An Act to provide payments to localities for high-priority expenditures, to encourage the States to supplement their revenue sources, and to authorize Federal collection of State individual income taxes
PL 92-512 (H.R.14370), enacted 10/20/1972

86 STAT.] 
PUBLIC LAW 9 2 - 5 1 2 - O C T . 20, 1972 
919 
Public Law 92-512 
A N A C T 
October 20, 1972 
To provide fiscal assistance to State and local governments, to authorize Federal —[H. R.14370]— 
collection o£ State individual income taxes, and for other purposes. 
Federal State 
revenue sharing. 
Citation of 
title. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled, 
TITLE I—FISCAL ASSISTANCE TO STATE AND LOCAL 
GOVERNMENTS 
Subtitle A—Allocation and Payment of Funds 
SEC. 101. SHORT TITLE. 
This title may be cited as the "State and Local Fiscal Assistance Act 
of 1972". 
SEC. 102. PAYMENTS TO STATE AND LOCAL GOVERNMENTS. 
Excej>t as otherwise provided in this title, the Secretary shall, for 
each entitlement period, pay out of the Trust Fund to— 
(1) each State government a total amount equal to the entitle-
ment of such State government determined under section 107 for 
such period, and 
(2) each unit of local government a total amount equal to the 
entitlement of such unit determined under section 108 for such 
period. 
In the case of entitlement periods ending after the date of the enact-
ment of this Act, such payments shall be made in installments, but not 
less often than once for each quarter, and, in the case of quarters 
ending after September 80, 1972, shall be paid not later than 5 days 
after the close of each quarter. Such payments for any entitlement 
period may be initially made on the basis of estimates. Proper adjust-
ment shall be made in the amount of any payment to a State govern-
ment or a unit of local government to the extent that the payments 
previously made to such government under this subtitle were in 
excess of or less than the amounts required to be paid. 
SEC. 103. USE OF FUNDS BY LOCAL GOVERNMENTS FOR PRIORITY 
«
^ ^ 
EXPENDITURES. 
(a) I N GENERAL.—Funds received by units of local government 
under this subtitle may be used only for priority expenditures. For expfnditures. 
purposes of this title, the term "priority expenditures^' means only— 
(1) ordinary and necessary maintenance and operating expenses 
for— 
(A) public safety (including law enforcement, fire protec-
tion, and building code enforcement), 
(B) environmental protection (including sewage disposal, 
sanitation, and pollution abatement), 
(C) public transportation (including transit systems and 
streets and roads), 
(D} health, 
(E) recreation, 
(F) libraries, 
(G) social services for the poor or aged, and 
(H) financial administration; and 
(2) ordinary and necessary capital expenditures authorized by 
law. 
(b) CERTIFICATES BY LOCAL 
GOVERNMENTS.—The Secretary is 
authorized to accept a certification by the chief executive officer of a 
unit of local government that the unit of local government has used 
82-081 O - 73 - 61 
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> 
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^ ^ 0 
PUBLIC LAW 92-512-OCT. 20, 1972 
[86 STAT. 
the funds received by it under this subtitle for an entitlement period 
only for priority expenditures, unless he determines that such certi-
" ^
^
)
" !' * 
fication is not sufficiently reliable to enable him to carry out his duties 
"""""'" • "' 
under this title. 
SEC. 104. PROHIBITION ON USE AS MATCHING FUNDS BY STATE OR 
LOCAL GOVERNMENTS. 
(a) I N GENERAL.—No State government or unit of local government 
.g' 
;
f
i ':..". 
jjjg^y ygg^ dlrectly or indirectly, any part of the funds it receives under 
this subtitle as a contribution for the purpose of obtaining Federal 
funds under any law of the United States which requires such ^vern-
ment to make a contribution in order to receive Federal funds. 
(b) DETERMINATIONS BY SECRETARY or THE TREASURY.—^If the Sec-
retary has reason to believe that a State government or unit of local 
government has used funds received under this subtitle in violation of 
' ' ' 'LTj;; subsection (a), he shall give reasonable notice and opportunity for 
hearing to such government. If, thereafter, the Secretary of the Treas-
ury determines that such government has used funds m violation of 
subsection (a), he shall notify such government of his determination, 
and shall request repayment to the United States of an amount 
equal to the funds so used. To the extent that such government fails to 
repay such amount, the Secretary shall withhold from subsequent 
payments to such government under th's subtitle an amount equal to 
the funds so used. 
(c) INCREASED STATE OR LOCAL GOVERNMENT REVENUES.—No State 
government or unit of local government shall be determined to have 
used funds in violation of subsection (a) with respect to any funds 
^ 
received for any entitlement period to the extent that the net revenues 
received by it from its own sources during such period exceed the net 
revenues received by it from its own sources during the one-year period 
beginning July 1, 1971 (or one-half of such net revenues, in the case 
of an entitlement period of 6 months). 
(d) DEPOSITS AND TRANSFERS TO GENERAL FUND.—Any amount 
repaid bv a State government or unit of local government under sub-
section (b) shall be deposited in the general fund of the Treasury. An 
amount equal to the reduction in payments to any State government or 
unit of local government which results from the application of this sec-
Post, p. 935. 
^JQj^ (after any judicial review under section 143) shall be transferred 
from the Trust Fund to the general fund of the Treasury on the day 
. 
,^ ^ 
on which such reduction becomes final. 
'v?3-u.i;uvj'p: 
(e) CERTIFICATES BY STATE AND IX>CAL GOVERNMENTS.—^The Secre-
tary is authorized to accept a certification by the Governor of a Stat« 
or the chief executive officer of a unit of local government that the 
State government or unit of local government has not used any funds 
received bv it under this subtitle for an entitlement period in violation 
of subsection (a), unless he detennines that such certification is not 
snfficiently reliable to enable him to carry out his duties under this 
title. 
SEC. 105. CREATION OF TRUST FUND; APPROPRIATIONS. 
(a) 
TRUST F U N D . — 
(1) I N GENERAL.—^^There is hereby established on the books of 
the Treasury of the United States a trust fund to be known as the 
"State and Local Government Fiscal Assistance Trust Fund" 
(referred to in this subtitle as the "Trust Fund"). The Trust Fund 
^^; shall remain availa)ble without fiscal year limitation and shall con-
" 
sist of such amounts as may be appropriated to it and deposited 
;, 
in it as provided in subsection (b). Except as provided in this title, 
i-* - Rt ~ o 
im-m 
Congress. 
86 STAT.] 
PUBLIC LAW 92-51 2 - O C T . 20, 1972 
921 
amounts in the Trust Fund may be used only for the payments to 
State and local governments provided by this subtitle. 
(2) TRUSTEE.—^The Secretary of the Treasury shall be the 
^^^P°^*^*° 
trustee of the Trust Fund and shall report to the Congress not 
later than March 1 of each year on the operation and status of the 
Trust Fund during the preceding fiscal year. 
(b) APPROPRIATIONS.— 
(1) I N GENERAL.—^There is appropriated to the Trust Fund, out 
of amounts in the general fund of the Treasury attributaible to the 
collections of the Federal individual income taxes not otherwise 
appropriated— 
(A) for the period beginning January 1, 1972, and ending 
June 30, 1972, $2,650,000,000; 
•-•'"^i ' 
(B) for the period beginning July 1, 1972, and ending 
December 31, 1972, $2,650,000,000; 
(C) for the period beginning January 1,1973, and ending 
June 30, 1973, $2,987,500,000; 
\"''i 
(D) 
for 
the 
fiscal 
year beginning July 
1, 1973, 
$6,050,000,000; 
'"• 
•• 
(E) 
for 
the 
fiscal 
year 
beginning July 
1, 1974, 
$6,200,000,000; 
•,iO^~:''r 
(F) 
for 
the 
fiscal 
year 
beginning 
July 
1, 1975, 
$6,350,000,000; and 
.f.M<" ^ 
(G) for the period beginning July 1, 1976, and ending 
=
;
T , 
December 31, 1976, $3,325,000,000. 
(2) 
NONCONTIGUOUS STATES ADJUSTMENT AMOUNTS.—There is 
appropriated to the Trust Fund, out of amounts in the general 
fund of the Treasury attributable to the collections of the Federal 
individual income taxes not otherwise appropriated— 
(A) for the period beginning January 1, 1972, and ending 
June 30,1972, $2,390,000; 
(B) for the period beginning July 1, 1972, and ending 
December 31,1972^ $2,390,000; 
> 
(C) for the period beginning January 1, 1973, and ending 
; 
June 30,1973, $2,390,000; 
(D) for each of the fiscal years beginning July 1, 1973, 
July 1, 1974, and July 1, 1975, $4,780,000; and 
(iE) for the period beginning July 1, 1976, and ending 
December 31,1976, $2,390,000. 
(3) DEPOSITS.—Amounts appropriated by paragraph (1) or (2) 
for any fiscal year or other period shall be deposited in the Trust 
Fund on the later of (A) the first day of such year or period, or 
(B) the day after the date of enactment of this Act. 
(c) TRANSFERS FROM TRUST FUND TO GENERAL FUND.—The Secre-
tary shall from time to time transfer from the Trust Fund to the 
general fund of the Treasury any moneys in the Trust Fund which he 
determines will not be needed to make payments to State governments 
and units of local government under this subtitle. 
SEC. 106. ALLOCATION AMONG STATES. 
(a) I N GENERAL.—There shall be allocated to each State for each 
entitlement period, out of amounts appropriated under section 105(b) 
(1) for that entitlement period, an amount which bears the same ratio 
to the amount appropriated under that section for that period as the 
amount allocable to that State under subsection (b) bears to the sum 
of the amounts allocable to all States under subsection (b). 
