‘If the Secretary sends by certified or reg-
istered mail a notice of such decision to the peti-
tioner, no proceeding in the Tax Court may be initi-
ated under this paragraph unless such petition is
filed before the 91st day after the date of such
mailing.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to civil actions or proceedings com-
menced after the date of the enactment of this Act.
SEC. 813. REDETERMINATION OF INTEREST PURSUANT TO
MOTION.
(a) IN GENERAL.—Paragraph (3) of section 7481(c)
(relating to jurisdiction over interest determinations) is
amended by striking ‘‘petition’’ and inserting ‘‘motion’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect on the date of the enactment
of this Act.
320
SEC. 814. APPLICATION OF NET WORTH REQUIREMENT
FOR AWARDS OF LITIGATION COSTS.
(a) IN GENERAL.—Paragraph (4) of section 7430(c)
(defining prevailing party) is amended by adding at the
end thereof the following new subparagraph:
‘‘(C) SPECIAL RULES FOR APPLYING NET
WORTH
REQUIREMENT.—In applying the re-
quirements of section 2412(d)(2)(B) of title 28,
United States Code, for purposes of subpara-
graph (A)(iii) of this paragraph—
‘‘(i) the net worth limitation in clause
(i) of such section shall apply to—
‘‘(I) an estate but shall be deter-
mined as of the date of the decedent’s
death, and
‘‘(II) a trust but shall be deter-
mined as of the last day of the taxable
year involved in the proceeding, and
‘‘(ii) individuals filing a joint return
shall be treated as 1 individual for pur-
poses of clause (i) of such section, except
in the case of a spouse relieved of liability
under section 6013(e).’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to proceedings commenced after
the date of the enactment of this Act.
321
Subtitle C—Authority for Certain
Cooperative Agreements
SEC. 821. COOPERATIVE AGREEMENTS WITH STATE TAX
AUTHORITIES.
(a) GENERAL RULE.—Chapter 77 (relating to mis-
cellaneous provisions) is amended by adding at the end
thereof the following new section:
‘‘SEC. 7524. COOPERATIVE AGREEMENTS WITH STATE TAX
AUTHORITIES.
‘‘(a) AUTHORIZATION OF AGREEMENTS.—The Sec-
retary is hereby authorized to enter into cooperative agree-
ments with State tax authorities for purposes of enhancing
joint tax administration. Such agreements may provide
for—
‘‘(1) joint filing of Federal and State income
tax returns,
‘‘(2) single processing of such returns,
‘‘(3) joint collection of taxes (other than Fed-
eral income taxes), and
‘‘(4) such other provisions as may enhance joint
tax administration.
‘‘(b) SERVICES
ON REIMBURSABLE BASIS.—Any
agreement under subsection (a) may require reimburse-
ment for services provided by either party to the
agreement.
322
‘‘(c) AVAILABILITY OF FUNDS.—Any funds appro-
priated for purposes of the administration of this title
shall be available for purposes of carrying out the Sec-
retary’s responsibility under an agreement entered into
under subsection (a). Any reimbursement received pursu-
ant to such an agreement shall be credited to the amount
so appropriated.
‘‘(d) STATE TAX AUTHORITY.—For purposes of this
section, the term ‘State tax authority’ means agency,
body, or commission referred to in section 6103(d)(1).’’
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 77 is amended by adding at the end thereof
the following new item:
‘‘Sec. 7524. Cooperative agreements with State tax authorities.’’
Subtitle D—Administrative Prac-
tice and Procedural Simplifica-
tion
SEC. 831. NOTIFICATION OF REASONS FOR TERMINATION
OR DENIAL OF INSTALLMENT AGREEMENTS.
(a) TERMINATIONS.—Subsection (b) of section 6159
(relating to extent to which agreements remain in effect)
is amended by adding at the end thereof the following new
paragraph:
‘‘(5) NOTICE REQUIREMENTS.—The Secretary
may not take any action under paragraph (2), (3),
or (4) unless—
323
‘‘(A) a notice of such action is provided to
the taxpayer not later than the day 30 days be-
fore the date of such action, and
‘‘(B) such notice includes an explanation
why the Secretary intends to take such action.
The preceding sentence shall not apply in any case
in which the Secretary believes that collection of any
tax to which an agreement under this section relates
is in jeopardy.’’
(b) DENIALS.—Section 6159 (relating to agreements
for payment of tax liability in installments) is amended
by adding at the end thereof the following new subsection:
‘‘(c) NOTICE REQUIREMENTS FOR DENIALS.—The
Secretary may not deny any request for an installment
agreement under this section unless—
‘‘(1) a notice of the proposed denial is provided
to the taxpayer not later than the day 30 days be-
fore the date of such denial, and
‘‘(2) such notice includes an explanation why
the Secretary intends to deny such request.