(b) DETERMINATION OF ALLOCABLE AMOUNT.— 
PUBLIC LAW 92-512-OCT. 20, 1972 
[86 STAT. 
(1) Ix OENEKAL.—P^or piirposes of subsectioii (a), the ainoimt 
allocable to a State under this subsection for any entitlement period 
shall be determined under paragraph (2), except that such amount 
shall be determined under paragraph (8) if the amount allocable 
to it under paragraph (3) is greater than the sum of the amounts 
allocable to it under paragraph (2) and subsection (c). 
(2) THREE FACTOR FORMULA.—For purposes of paragraph (1), 
the amount allocable to a State under this paragraph for any 
entitlement period is the amount which bears the same ratio to 
$5,30(),()(){),()()() as— 
(A) the population of that State, multiplied by the general 
tax eii'oi't factor of that State, multiplied by the relative 
income factor of that State, bears to 
; , 
(B) the sum of the products determined under subpara-
graph (A) for all States. 
(8) FIVE FACTOR FORMULA.—For purposes of paragraph (1), the 
amount allocable to a State under this paragraph for any entitle-
ment period is the amount to which that State Avoiild be entitled 
if— 
(A) 1/3 of $8,5()0,0UO,(;()() were allocated among the States on 
the basis of population, 
.:: 
(B) 1/3 of $3,500,00(),()00 were allocated among the States on 
the basis of urbanized population, 
r.'::-M.' 
(<^') V3 of $3,5()0,0()0,000 were allocated among the States on 
the basis of population inversely weighted for per capita 
income, 
(D) 1
/
2 of $1,8()(),0(X),()00 were allocated among the States on 
the basis of income tax collections, and 
(E) 1/^ of $1,800,000,000 were allocated among the States on 
the basis of general tax effort. 
(c) \()XCONTIGUOUS STATES ADJUSTMENT.— 
(1) I x GEXERAL.—In addition to amounts allocated among the 
States under subsection (a), there shall be allocated for each 
entitlement period, out of amounts appropriated under section 
105(b) (2), an additional amount to any State (A) whose alloca-
tion under subsection (b) is determined by the formula set forth 
in paiagraph (2) of that subsection and (B) in which civilian 
employees of the United States Government receive an allowance 
80 Stat. 512. 
,„j^jgj. section 5941 of title 5, United States Code. 
(2) DETERMIXATIOX^ OF AMOUNT.—The additional amount allo-
cable to any State under this subsection for any entitlement period 
is an amount equal to a percentage of the amount allocable to that 
State under subsection (b) (2) for that period which is the same 
as the percentage of basic pay received by such employees sta-
tioned in that State as an allowance under such section 5941. If 
the total amount appropriated under section 105(b) (2) for any 
entitlement period is not sufficient to pay in full the additional 
sunounts allocable under this subsection for that period, the Sec-
letary shall reduce proportionately the amounts so allocable. 
SEC. 107. ENTITLEMENTS OF STATE GOVERNMENTS. 
(a) Divisiox BETWEEN STATE AND LOCAL GOVERNMENTS.—The 
State government shall be entitled to receive one-third of the amount 
allocated to that State for each entitlement period. The remaining 
portion of each State's allocation shall be allocated among the units 
of local government of that State as provided in section 108. 
(b) STATE MUST MAINTAIN TRANSFERS TO LOCAL GOVERNMENTS.— 
86 STAT. ] 
PUBLIC LAW 92-512-OCT. 20, 1972 
923 
(1) GENERAL RULE.—The entitlement of any State government 
for any entitlement period beginning on or after July 1, 107'>, 
shallbereducedby theamomit (if any) by which— 
(A) the average of the aggregate amounts transferred by 
the State government (out of its ov^^n sources) during such 
period and the preceding entitlement period to all units of 
local government in such State, is less than, 
(B) the similar aggregate amount for the one-year period 
beginning July 1,1971. 
For purposes of subparagraph (A), the amount of any reduction 
in the entitlement of a State government under this subsection 
for any entitlement period shall, for subsequent entitlement 
periods, be treated as an amount transferred by the State govern-
ment (out of its own sources) during such period to units of 
local government in such State. 
(2) ADJUSTMENT WHERE STATE ASSUMES RESPONsiBiLrrr FOR 
CATEGORY or EXPENDITURES.—If the State government establishes 
to the satisfaction of the Secretary that since June 30,1972, it has 
assumed responsibility for a category of expenditures which 
(before July 1,1972) Avas the responsibility of local governments 
located in such State, then, under regulations prescribed by the 
Secretary, the aggregate amount taken into account under para-
graph (1) (B) shall be reduced to the extent that increased State 
government spending (out of its own sources) for such category 
has replaced corresponding amounts which for the one-year 
period beginning July 1, 1971, it transferred to units of local 
government. 
(3) ADJUSTMENT WHERE NEW TAXING POWERS ARE CONFERRED 
UPON LOCAL GOVERNMENTS.—If a State establishes to the satisfac-
tion of the Secretary that since June 30,1972, one or more units of 
local government within such State have had conferred upon them 
new taxing authority, then, under regulations prescribed by the 
Secretary, the aggregate amount taken into account under para-
graph (1) (B) shall be i-educed to the extent of the larger of— 
(A) an amount equal to the amount of the taxes collected 
by reason of the exercise of such new taxing authority by 
such local governments, or 
(B) an amount equal to the amount of the loss of revenue 
to the State by reason of such new taxing authority being 
conferred on such local governments. 
No amount shall be taken into consideration under subparagraph 
(A) if such new taxing authority is an increase in the authorized 
rate of tax under a previously authorized kind of tax, unless the 
State is determined by the Secretary to have dexjreased a related 
State tax. 
(4) SPECIAL RULE FOR PERIOD BEGINNING JULY i, 1973.—In the 
case of the entitlement period beginning July 1,1973, the preced-
ing entitlement period for purposes of paragraph (1) (A) shall 
be treated as being the one-year period beginning July 1, 1972. 
(5) SPECIAL RUIJ<: FOR PERIOD BEGINNING JULY 1, lOTfi.—In the 
case of the entitlement period beginning July 1, 1976, and ending 
December 31, 1976, the aggregate amount taken into account un-
der paragraph (1) (A) for the preceding entitlement period and 
the aggregate amount taken into account under paragraph (1) 
(B) shall be one-half of the amounts which (but for this para-
graph) would be taken into account. 
m» 
PUBLIC LAW 92-512-OCT. 20, 1972 
[86 STAT. 
1 
(H) REDUCTIOX IN ENTITLEMENT.—If the Secretary has reason 
to believe that paragraph (1) requires a reduction in the entitle-
ment of any State government for any entitlement period, he shall 
give reasonable notice and opportunity for hearing to the State. If. 
thereafter, he determines that paragraph (1) rex:]uires the reduc-
tion of such entitlement, he shall also determine the amount of 
such reduction and shall notify the (Tovernor of such State of 
such determinations and shall withhold from subsequent payments 
to such State government under this subtitle an amount equal 
to such reduction. 
(7) TRANSFER TO (iENERAL FUND.—An amount equal to the 
reduction in the entitlement of any State government which 
results from the application of this subsection (after any judicial 
Post. p. 935. 
review under section 143) shall be transferred from the Trust 
Fund to the general fund of the Treasury on the day on which 
such reduction becomes final. 
SEC. 108. ENTITLEMENTS OF LOCAL GOVERNMENTS. 
(a) ALLOCATION AMONG COUNTY AREAS.—The amount to be allo-
cated to the units of local government within a State for any entitle-
ment period shall be allocated among the county areas located in that 
State so that each county area will receive an amount which bears the 
same ratio to the total amount to be allocated to the units of local 
ir«)vernment within that State as— 
(1) the population of that county area, multiplied by the 
general tax effort factor of that county area, multiplied by the 
relative income factor of that county area, bears to 
(2) the sum of the products determined imder paragraph (1) 
for all county areas within that State. 
(b) ALLOCATION T
O COUNTY (TOVERNMENTS, MUNICIPALITIES, TOWN-
SHIPS, ETC.— 
(1) CouNTT GOVERNMENTS.—^^The county government shall be 
allocated that portion of the amount allocated to the county area 
for the entitlement period under subsection (a) which bears the 
same ratio to such amount as the adjusted taxes of the county 
government bear to the adjusted taxes of the county government 
' 
and all other units of local government located in the county area. 
(2) OTHER UNITS OF LOCAL GOVERNMENT.—The amount remain-
itfi ],jg ffyj. allocation within a county area after the application of 
a/if paragraph (1) shall be allocated among the units of local gov-
ernment (other than the county government and other than town-
ship governments) located in that county area so that each unit 
of local government will receive an amount which bears the same 
ratio to the total amount to be allocated to all such units as— 
(A) the population of that local government, multiplied by 
the general tax effort factor of that local government, multi-
plied by the relative income factor of that local government, 
bears to 
(B) the sum of the products determined under subpara-
graph (A) for all such units. 
(3) TOWNSHIP GOVERNMENTS.—If the county area includes one 
ov more township governments, then before applying paragraph 
' 
(A) there shall be set aside for allocation under subpara-
graph (B) to such township governments that portion of the 
' * ' 
amount allocated to the county area for the entitlement 
period which bears the same ratio to such amount as the sum 
86 STAT.] 
PUBLIC LAW 9 2-51 2 - O C T . 20, 1972 
925 
' ' 
of the adjusted taxes of all such township governments bears 
to the aggregate adjusted taxes of the county government, 
such township governments, and all other units of local gov-
^ 
. 
ernment located in the county area, and 
* 
(B) that portion of each amount set aside under subpara-
graph (A) shall be allocated to each township government 
on the same basis as amounts are allocated to units of local 
government under paragraph (2). 
If this paragraph applies with respect to any county area for any 
entitlement period, the remaining portion allocated under para-
graph (2) to the units of local government located in the county 
area (other than the county government and the township govern-
ments) shall be appropriately reduced to reflect the amounts set 
, 
aside under subparagraph (A). 
^ 
(4) INDIAN TRIBES AND ALASKAN NATIVE VILLAGES.—If within a 
county area there is an Indian tribe or Alaskan native village 
which has a recognized governing body which performs substan-
tial governmental functions, then before applying paragraph (1) 
there shall be allocated to such tribe or village a portion of the 
amount allocated to the county area for the entitlement period 
which bears the same ratio to such amount as the population of 
that tribe or village within that county area bears to the popula-
tion of that county area. If this paragraph applies with respect 
to any county area for any entitlement period, the amount to be 
allocated under paragraph (1) shall be appropriately reduced 
to reflect the amount allocated under the preceding sentence. If 
the entitlement of any such tribe or village is waived for any 
entitlement period by the governing body of that tribe or village, 
then the provisions of this paragraph shall not apply with respect 
to the amount of such entitlement for such period. 
(5) RULE FOR SMALL UNITS OF GOVERNMENT.—If the Secretary 
determines that in any county area the data available for any 
entitlement period are not adequate for the application of the 
formulas set forth in paragraphs (2) and (3) (B) with respect to 
units of local government (other than a county government) with 
a population below a number (not more than 500) prescribed for 
that county area by the Secretary, he may apply paragraph (2) 
or (3) (B) by allocating for such entitlement period to each such 
unit located in that county area an amount which bears the same 
ratio to the total amount to be allocated under paragraph (2) 
or (3) (B) for such entitlement period as the population of such 
Tuiit bears to the population of all units of local government in 
that county area to which allocations are made under such para-
graph. If the preceding sentence applies with respect to any 
county area, the total amount to be allocated under paragraph 
(2) or (3) (B) to other units of local government in that county 
area for the entitlement period shall be appropriately reduced 
to reflect the amounts allocated under the preceding sentence. 
(6) ENTITLEMENT.— 
(A) I N GENERAL.—Except as otherwise provided in this 
paragraph, the entitlement of any unit of local government for 
any entitlement period shall be the amount allocated to such 
^ *' 
unit under this subsection (after taking into account any 
applicable modification under subsection (c)). 
(B) MAXIMUM AND MINIMUM PER CAPITA ENITTLEMENT.— 
Subject to the provisions of subparagraphs (C) and (D), the 
per capita amount allocated to any county area or any unit of 
local government (other than a coimty government) within a 
^ 6 
PUBLIC LAW 92-512-OCT. 20,1972 
[86 STAT. 
State under this section for any entitlement period shall not 
be less than 20 percent, nor more than 145 percent, of two-
thirds of the amount allocated to the State luider section 106, 
divided by the population of that State. 
(C) LIMITATION.—The amount allocated to any unit of 
local government under this section for any entitlement period 
1;, 
shall not exceed 50 percent of the sum of (i) such government's 
adjusted taxes, and (ii) the intergovernmental transfers of 
revenue to such government (other than transfers to such 
government under this subtitle). 
(D) ENTITLEMENT LESS THAN $200, OR GOVERNING BODY 
WAIVES ENTITLEMENT.—If (but for this subparagraph) the 
entitlement of any unit of local government below the level of 
the county government— 
(i) would be less than $200 for any entitlement period 
($100 for an entitlement period of 6 months), or 
(ii) is waived for any entitlement period by the gov-
erning body of such unit, 
then the amount of such entitlement for such period shall (in 
lieu of being paid to such unit) be added to, and shall be-
come a part of, the entitlement for such period of the county 
government of the county area in which such unit is located. 
(7) ADJUSTMENT or ENTITLEMENT.— 
(A) I N GENERAL.—In adjusting the allocation of any county 
area or unit of local government, the Secretary shall make any 
adjustment required under paragraph (6) (B) first, any adust-
ment required under paragraph (6) (C) next, and any adjustment 
required under paragraph (6) (D) last. 
(B) 
ADJUSTMENT FOR APPLICATION OF MAXIMUM OR MINIMUM 
PER CAPITA ENTITLEMENT.—The Secretary shall adjust the alloca-
tions made under this section to county areas or to units of local 
governments in any State in order to bring those allocations into 
compliance with the provisions of paragraph (6) (B). In making 
such adjustments he shall make any necessary adjustments with 
respect to county areas before making any necessary adjustments 
with respect to units of local government. 
(C) ADJUSTMENT F
O
R APPLICATION OF LIMITATION.—In any case 
in which the amount allocated to a unit of local government is re-
duced under paragraph (6) (C) by the Secretary, the amount of 
that reduction— 
(i) in the case of a unit of local government (other than a 
county government), shall be added to and increase the 
allocation of the county government of the county area in 
which it is located, unless (on account of the application of 
paragraph (6)) that county government may not receive it, 
in which case the amount of the reduction shall be added to 
and increase the entitlement of the State government of the 
State in which that unit of local government is located; and 
(ii) in the case of a county government, shall be added to 
and increase the entitlement of the State government of the 
State in which it is located, 
(c) 
SPECIAL ALLOCATION RULES.— 
(1) OPTIONAL FORMULA.—A State may by law provide for the 
allocation of funds among county areas, or among units of local 
government (other than county governments), on the basis of the 
population multiplied by the general tax effort factors of such 
areas or units of local government, on the basis of the population 
86 STAT.] 
PUBLIC LAW 9 2 - 5 1 2 - O C T . 20, 1972 
927 
multiplied by the relative income factors of such areas or units 
of local government, or on the basis of a combination of those 
two factors. Any State which provides by law for such a variation 
in the allocation formula provided by subsection (a), or by para-
graphs (2) and (3) of subsection (b), shall notify the Secretary 
of such law not later than 30 days before the beginning of the first 
entitlement period to which such law is to apply. Any such law 
shall— 
(A) provide for allocating 100 percent of the aggregate 
amount to be allocated under subsection (a), or under para-
graphs (2) and (3) of subsection (b) ; 
a; 
.„ 
(B) apply uniformly throughout the State; and 
(C) apply during the period beginning on the first day of 
i<, } 
the first entitlement period to which it applies and ending 
on December 31,1976. 
(2) CERTIFICATION.—Paragraph (1) shall apply within a State 
only if the Secretary certifies that the State law complies with 
the requirements of such paragraph. The Secretary sihall not 
certify any such law with respect to which he receives notifica-
tion later than 30 days prior to the first entitlement period dur-
ing which it is to apply, 
(d) GOVERNMENTAL DEFINITIONS AND RELATED RULES.—For pur-
poses of this title— 
(1) UNITS or LOCAL GOVERNMENT.—The term "unit of local gov-
ernment" means the government of a county, municipality, town-
ship, or other unit of government below the State which is a unit 
of general government (determined on the basis of the same prin-
ciples as are used by the Bureau of the Census for general statis-
tical purposes). Such term also means, except for purposes of 
paragraphs (1), (2), (3), (5), (6)(C), and (6) (D) of subsec-
tion (b), and, except for purposes of subsection (c), the recog-
nized governing body of an Indian tribe or Alaskan native village 
which performs substantial governmental functions. 
(2) CERTAIN AREAS TREATED AS COUNTIES.—In any State in 
which any unit of local government (other than a county govern-
ment) constitutes the next level of government below the State 
government level, then, except as provided in the next sentence, 
the geographic area of such unit of government shall be ti-eated 
as a county area (and such unit of government shall be treated as 
a county government) with respect to that portion of the State's 
geographic area. In any State in which any county area is not 
governed by a county government but contains two or more units 
of local government, such units shall not be treated as county 
governments and the geographic areas of such units shall not be 
treated as county areas. 
(3) TOWNSHIPS.—The term "township" includes equivalent 
subdivisions of government having different designations (such 
as "towais"), and shall be determined on the basis of the same 
principles as are used by the Bureau of the Census for general 
statistical purposes. 
(4) UNITS OF LOCAL GOVERNMENT LOCATED IN L
U
V
R
G
I
<
:
R ENTITY.—A 
unit of local government shall be treated as located in a larger 
entity if part or all of its geographic area is located in the larger 
entity. 
(5) ONLY PART or UNIT L
O
C
A
T
E
D IN L
A
R
G
E
R ENTITY.—If ouly part 
of a unit of local government is located in a larger entity, such 
part, shall be treated for allocation purposes as a separate unit of 
PUBLIC LAW 92-512-OCT. 20, 1972 
[86 STAT. 
local govei'iimeiit, and all computations shall, except as otherwise 
provided in regulations, be made on the basis of the ratio which 
the estimated population of such p a i t bears to the population of 
the entirety of such unit. 
(6) BOUNDARY CHANGES, GOVERNMENTAL REORGANIZATION, ETC.— 
If, by reason of boundary line changes, by i-eason of State statu-
tory or constitutional changes, by i-eason of annexations or other 
governmental i-eorganizations, or by i-eason of other circum-
i*. stances, the application of any provision of this section t o units of 
r, 
local government does not carry out the purposes of this subtitle, 
the application of such provision shall be made, under regulations 
prescribed by the Secretary, in a manner which is consistent with 
such pur-poses. 
SEC. 109. DEFINITIONS AND SPECIAL RULES FOR APPLICATION OF 
ALLOCATION FORMULAS. 
(a) I N GENERAL.—^For purposes of this subtitle— 
(1) POPULATION.—Population shall be determined on the same 
basis as resident population is determined by the Bureau of the 
• ii 
(Vnsus for general statistical purposes. 
1 
(2) URBANIZED 
POPULATION.—Urbanized 
population 
means 
the population of any ar'ea consisting of a central city or- cities of 
-I 
50,000 or more inhabitants (and of the surrounding dlosely settled 
teri-itoiy for such city or cities) which is treated a s an urbanized 
ar-ea by the Bureau of the Census for general statistical purposes. 