The preceding sentence shall not apply in any case in
which the Secretary believes that collection of any tax to
which a request for an agreement under this section re-
lates is in jeopardy.’’
324
(c) CONFORMING AMENDMENT.—Paragraph (3) of
section 6159(b) is amended to read as follows:
‘‘(3) SUBSEQUENT CHANGE IN FINANCIAL CON-
DITIONS.—If the Secretary makes a determination
that the financial condition of a taxpayer with whom
the Secretary has entered into an agreement under
subsection (a) has significantly changed, the Sec-
retary may alter, modify, or terminate such agree-
ment.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date 6 months after
the date of the enactment of this Act.
SEC. 832. JOINT RETURN MAY BE MADE AFTER SEPARATE
RETURNS WITHOUT FULL PAYMENT OF TAX.
(a) GENERAL RULE.—Paragraph (2) of section
6013(b) (relating to limitations on filing of joint return
after filing separate returns) is amended by striking sub-
paragraph (A) and redesignating the following subpara-
graphs accordingly.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 833. OFFERS-IN-COMPROMISE.
(a) GENERAL RULE.—Subsection (a) of section 7122
(relating to compromises) is amended by adding at the end
325
thereof the following new sentence: ‘‘The Secretary may
make such a compromise in any case where the Secretary
determines that such compromise would be in the best in-
terests of the United States.’’.
(b) REVIEW REQUIREMENTS.—Subsection (b) of sec-
tion 7122 (relating to records) is amended by striking
‘‘$500.’’ and inserting ‘‘$50,000. However, such com-
promise shall be subject to continuing quality review by
the Secretary.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 834. PRELIMINARY NOTICE REQUIREMENT.
(a) IN GENERAL.—Section 6672 (relating to failure
to collect and pay over tax, or attempt to evade or defeat
tax) is amended by redesignating subsection (b) as sub-
section (c) and by inserting after subsection (a) the follow-
ing new subsection:
‘‘(b) PRELIMINARY NOTICE REQUIREMENT.—
‘‘(1) IN
GENERAL.—No penalty shall be im-
posed under subsection (a) unless the Secretary noti-
fies the taxpayer in writing by mail to an address as
determined under section 6212(b) that the taxpayer
shall be subject to an assessment of such penalty.
326
‘‘(2) TIMING OF NOTICE.—The mailing of the
notice described in paragraph (1) shall precede any
notice and demand of any penalty under subsection
(a) by at least 60 days.
‘‘(3) STATUTE
OF
LIMITATIONS.—If a notice
described in paragraph (1) with respect to any pen-
alty is mailed before the expiration of the period
provided by section 6501 for the assessment of such
penalty (determined without regard to this para-
graph), the period provided by such section for the
assessment of such penalty shall not expire before
the date 90 days after the date on which such notice
was mailed.
‘‘(4) EXCEPTION
FOR
JEOPARDY.—This sub-
section shall not apply if the Secretary finds that the
collection of the penalty is in jeopardy.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to assessments made after June
30, 1995.
SEC. 835. PENALTIES UNDER SECTION 6672.
(a) PUBLIC INFORMATION REQUIREMENTS.—The
Secretary of the Treasury or the Secretary’s delegate
(hereafter in this section referred to as the ‘‘Secretary’’)
shall take such actions as may be appropriate to ensure
that employees are aware of their responsibilities under
327
the Federal tax depository system, the circumstances
under which employees may be liable for the penalty im-
posed by section 6672 of the Internal Revenue Code of
1986, and the responsibility to promptly report to the In-
ternal Revenue Service any failure referred to in sub-
section (a) of such section 6672. Such actions shall in-
clude—
(1) printing of a warning on deposit coupon
booklets and the appropriate tax returns that certain
employees may be liable for the penalty imposed by
such section 6672, and
(2) the development of a special information
packet.
(b) BOARD MEMBERS OF TAX-EXEMPT ORGANIZA-
TIONS.—
(1) VOLUNTARY BOARD MEMBERS.—
(A) IN GENERAL.—The penalty under sec-
tion 6672 of the Internal Revenue Code of 1986
shall not be imposed on unpaid, volunteer mem-
bers of any board of trustees or directors of an
organization referred to in section 501 of such
Code to the extent such members are solely
serving in an honorary capacity, do not partici-
pate in the day-to-day or financial operations of
the organization, and do not have actual knowl-
328
edge of the failure on which such penalty is
imposed.
(B) APPLICATION
OF
PARAGRAPH.—This
paragraph shall not apply if it results in no per-
son being held liable for the penalty described
in section 6672(a) of the Internal Revenue
Code of 1986.
(2) DEVELOPMENT
OF
EXPLANATORY
MATE-
RIALS.—The Secretary shall develop materials ex-
plaining the circumstances under which board mem-
bers of tax-exempt organizations (including vol-
untary and honorary members) may be subject to
penalty under section 6672 of such Code. Such ma-
terials shall be made available to tax-exempt organi-
zations.