(8) INCOME.—Income means total money income received from 
all sources, as determined by the Bureau of the Census for general 
s statistical purposes. 
s 
(4) PERSONAL INCOME.—Personal income means the income of 
i? 
individuals, as determined by the Department of Commerce for 
national income accounts purposes. 
(5) 
DATES 
FOR DETERMINING 
ALLOCATIONS 
AND 
ENTITLE-
MENTS.—Except as provided in regulations, the determination of 
allocations and entitlements for any entitlement period shall be 
F^ 
made as of the first day of the third month immediately pr-eceding 
the beginning of such period. 
(6) 
INTERGOVERNMENTAL 
TRANSFERS.—The 
intergovernmental 
ti-ansf ers of revenue to any government ar-e t h e amounts of revenue 
received by that government from other goveriiments as a share in 
Hnancing (or as i*eimbur-sement for) the per-formance of govern-
mental functions, as determined by the Bureau of the Census for 
general statistical pur-poses. 
(7) 
DATA USED; UNIFORMITY OF DATA.— 
( A ) 
GENERAL RULE.—Except as provided in subparagraph 
3ii 
( B ) , the data used shall be the most recently available data 
j^rovided by the Bureau of the (Vnsus or- the Depaitrnent of 
\* 
Commerce, as the case may be. 
• ' 
(B) U S E OF ESTIMATES, ETC.—Wher-e the Secretary detei--
mines that the data referred to in subpar-agr-aph ( A ) ai-e not 
i Si I. 
currvnt enough or ar-e not compr-ehensive enough to provide 
for equitable allocations, he may use such additional data 
^ 
(including data based on estimates) as may be provided for 
in regulations. 
(b) 
INCOME TAX A M O I N T OF STATES.—For- pur[X)ses of this sub-
title— 
(1) I N GENERAL.—The income tax amount of any State for any 
entitlement period is the income tax amount of such State as deter-
'i 
mined under paragraphs (-2) and (3). 
-^ 
'«nr • n.j 
86 STAT. ] 
PUBLIC LAW 92-512-OCT. 20, 1972 
929 
(2) INCOME TAX AMOUNT.—The income tax amount of any State 
for any entitlement period is 15 percent of the net amount collected 
from the State individual income tax of such State during 1972 or 
(if later) during the last calendar year ending before the begin-
ning of such entitlement period. 
,. ^ 
(3) CEILING AND FLOOR.—The income tax amount of any State 
for any entitlement period— 
(A) shall not exceed 6 percent, and 
(B) shall not be less than 1 percent, 
of the Federal individual income tax liabilities attributed to such 
State for taxable years ending during 1971 or (if later) during 
the last calendar year ending before the beginning of such entitle-
ment period. 
(4) STATE INDIVIDUAL INCOME TAX.—The individual income tax 
of any State is the tax imposed upon the income of individuals by 
such State and described as a State income tax under section 
164(a) (3) of the Internal Revenue Code of 1954. 
78 stau 40. 
(5) FEDERAL INDIVIDUAL INCOME TAX LIABILITIES.—Federal indi-
vidual income tax liabilities attributed to any State for- any period 
shall be determined on the same basis as such liabilities are deter-
mined for such period by the Internal Revenue Service for general 
statistical purposes. 
(c) GENERAL TAX EFFORT or STATES.— 
(1) I N GENERAL.—For purposes of this Subtitle— 
(A) GENERAL TAX EFFORT FACTOR.—The general tax effort 
factor of any State for any entitlement period is (i) the net 
• s'-- 
amount collected from the State and local taxes of such State 
• 
during the most recent reporting year, divided by (ii) the 
• 
' 
aggregate personal income (as defined in paragraph (4) of 
' 
subsection (a)) attributed to such State for the same period. 
(B) GENEILVL TAX EFFORT AMOUNT.—The general tax eifort 
'- 
'•- 
-, 
amount of any State for any entitlement period is the amount 
determined by multiplying— 
(i) the net amount collected from the State and local 
taxes of such State during the most recent reporting year, 
by 
^ * 
(ii) the general tax eifort factor of that State. 
(2) 
S T A T E A N D LOCAL TAXES.— 
(A) TAXES TAKEN INTO ACCOUNT.—The State and local 
taxes taken into account under paragraph (1) are the com-
pulsory contributions exacted by the State (or by any unit of 
' '' 
local government or other political subdivision of the State) 
for public purposes (other than employee and employer 
assessments and contributions to finance retirement and social 
• 
insurance systems, and other than special assessments for 
capital outlay), as such contributions are determined by the 
Bureau of the Census for general statistical purposes. 
(B) MOST RECENT REPORTING YEAR.—The most recent 
reporting year vt^ith respect to any entitlement period consists 
iv - 
of the years taken into account by the Bureau of the Census 
in its most recent general determination of State and local 
taxes made before the close of such period. 
(d) (TENERAL TAX EFFORT FACTOR OF COUNTY AREA.—For- purposes 
of this subtitle, the general tax effort fact.or of any county area for* 
any entitlement period is— 
(1) the adjusted taxes of the coimty government plus the ad-
DSO 
PUBLIC LAW 92-512-OCT. 20, 1972 
[86 STAT. 
justed taxes of each other unit of local government within that 
county area, divided by 
(2) the aggregate income (as defined in paragraph (3) of 
subsection (a)) attributed to that county area. 
(e) 
GENERAL TAX EFFORT FACTOR OF U N I T OF IJDCAL GOVERN-
MENT.—For purposes of this subtitle— 
(1) I N GENERAL.—^The general tax effort factor of any unit of 
local government for any entitlement period is— 
(A) the adjusted taxes of that unit of local government, 
divided by 
(B) the aggregate income (as defined in paragraph (3) of 
- y
i 
subsection (a)) attributed to that unit of local government. 
(2) ADJUSTED TAXES.— 
(A) I N GENERAL.—The adjusted taxes of any unit of local 
government are— 
(i) the compulsory contributions exacted by such 
; . •'- 
government for public purposes (other than employee 
and employer assessments and contributions to finance 
retirement and social insurance systems, and other than 
special assessments for capital outlay), as such contri-
te,.,;,,_, 
butions are determined by the Bureau of the Census for 
general statistical purposes, 
(ii) adjusted (under regulations prescribed by the 
r 
Secretary) by excluding an amount equal to that portion 
;r ,jt 
of such compulsory contributions which is properly 
allocable to expenses for education. 
(B) CERTAIN SALES TAXES COLLECTED BY COUNTIES.—In any 
case where— 
(i) a county government exacts sales taxes within the 
geographic area of a unit of local government and 
transfers part or all of such taxes to svich unit without 
specifying the purposes for which such unit may spend 
the revenues, and 
, 
(ii) the Governor of the State notifies the Secretary 
that the requirements of this subparagraph have been 
met with respect to such taxes, 
then the taxes so transferred shall be treated as the taxes of 
the unit of local government (and not the taxes of the 
county government). 
(f) RELATIVE INCOME FACTOR.—For purposes of this subtitle, the 
relative income factor is a fraction— 
(1) in the case of a State, the numerator of which is the per 
capita income of the United States and the denominator of which 
is the per capita income of that State; 
(2) in the case of a county area, the numerator of which is the 
. J, per capita income of the State in which it is located and the denom-
inator of which is the per capita income of that county area; and 
(3) in the case of a unit of local government, the numerator of 
which is the per capita income of the county area in which it is 
located and the denominator of which is the per capita income of 
the geographic area of that unit of local government. 
For purposes of this subsection, per capita income shall be determined 
on the basis of income as defined in paragraph (3) of subsection (a). 
(g) ALLOCATION RULES FOR FIVE FACTOR FORMULA.—For purposes 
of section 106(b)(3)— 
(1) 
ALLOCATION ON BASIS or POPULATION.—Any allocation 
among the States on the basis of population shall be made by 
86 STAT.] 
PUBLIC LAW 92-51 2 - O C T . 20, 1972 
931 
allocating to each State an amount which bears the same ratio to 
the total amount to be allocated as the population of such State 
bears to the population of all the States. 
(2) 
ALLOCATION ON BASIS OF URBANIZED POPULATION.—^Any 
allocation among the States on the basis of urbanized population 
shall be made by allocating to each State an amount which bears 
the same ratio to the total amount to be allocated as the urbanized 
population of such State bears to the urbanized population of all 
the States. 
(3) 
ALLOCATION ON BASIS or POPULATION INVERSELY WEIGHTED 
FOR PER CAPITA INCOME.—^Auy allocation among the States on 
the basis of population inversely weighted for per capita income 
shall be made by allocating to each State an amount which bears 
the same ratio to the total amount to be allocated as— 
(A) the population of such State, multiplied by a fraction 
the numerator of which is the per capita income of all the 
States and the denominator of which is the per capita income 
of such State, bears to 
• 
(B) the sum of the products determined under subpara-
graph (A) for all the States. 
(4) 
ALLOCATION ON BASIS OF INCOME TAX COLLECTIONS.—^Any 
allocation among the States on the basis of income tax collections 
shall be made by allocating to each State an amount which bears 
the same ratio to the total amount to be allocated as the income tax 
amount of such State bears to the sum of the income tax amounts 
of all the States. 
(5) ALLOCATION ON BASIS OF GENERAL TAX EFFORT.—Any allo-
cation among the States on the basis of general tax effort shall be 
made by allocating to each State an amount which bears the same 
ratio to the total amount to be allocated as the general tax effort 
amount of such State bears to the sum of the general tax effort 
amounts of all the States. 
Subtitle B—Administrative Provisions 
SEC. 121. REPORTS ON USE OF FUNDS; PUBLICATION. 
(a) REPORTS ON USE OF FUNDS.—Each State government and unit 
of local government which receives funds under subtitle A shall, after 
the close of each entitlement period, submit a report to the Secretary 
setting forth the amounts and purposes for which funds received dur-
ing such period have been spent or obligated. Such reports shall be in 
such form and detail and shall be submitted at such time as the 
Secretary may prescribe. 
(b) REPORTS ON PLANNED USE OF FUNDS.—Each State government 
and unit of local government which expects to receive funds under 
subtitle A for any entitlement period beginning on or after January 1, 
1973, shall submit a report to the Secretary setting forth the amounts 
and purposes for which it plans to spend or obligate the funds which 
it expects to receive during such period. Such reports shall be in such 
form and detail as the Secretary may prescribe and shall be submitted 
at such time before the beginning of the entitlement period as the 
Secretary may prescribe. 
(c) PUBLICATION AND PUBLICITY OF REPORTS.—Each State govern-
ment and unit of local government shall have a copy of each report 
submitted by it under siibsection (a) or (b) published in a newspaper 
which is published within the State and has general circulation within 
the geographic area of that government. Each State government and 
unit of local government shall advise the news media of the publica-
tion of its reports pursuant to this subsection. 
PUBLIC LAW 92-512-OCT. 20, 1972 
[86 STAT. 
SEC. 122. NONDISCRIMINATION PROVISION. 
(a) Ix GENERAL.—No person in the United States shall on the 
ground of race, color, national origin, or sex be excluded from partici-
pation in, be denied the benefits of, or be subjected to discrimination 
under any program or activity funded in whole or in part with funds 
made available under subtitle A. 
(b) AUTHORITY OF SECRETARY.—^^Vhenever the Secretary determines 
that a State government or unit of local government has failed to 
comply with subsection (a) or an applicable regulation, he shall notify 
the Governor of the State (or, in the case of a unit of local government, 
the Governor of the State in which such unit is located) of the non-
compliance and shall request the Governor to secure compliance. If 
within a reasonable period of time the Governor fails or refuses to 
secure compliance, the Secretary is authorized (1) to refer the matter 
to the Attorney General with a recommendation that an appropriate 
civil action be instituted; (2) to exercise the powers and functions 
78 Stat. 252. 
provided by title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) ; 
or (8) to take such other action as may be provided by law. 
(c) AUTHORITY OF ATTORNEY GENERAL.—^\Vhen a matter is refeiTed 
to the Attorney General pursuant to subsection (b), or whenever he has 
reason to believe that a State government or imit of local government is 
engaged in a pattern or practice in violation of the provisions cf this 
section, the Attorney (xeneral may bring a civil action in any appro-
priate United States district court for such relief as may be appro-
priate, including injunctive relief. 
;;•>' 
, 
SEC. 123. MISCELLANEOUS PROVISIONS. 
(a) ASSURANCES TO THE SECRETARY.—In order to qualify for any 
payment under subtitle A for any entitlement period beginning on or 
after January 1,1973, a State government or unit of local government 
must establish (in accordance with regulations prescribed by the Sec-
retary, and, with respect to a unit of local government, after an 
opportunity for review and comment by the Governor of the State in 
which such unit is located) to the satisfaction of the Secretary that— 
(1) it will establish a trust fund in which it will deposit all pay-
ments it receives under subtitle A; 
(2) it will use amounts in such trust fund (including any 
interest earned thereon while in such trust fund) during such rea-
sonable period or periods as may be provided in such regulations; 
' 
(3) in the case of a unit of local government, it will use amounts 
" 
in such trust fund (including any interest earned thereon while in 
^ 
such trust fund) only for priority expenditures (as defined in 
'" 
section 103(a)), and will pay over to the Secretary (for deposit 
in the general fund of the Treasury) an amount equal to 110 per-
cent of any amomit expended out of such trust fund in violation of 
this paragraph, unless such amount is promptly repaid to such 
trust fund (or the violation is otherwise corrected) after notice 
and opportunity for corrective action; 
(4) it will provide for the expenditure of amounts received 
under subtitle A only in accordance with the laws and procedures 
applicable to the expenditure of its own revenues; 
(.5) it will— 
(A) use fiscal, accounting, and audit procedures which 
conform to guidelines established therefor by the Secretary 
(after consultation with the Comptroller General of the 
United States), 
(B) provide to the Secretary (and to the Comptroller Gen-
eral of the United States), on reasonable notice, access to, and 
63 Stat. 108. 
86 STAT.] 
PUBLIC LAW 92-51 2 - O C T . 20, 1972 
933 
the right to examine, such books, documents, paper's, or rec-
ords as the Secretary may reasonably require for purposes of 
reviewing compliance with this title (or, in the case of the 
Comptroller General, as the Comptroller General may reason-
ably require for purposes of reviewing compliance and oper-
ations under subsection (c)(2)), and 
(C) make such annual and interim reports (other than 
Reports, 
reports required by section 121) to the Secretary as he may 
reasonably require; 
(6) all laborers and mechanics employed by contractor's or sub-
contractor's in the performance of work on any construction proj-
ect, 25 percent or more of the costs of which project are paid out 
of its trust fund established under paragraph (1), will be paid 
wages at rates not less than those prevailing on similar construc-
tion in the locality as determined by the Secretary of Labor in 
accordance with the Davis-Bacon Act, as amended (40 U.S.C. 
276a-276a-5), and that with respect to the labor standards speci- 
"^^ ^'^*- ^°^^-
tied in this paragraph the Secretary of Labor shall act in accord-
ance with Reorganization Plan Numbered 14 of 1950 (15 F.R. 
8176; 64 Stat. 1267) and section 2 of the Act of Jime 18, 1984, 
^ use app. 
as amended (40 U.S.C. 276c) ; 
(7) individuals employed by it whose wages are paid in whole 
or in part out of its trust fund established under paragraph (1) 
. 
will be paid wages which ar-e not lower than the prevailing rates 
' 
of pay for persons employed in similar public occupations by the 
same employer; and 
(8) in the case of a unit of local government as defined in the 
second sentence of section 108(d) (1) (relating to governments of 
Indian tribes and Alaskan native villages), it will expend funds 
received by it under subtitle A for the benefit of members of the 
tribe or village residing in the county area from the allocation of 
which funds are allocated to it under section 108(b) (4). 
Paragraph (7) shall apply with respect to employees in any category 
only if 25 percent or more of the wages of all employees of the State 
government or unit of local government in such category are paid 
from the trust fund established by it under paragraph (1). 
(b) WITHHOLDING or PAYMENTS.—If the Secretary determines that 
a State government or unit of local government has failed to comply 
substantially with any provision of subsection (a) or any regulations 
prescribed thereunder, after giving reasonable notice and opportunity 
for a hearing to the Governor of the State or the chief executive officer 
of the unit of local government, he shall notify the State government 
or unit of local government that if it fails to take corrective action 
within 60 days from the date of receipt of such notification further 
payments to it will be withheld for the remainder of the entitlement 
period and for any subsequent entitlement period until such time as 
the Secretary is satisfied that appropriate corrective action has been 
taken and that there will no longer be any failure to comply. Until he 
is satisfied, the Secretary shall make no further payments of such 
amounts. 
(c) ACCOUNTING, AUDITING, AND EVALUATION.— 
(1) I N GENERAL.—^The Secretary shall provide for such account-
ing and auditing procedures, evaluations, and reviews as may be 
necessary to insure that the expenditures of funds received under 
subtitle A by State governments and units of local government 
comply fully with the requirements of this title. The Secretary is 
authorized to accept an audit by a State of such expenditures of a 
9m 
PUBLIC LAW 92-512-OCT. 20, 1972 
[86 STAT. 
State government or unit of local government if be deteriniiies that 
such audit and the audit procedures of that State are sufficiently 
reliable to enable him to carry out his duties under this title. 
(2) 
(COMPTROLLER (GENERAL SHALL REVIEW (X)MPL1A^•('E.—Tlu' 
Comptroller General of the I"fnited States shall make such reviews 
of the work as done by the Secretary, the State gOA-ernments, and 
:' -'v'''' 
the units of local government as may be necessary for the Con-
gress to evaluate compliance and operations under this title. 
Subtitle C—General Provisions 
SEC. 141. DEFINITIONS AND SPECIAL RULES. 
(a) SECRETARY.—For purposes of this title, the term "Secietary'' 
means the Secretary of the Treasury or his delegate. The term "Secre-
tary of the Treasury"' means the Secretary of the Treasury per-
sonally, not including any delegate. 
, 
: 
t 
(b) ENTITLEMENT PERIOD.—For purposes of this title, the teini 
''entitlement period" means— 
(1) The period beginning Januarv 1,1972, and ending June 30. 
- 
1972. 
(2) The period beginning July 1, 1972, and ending Decem-
; 
her 31,1972. 
(3) The period beginning Januarv 1,1973, and ending June 30. 
1973. 
(4) The one-vear periods beginning on July 1 of 1973,1974, and 
1975. 
(5) The period beginning July 1, 1976, and ending Decem-
ber 31,1976. 
(c) DISTRICT OF COLUMBIA.— 
(1) TREATMENT AS STATE AND LOCAL GOVERNMENT.—For pur-
poses of this title, the District of Columbia shall be treated both— 
(A) as a State (and any reference to the Governor of a 
State shall, in the case of the District of Columbia, be treated 
as a reference to the Commissioner of the District of 
Columbia), and 
(B) as a county area which has no units of local govern-
ment (other than itself) within its geographic area. 