(3) IRS INSTRUCTIONS.—The Secretary shall
clarify the instructions to Internal Revenue Service
employees on the application of the penalty under
section 6672 of such Code with regard to voluntary
members of boards of trustees or directors of tax-ex-
empt organizations.
(c) PROMPT NOTIFICATION.—To the maximum ex-
tent practicable, the Secretary shall notify all persons who
have failed to make timely and complete deposit of any
taxes described in section 6672 of the Internal Revenue
329
Code of 1986 of such failure within 30 days after the re-
turn was filed reflecting such failure or after the date on
which the Secretary is first aware of such failure. If the
person failing to make the deposit is not an individual,
the Secretary shall notify the entity subject to such deposit
requirement and that entity shall notify, within 15 days
of the notification by the Secretary, all officers, general
partners, trustees, or other managers of the failure.
SEC. 836. REQUIRED CONTENT OF CERTAIN NOTICES.
(a) GENERAL RULE.—Subsection (a) of section 7522
(relating to content of tax due, deficiency, and other no-
tices) is amended by striking ‘‘shall describe the basis for,
and identify’’ and inserting ‘‘shall set forth the adjust-
ments which are the basis for, and shall identify’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to notices sent after the date
6 months after the date of the enactment of this Act.
SEC. 837. REQUIRED NOTICE OF CERTAIN PAYMENTS.
If any payment is received by the Secretary of the
Treasury or the Secretary’s delegate (hereafter in the sec-
tion referred to as the ‘‘Secretary’’) from any taxpayer
and the Secretary cannot associate such payment with any
outstanding tax liability of such taxpayer, the Secretary
shall make reasonable efforts to notify the taxpayer of
330
such inability within 60 days after the receipt of such
payment.
SEC. 838. IMPROVED PROCEDURES FOR NOTIFYING SERV-
ICE OF CHANGE OF ADDRESS OR NAME.
The Secretary of the Treasury shall provide improved
procedures for taxpayers to notify the Secretary of
changes in names and addresses. Not later than December
31, 1994, the Secretary shall institute procedures for
timely updating all Internal Revenue Service records with
change-of-address information provided to the Secretary
by taxpayers.
SEC. 839. RIGHTS AND RESPONSIBILITIES OF DIVORCED
INDIVIDUALS.
The Secretary of the Treasury shall include in the
Internal Revenue Service publication entitled ‘‘Your
Rights As A Taxpayer’’ a section on the rights and respon-
sibilities of divorced individuals.
TITLE IX—FINANCING
PROVISIONS
SEC. 901. CERTAIN AMOUNTS DERIVED FROM FOREIGN
CORPORATIONS TREATED AS UNRELATED
BUSINESS TAXABLE INCOME.
(a) GENERAL RULE.—Subsection (b) of section 512
(relating to modifications) is amended by adding at the
end thereof the following new paragraph:
331
‘‘(17) TREATMENT OF CERTAIN AMOUNTS DE-
RIVED FROM FOREIGN CORPORATIONS.—
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (1), any disqualified amount derived by
an organization from a foreign corporation in
which such organization is a 10-percent share-
holder shall be included as an item of gross in-
come derived from an unrelated trade or busi-
ness. There shall be allowed all deductions di-
rectly connected with amounts included in gross
income under the preceding sentence.
‘‘(B) DISQUALIFIED
AMOUNT.—For pur-
poses of subparagraph (A), the term ‘disquali-
fied amount’ means any of the following:
‘‘(i) SUBPART
F
INCLUSION.—Any
amount included in gross income under
section 951(a)(1)(A) to the extent the
amount so included is attributable to in-
come which, if derived directly by the orga-
nization, would be treated as gross income
from an unrelated trade or business.
‘‘(ii) DIVIDENDS.—Any dividend paid
out of the earnings and profits of any for-
eign corporation in proportion to the ratio
of—
332
‘‘(I) the portion of the earnings
and profits attributable to income
which, if derived directly by the orga-
nization, would be treated as gross in-
come from an unrelated trade or busi-
ness, to
‘‘(II) the total amount of earn-
ings and profits.
For purposes of the preceding sentence,
earnings and profits accumulated in tax-
able years beginning before January 1,
1994, shall not be taken into account.
‘‘(C) 10-PERCENT
SHAREHOLDER.—The
term ‘10-percent shareholder’ means any orga-
nization who owns (within the meaning of sec-
tion 958(a)), or is considered as owning by ap-
plying the rules of section 958(b), 10 percent or
more of the combined voting power of all class
of stock entitled to vote of the foreign corpora-
tion.
‘‘(D) TREATMENT OF CERTAIN AMOUNTS
AS
DIVIDENDS.—The 
rules 
of 
section
904(d)(3)(G) shall apply for purposes of this
paragraph.