(2) REDUCTION IN CASE or INCOME TAX ON NONRESIDENT iNDiviD-
lALS.—If there is hereafter enacted a law imposing a tax on 
income earned in the District of Columbia by individuals who are 
not residents of the District of Columbia, then the entitlement of 
the District of Columbia under subtitle A for any entitlement 
l)eriod shall be reduced by an amount equal to the net collections 
from such tax during such entitlement period attributable to 
individuals who are not residents of the District of Columbia. The 
[) receding sentence shall not apply if— 
(A) the District of Columbia and Maryland enter into an 
agreement under which each State agrees to impose a tax 
^ 
on income earned in that State by individuals who are resi-
dents of the other State, and the District of Columbia and 
Virginia enter into an agreement under which each State 
; 
agrees to impose a tax on income earned in that State by 
individuals who are residents of the other State, or 
^ 
(B) the Congress enacts a law directly imposing a tax on 
\ 
J 
income earned in the District of Columbia by individuals who 
are not residents of the District of Columbia. 
80 Stat. 381. 
5 u s e 551. 
86 STAT. ] 
PUBLIC LAW 92-512-OCT. 20, 1972 
935 
SEC. 142. REGULATIONS. 
(a) GENERAL RULE.—The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the provisions of this 
title. 
(b) ADMINISTRATIVE PROCEDURE ACT To APPLY.—The rulemaking 
provisions of subchapter I I of chapter 5 of title 5 of the United States 
Code shall apply to the regulations prescribed under this title for enti-
tlement periods beginning on or after January 1, 1973. 
SEC. 143. JUDICIAL REVIEW. 
(a) PETITIONS FOR REVIEW.—Any State which receives a notice of 
reduction in entitlement under section 107(b), and any State or unit 
of local government which receives a notice of withholding of pay-
ments under section 104(b) or 123(b), may, within 60 days after 
. • ^v' 
receiving such notice, file with the United States court of appeals for 
-•=; . 
the circuit in which such State or unit of local government is located 
a petition for review of the action of the Secretary. A copy of the peti-
tion shall forthwith be transmitted to the Secretary; a copy shall also 
forthwith be transmitted to the Attorney General. 
(b) RECORD.—The Secretary shall file in the court the record of the 
proceeding on which he based his action, as provided in section 2112 
of title 28, United States Code. No objection to the action of the ^Jl.H^^^^^V" 
Secretary shall be considered by the court unless such objection has 
been urged before the Secretary. 
(c) JURISDICTION OF COURT.—The court shall have jurisdiction to 
affirm or modify the action of the Secretary or to set it aside in whole 
or in part. The findings of fact by the Secretary, if supported by sub-
stantial evidence contained in the record, shall be conclusive. However, 
if any finding is not supported by substantial evidence contained in 
the record, the court may remand the case to the Secretary to take 
> 
further evidence, and the Secretary may thereupon make new or 
modified findings of fact and may modify his previous actions. He 
shall certify to the court the record of any further proceedings. Such 
new or modified findings of fact shall likewise be conclusive if sup-
ported by substantial evidence contained in the record. 
(d) REVIEW BY SUPREME COURT.—The judgment of the court shall 
be subject to review by the Supreme Court of the United States upon 
certiorari or certification, as provided in section 1254 of title 28, 
United States Code. 
62 stat. 928. 
SEC. 144. AUTHORITY TO REQUIRE INFORMATION ON INCOME TAX 
RETURNS. 
(a) GENERAL R U L E . — 
(1) INFORMATION WITH RESPECT TO PLACE OF RESIDENCE.—Sub-
part B of part I I of subchapter A of chapter 61 of the Internal 
Revenue Code of 1954 (relating to income tax returns) is amended 
by adding at the end thereof the following new section: 
"SEC. 6017A. PLACE OF RESIDENCE. 
"In the case of an individual, the information required on any 
return with respect to the taxes imposed by chapter 1 for any period 
^^ "^^ ^ • 
shall include information as to the State, county, municipality, and 
any other unit of local government in which the taxpayer (and any 
other individual with respect to whom an exemption is claimed on such 
return) resided on one or more dates (determined in the manner pro-
vided by regulations prescribed by the Secretary or his delegate) 
during such period," 
(2) CLERICAL AMENDMENT.—The table of sections for such 
subpart B is amended by adding at the end thereof the following: 
82-081 O - 73 - 62 
68A Stat. 731. 
26 u s e 6001. 
936 
PUBLIC LAW 92-512-OCT. 20, 1972 
[86 STAT. 
"Sec. 6017A. Place of residence." 
')fi8 
68A Stat. 828; 
55 Stat. 551. 
26 use 6651. 
26 use 6211. 
26 u s e 4940. 
(b) CIVIL PENALTY.— 
(1) I N GENERAL.—Subchapter B of chapter 68 of the Internal 
Revenue Code of 1954 is amended by adding at the end thereof 
the following new section: 
"SEC. 6687. FAILURE TO SUPPLY INFORMATION WITH RESPECT TO 
PLACE OF RESIDENCE. 
"(a) CIVIL PENALTY.—If any pereon fails to include on his return 
any information required under section 6017A with respect to his place 
of residence, he shall pay a penalty of $5 for each such failure, unless 
it is shown that such failure is due to reasonable cause. 
"(b) DEFICIENCY PROCEDURES NOT To APPLY.—Subchapter B of 
chapter 63 (relating to deficiency pi-ocedures for income, estat«^, gift, 
and chapter 42 taxes) shall not apply in respect of the assessment or 
collection of any penalty imposed by subsection (a).'' 
(2) CLERICAL AMENDMENT.—The table of sections for such sub-
chapter B is amended by adding at the end thereof the following: 
"Sec. 6687. Failure to supply information with respect to place of 
residence." 
Citation of 
title, 
26 use 6301. 
26 
use 8001, 
3401. 
26 
use 1. 
18 
use 1 etseq. 
TITLE II-^FEDERAL COLLECTION OF STATE INDIVID-
UAL INCOME TAXES 
SEC. 201. SHORT TITLE. 
This title may be cited as the "Federal-State Tax (Collection Act of 
1972". 
SEC. 202. COLLECTION PROVISIONS. 
(a) AMENDMENT OF CHAPTER 64.—Chapter 64 of the Internal Rev-
enue Code of 1954 (relating to collection) is amended by adding at 
the end thereof the following new subchapter: 
"Subchapter E—Collection of State Individual Income Taxes 
"Sec. 6361. General rules. 
.t 
•"Sec. 6362. Qualified State individual income taxes. 
"Sec. 6363. State agreements; other procedures. 
. 
"Sec. 6364. Begulations. 
'' '*' •"''•'['• 
" 
"Sec. 6365. Definitions and special rules. 
:' 
"SEC. 6361. GENERAL RULES. 
"(a) COLLECTION AND ADMINISTRATION.—In the case of any State 
which has in effect an agreement with the Secretary entered into under 
section 6363, the Secretary or his delegate shall collect and administer 
the qualified State individual income taxes of such State. All provisions 
of this subtitle, subtitle G, and chapter 24 relating to the collection and 
administration of the taxes imposed by chapter 1 on the incomes of 
individuals (and all civil and criminal sanctions provided by this 
subtitle or by title 18 of the United States Code with respect to such 
collection and administration) shall apply to the collection and admin-
istration of qualified State individual income taxes as if such taxes were 
imposed by chapter 1, except to the extent that their application is 
modified by the Secretary or his delegate by regulations necessary or 
appropriate to reflect the provisions of this subchapter, or to reflect 
differences in the taxes or differences in the situations in which liability 
for such taxes arises, 
"(b) CIVIL PROCEEDINGS.—Any person shall have, with respect to 
a qualified State individual income tax (including the current collec-
tion thereof), the same right to bring or contest a civil action and 
pbtain review thereof, in the same court or courts and subject to the 
26 u s e 3401. 
86 STAT. ] 
PUBLIC LAW 92-512-OCT. 20, 1972 
937 
same requirements and procedures, as he would have under chapter 76, 
26 uscr74oi^' 
and under title 28 of the United States Code, if the tax were imposed 
28 use i et s'eq. 
by section 1 (or were for the current collection of the tax imposed by 
section 1). To the extent that the preceding sentence provides judicial 
procedures (including review procedures) with respect to any matter, 
such procedures shall replace judicial procedures under State law, 
except that nothing in this subchapter shall be construed in any way 
to affect the right or power of a State court to pass on matters involv-
ing the constitution of that State. 
"(c) TRANSFERS T
O STATES.— 
" (1) PROMPT TRANSFERS.—Any amount collected under this sub-
chapter which is apportioned to a qualified State individual 
income tax shall be promptly transferred to the State on the basis 
of estimates by the Secretary or his delegate. In the case of 
amounts collected under chapter 24, the estimated amount due the 
State shall be transferred to the State not later than the close of 
the third business day after the amount is deposited in a Federal 
Reserve bank. In the case of amounts collected pursuant to a 
return, a declaration of estimated tax, an amendment of such a 
declaration, or otherwise, the estimated amount due the State shall 
be transferred to the State not later than the close of the 30th day 
after the amount is received by the Secretary or his delegate. 
" (2) ADJUSTMENTS.—Not less often than once each fiscal year 
the difference between collections (adjusted for credits and 
refunds) made under this subchapter during the preceding fiscal 
year and the transfers to the States made on account of estimates 
of such collections shall be determined, and such difference shall 
be a charge against, or an addition to, the amounts otherwise 
payable. 
"(d) SPECIAL RULES.— 
" (1) UNITED STATES TO REPRESENT STATE INTEREST.— 
"(A) GENERAL RULE.—In all administrative proceedings, 
and in all judicial proceedings (whether civil or criminal), 
relating to the administration and collection of a State quali-
, 
fied 
individual income tax the interests of the State impos-
ing such tax shall be represented by the United States in the 
same manner in which the interests of the United States are 
{ 
represented in corresponding proceedings involving the taxes 
imposed by chapter 1. 
"(B) EXCEPTIONS.—Subparagraph (A) shall not apply 
to— 
"(i) proceedings in a State court involving the con-
stitution of that State, and 
"(ii) proceedings involving the relationship between 
the United States and the State. 
"(2) ALLOCATION OF O\':ERPAYMENTS AND UNDERPAYMENTS.—If 
the combined amount collected in respect of a qualified State 
individual income tax for any period and the taxes imposed by 
chapter 1 for such period with respect to the income of any 
individual is greater or less than the combined amount required to 
be paid for such period, the collected amount shall be divided 
between the accounts for such taxes on the basis of the respective 
amounts required to be paid. 
"(3) FINALITY OF ADMINISTRATIVE DETERMINATIONS.—Adminis-
trative determinations of the Secretary or his delegate as to tax 
liabilities of, or refunds owing to, individuals with respect to 
qualified State individual income taxes shall not be reviewed by 
or enforced by any officer or employee of any State or political 
subdivision of a State. 
PUBLIC LAW 92-512-OCT. 20, 1972 
[86 STAT. 
: 
"SEC. 6362. QUALIFIED STATE INDIVIDUAL INCOME TAXES. 
"(a) QUALIFIED STATE INDIVIDUAL INCOME TAXES DEFINED.—For 
purposes of this subchapter— 
" (1) I N GENERAL.—The term 'qualified State individual income 
tax' means— 
"(A) a qualified resident tax, and 
"(B) a qualified nonresident tax. 
"(2) QUALIFIED RESIDENT TAX.—The tei-m 'qualified resident 
tax' means a tax imposed by a State on the income of individuals 
who are residents of such State which is either— 
"(A,) a tax based on taxable income which meets the 
requirements of subsection (b), or 
"(B) a tax which is a percentage of the Federal tax which 
, 
,r:! ^- 
meets the requirements of subsection (c), 
and which, in addition, meets the requirements of subsections (e) 
and (f). 
"(3) QUALIFIED NONRESIDENT TAX.—The term 'qualified non-
resident tax' means a tax which is imposed by a State on the wage 
and other business income of individuals who are not residents 
of such State and which meets the requirements of subsections 
( d ) , ( e ) , a n d ( f ) . 
"(b) QUALIFIED RESIDENT TAX BASED ON TAXABIE INCOME.— 
" (1) I N GENERAL.—A tax meets the requirements of this subsec-
tion only if it is imposed on an amount equal to the individual's 
^f'^To^*;,^*' 
taxable income (as defined in section 63) for the taxable year, 
26 use 63. 
T 
, 1 
^ 
' 
»' 
' 
adjusted— 
"(A) by subtracting an amount equal to the amount of his 
interest on obligations of the United States which was 
included in his gross income for the year, 
"(B) by adding an amount equal to his net State income 
tax deduction for the year, and 
"(C) by adding an amount equal to his net tax-exempt 
income for the year. 
"(2) PERMITTED ADJUSTMENTS.—A tax which otherwise meets 
the requirements of paragraph (1) shall not be deemed to fail to 
meet such requirements solely because it provides for one or more 
of the following adjustments: 
"(A) There is imposed a tax on the amount taxed under 
J
B
3 Stat.^5^80; 
scctiou 56 (relating to the minimum tax for tax preferences). 
"(B) A credit determined under rules prescribed by the 
Secretary or his delegate is allowed against such tax for 
income tax paid to another State or a political subdivision 
thereof. 
"(3) NET STATE INCOME TAX DEDUCTION.—For purposes of this 
subsection and subsection (c), the term 'net State income tax 
deduction' means the excess (if any) of (A) the amount 
deducted from income under section 164(a) (3) as taxes paid to a 
State or a political subdivision thereof, over (B) amounts 
included in income as recoveries of prior income taxes paid to a 
State or a political subdivision thereof which had been deducted 
under section 164(a)(3). 
"(4) NET TAX-EXEMPT INCOME.—For purposes of this subsec-
tion and subsection (c), the term 'net tax-exempt income' means 
the excess (if any) of— 
"(A) the interest on obligations described in section 103 
(a) (1) other than obligations of the State and its political 
subdivisions, and 
85 Stat. 558. 
78 Stat. 40. 
86 STAT.] 
PUBLIC LAW 92-51 2 - O C T . 20, 1972 
939 
"(B) the interest on obligations described in such sec-
tion, of the State and its political subdivision which under 
the law of the State is subject to the individual income tax 
imposed by the State, over 
the sum of the amount of deductions allocable to such interest 
which is disallowed by application of section 265, and the amount yg^stlt^se*. ^^' 
of the proper adjustment to basis allocable to such obligations 
26 use 256. 
which is required to be made for the taxable year under section 
1016(a) (5) or (6). 
"(c) 
QUALIFIED KESIDENT TAX W H I C H Is A PERCENTAGE OF THE 
FEDERAL TAX.— 
"(1) I N GENERAL.—A tax meets the requirements of this sub-
section only if it is imposed as a specified percentage of the excess 
of the taxes imposed by chapter 1 over the sum of the credits allow- 
^^ '^^^ ' • 
able under part IV of subchapter A of chapter 1 (other than the 
^e use 31. 
credits allowable by sections 31 and 39). 
"(2) REQUIRED ADJUSTMENT.—^A tax meets the requirements of 
this subsection only if the liability for tax is decreased by the 
decrease in such liaoility which would result from excluding from 
gross income an amount equal to the interest on obligations of 
the United States which was included in gross income for such 
year. 
"(3) PERMITTED ADJUSTMENTS.—A tax which otherwise meets 
the requirements of paragraphs (1) and (2) shall not be deemed 
to fail to meet such requirements solely because it provides for 
both of the following adjustments: 
"(A) the liability for tax is increased by the increase in 
such liability which would result from including as an item 
of gross income an amount equal to the net tax-exempt 
income for the year, and 
"(B) the liability for tax is increased by the increase in 
such liability which would result from including as an item 
of gross income an amount equal to the net State income tax 
deduction for the year. 
"(4) FURTHER PERMITTED ADJUSTMENT.—^A tax which other-
wise meets the requirements of paragraphs (1) and (2) shall 
not be deemed to fail to meet such requirements solely because a 
credit determined under rules prescribed by the Secretary or his 
delegate is allowed against such tax for income tax paid to an-
other State or a political subdivision thereof. 
"(d) 
QUALIFIED NONRESIDENT TAX.— 
"(1) I N GENERAL.—A tax imposed by a State meets the require-
ments of this subsection only if it has the following character-
istics— 
"(A) such tax is imposed by the State on the wage and 
other business income of individuals who are not residents 
of such State, 
"(B) such tax applies only with respect to wage and other 
business income derived from sources within such State, 
"(C) such tax applies only if 25 percent or more of the 
individual's wage and other business income for the taxable 
year is derived from sources within such State, 
"(D) the amount of such tax imposed with respect to any 
individual who is not a resident does not exceed the amount 
of tax for which he would be liable under such State's quali-
fied resident tax if he were a resident of such State and if 
his taxable income were an amount equal to the excess of— 
" (i) the amount of his wage and other business income 
derived from sources within such State, over 
940 
PUBLIC LAW 92-512-OCT. 20, 1972 
[86 STAT. 
: 
"(ii) that portion of the nonbusiness deductions taken 
into account for purposes of the State's qualified resident 
, 
'-zs:'-, . 
tax which bears the same ratio to the amount of such 
deductions as the income referred to in clause (i) bears 
to his adjusted gross income, and 
' t^^-B^y'^- 
"(E) the State has in effect for the same period a qualified 
, Jt 'iz-j r. 
resident tax. 
"(2) WAGE AND OTHER BUSINESS INCOME.—The term 'wage and 
other business income' means— 
^e'use * 340^1* 
" ( ^ ) wages, as defined in section 3401 (a), 
"(B) net earnings from self-employment 
(within the 
si^lfau^Vif"' 
meaning of section 1402 (a)), and 
"(C) the distributive share of income of any trade or busi-
ness carried on by a trust, estate, or electing small business 
72 Stat. 1650. 
corporatiou (within the meaning of section 1371(a)) to the 
extent such share (i) is includible in the gross income of the 
'fr; 
individual for the taxable year, and (ii) would constitute 
net earnings from self-employment (within the meaning of 
section 1402(a)) if such trade or business were carried on 
by a partnership. 
"(e) REQUIREMENTS RELATING TO RESIDENCE.—A tax imposed by a 
State meets the requirements of this subsection only if for purposes 
of such tax— 
"(1) RESIDENT INDIVIDUAL.—An individual (other than a trust 
'
T
f or estate) is treated as a resident of such State with respect to a 
taxable year only if— 
.fi 
"(A) his principal place of residence has been within such 
State for a period of at least 135 consecutive days and at 
least 30 days of such period are in such taxable year, or 
" (B) in the case of a citizen or resident of the United States 
• u ' 
who is not a resident (determined in the manner provided in 
subparagraph (A)) of any State with respect to such tax-
able year, such individual is domiciled in such State for at 
least 30 days during such taxable year. 
Nothing in this subchapter shall be construed to require or author-
ize the treatment of a Senator, Representative, Delegate, or Resi-
dent Commissioner as a resident of a State other than the State 
which he represents in Congress. 
-ft 
"(2) ESTATE.—An estate of an individual is treated as a resi-
dent of the last State of which such individual was a resident 
(within the meaning of paragraph (1)) before his death, 
r 
"(3) TRUSTS.— 
"(A) 
TESTAMENTARY TRUST.—^A trust with respect to 
which a deceased individual is the principal contributor by 
j , ' 
reason of property passing on his death is treated as a resi-
f...i' J i dent of the last State of which such individual was a resident 
(within the meaning of paragraph (1)) before his death. 
'i^ 
"(B) NONTESTAMENTARY TRUST.—A trust (other than a 
trust described in subparagraph (A)) is treated as a resident 
'?•'' 
of such State with respect to a taxable year only if the prin-
:Ux>:.y 
cipal contributor to the trust, during the 3-year period ending 
on the date of the creation of the trust, resided in the State 
for an aggregate number of days longer than the aggregate 
number of days he resided in any other State. 
"(C) SPECIAL RULES.—For purposes of this paragraph— 
, 
" 
" (i) If on any day before the close of the taxable year 
- ; • 
an existing trust received assets having a value greater 
86 STAT. ] 
PUBLIC LAW 92-512-OCT. 20, 1972 
than the aggregate value of all assets theretofore con-
tributed to the trust, such trust shall be treated as created 
on such day. For purposes of this subparagraph, the 
value of any asset taken into account shall be its fair 
market value on the day it is contributed to the trust. 
!";:-•: f-j. • 
" (ii) The principal contributor to the trust is the indi-
vidual who contributed more (in value) of the assets 
contributed on the date of the creation of the trust (de-
termined after applying clause (i)) than any other 
individual. 
'' 
-' ' 
"(iii) If 'the foregoing rules would create more than 
-•'i =
, • 
'. one State of residence (or no State of residence) for a 
trust, such trust shall be treated as a resident of the 
';'' 
' • 
State determined under similar principles prescribed by 
the Secretary or his delegate by regulations. 
'' (4) LIABILITY FOR TAX ON CHANGE OF RESIDENCE.—With respect 
. to a taxable year, in the case of an individual (other than an 
individual who comes into being or ceases to exist) who becomes 
a resident, or ceases to be a resident, of the State, his liability to 
such State for the resident tax is determined by multiplying the 
amount which would be his liability for tax (after the nonrefund-
able credits allowed against such tax) if he had been a resident 
of such State for the entire taxable year by a fraction the 
numerator of which is the number of days he was a resident of 
such State and the denominator of which is the total number of 
days in the taxable year. In the case of an individual who is 
treated as a resident of a State with respect to a taxable year by 
reason of paragraph (1)(B), the preceding sentence shall be 
applied by substituting days of domicile for days of residence. 
"(5) CURRENT COLLECTION OF TAX.—In applying chapter 24 
69 Stat. 616. 
26 u s e 3401. 
(relating to witholding) and section 6015 and other provisions 
68A stat. 737 
85 Stat. 517. 
relating to declarations of estimated income (and amendments 
thereto) — 
"(A) in the case of a resident tax, an individual is treated 
as subject to the tax if he reasonably expects to reside in the 
State for 30 days or more or if such individual is a resident of 
the State (within the meaning of paragraph (1), (2), or 
(3)), and 
"(B) in the case of a nonresident tax, an individual is 
treated as subject to the tax if he reasonably expects to receive 
wage and other business income (within the meaning of sub-
section (d) (2)) for 30 days or more during the taxable year. 
^ ,„ , ^ 
''(f) ADDITIONAL EEQIJIREMENTS.—A tax imposed by a State shall 
^ViV")? 
me^t the requirements of this subsection only if— 
"(1) STATE AGREEMENT MUST BE IN EFFECT FOR PERIOD CON-
CERNED.—A State agreement entered into under section 6363 is 
^°®'' P- ^'^^• 
in effect with respect to such tax for the taxable period in question. 
"(2) STATE LAWS MUST CONTAIN CERTAIN PROVISIONS.—Under 
the laws of such State— 
"(A) the provisions of this subchapter (and of the regu-
lations prescribed thereunder) as in effect from time to time 
.Q 
are made applicable for the period for which the State 
agreement is in effect, and 
"(B) any change made by the State in the tax imposed 
by the State will not apply to taxable years beginning in 
any calendar year for which the State agreement is in effect 
unless such change is enacted before NoA^ember 1 of such 
;. 
calendar vear. 
942 
; 
PUBLIC L
A
W 92-512~OCT. 20, 1972 
[86 STAT. 
"(3) 
STATE LAWS TAXING INCOME OF INDIVIDUALS CAN ONLY BE 
OF CERTAIN KINDS.—The State does not impose any tax on the 
income of individuals other than— 
"(A) a qualified resident tax, 
"^B) a qualified nonresident tax, and 
"(C) a separate tax on income which is not wage and 
other business income and which is received or accrued by 
individuals who are domiciled in the State but who are 
not residents of the State within the meaning of subsection 
^ (e)(1). 
^ " (4) TAXABLE YEARS MUST COINCIDE.—The taxable years of 
individuals under such tax coincide with taxable years for pur-
68A Stat. 3. 
poses of the taxes imposed by chapter 1. 
^^ "^^ ^
* 
"(5) MARRIED INDIVIDUALS.—A married individual (within the 
83 Stat. 677. 
meaninff of section 143)— 
26 use 143. 
"(A) who files a joint return for purposes of the taxes 
imposed by chapter 1 shall not file a separate return for 
purposes ol such State tax, and 
"(B) who files a separate return for purposes of the taxes 
imposed by chapter 1, shall not file a joint return for purposes 
of such State tax. 
" (6) No DOUBLE JEOPARDY UNDER STATE LAW.—The laws of such 
State do not provide criminal or civil sanctions for an act (or 
omission to act) with respect to a qualified resident tax or qualified 
nonresident tax other than the criminal or civil sanctions to which 
Ante, p. 936. 
^^ individual is subjected by reason of section 6361. 
"(7) 
PARTNERSHIPS, TRUSTS, SUBCHAPTER S CORPORATIONS, AND 
OTHER CONDUIT ENTITIES.—^Undcr the State law the tax treat-
ment of— 
"(A) partnerships and partners, 
"(B) trusts and their beneficiaries, 
. 
f 
"(C) estates and their beneficiaries, 
"(D) electing small business corporations (within the 
72 Stat. 1650. 
meaning of section 1371(a)) and their shareholders, and 
"(E) any other entity and the individuals having bene-
ficial interests therein, to the extent that such entity is treated 
as a conduit for purposes of the taxes imposed by chapter 1, 
shall correspond to the tax treatment provided therefor in the 
case of the taxes imposed by chapter 1. 
"(8) MEMBERS OF ARMED FORCES.—The relief provided to any 
member of the Armed Forces of the United States by section 514 
of the Soldiers' and Sailors' Civil Kelief Act (50 U.S.C. App. 
,^58 Stat. 722; 
gg^ 574) jg j ^ no way diminished. 
76 Stat. 768. 
,, ,^^ '.^ir 
(9) WITHHOLDING ON COMPENSATION OF EMPLOYEES OF RAIL-
ROADS, MOTOR CARRIERS, AIRLINES, AND WATER CARRIERS. 
There is 
no contravention of the provisions of section 26, 226A, or 324 of 
49 use* 26a ^' 
^^^ Interstate Commerce Act or of section 1112 of the Federal 
325a, 922b. ^' 
Aviatiou Act of 1958 with respect to the withholding of compensa-
49 use 1512. 
tion to which such sections apply for purposes of the nonresident 
tax. 
"SEC. 6363. STATE AGREEMENTS; OTHER PROCEDURES. 
"(a) STATE AGREEMENT.—If a State elects to enter into an agree-
ment with the United States to have its individual income taxes 
collected and administered as provided in this subchapter, it shall 
file notice of such election in such manner and with such supporting 
information as the Secretary or his delegate may prescribe by regula-
tions. The Secretary shall enter into an agreement with such State 
unless the Secretary notifies the Goyemor of the State within 90 days 
86 STAT.] 
PUBLIC LAW92-512-OCT. 20, 1972 
-943 
after tlie date of the filing of the notice of the election that tlie State 
does not have a qualified State individual income tax (deteimined 
without regard to section ()8Hi2(f) (1)). The provisions of this sub- 
^"'e, p. 938. 
chapter shall apply on and after the date (not earlier than the fii-st 
.fanuary 1 which is more than H months after- the date of the notice) 
specified for this purpose in the agreement. 
"(b) 
WITHDRAWAL.— 
"(1) B Y NOTIFK ATION.—If a State wishes to withdraw from 
the agreement, it shall notify the Secretary oi- his delegate of its 
intention to withdraw in such manner as the Secretary or his 
delegate may prescribe by regulations. The provisions of this 
subchapter (other than this section) shall not apply on oi- after 
the date specified for this purpose in the notification. Except as 
.a:* -i«" '
^ 
provided in regulations, the date so specified shall not be earliei-
than the first January 1 which is moie than fi months after the 
date on which the Secretary or his delegate is so notified. 
"(2) By CHANGE IN STATE LAW.—Any change in State law 
which would (but for this subchapter) have the effect of causing 
a tax to cease to be a qualified State individual income tax shall 
be treated as an intention to withdraw from the agieement. 
Xotitication by the Secretary to the Governor- of such State that 
rhe change in State law^ will be treated as an intention to withdraw 
shall be made by the Secretai-y in such manner as the Secretary 
or his delegate shall by regulations prescribe. Such notification 
shall have the same effect as a notice under- pai-agraph (1) of an 
intention to withdraw from the agreement r-eceived on the effec-
tive date of the change in State law. 
"(c) TRANSITION YEARS.— 
"(1) 
SUBCHAPTER CEASES TO APPLY DURINCI TAXPAYER'S YEAR.— 
If the provisions of this subchapter cease to apply on a day other-
than the last day of the taxpayer's taxable year, then amounts 
previously paid to the United States on account of the State's 
qualified individual income tax for that taxable year (whether 
paid by withholding, estimated tax, crexiit in lieu of refund, or-
otherwise) shall be treated as having been paid on account of 
the State's individual income tax law for that taxable year. 'Such 
amounts shall be transferred to the State as though the State had 
not withdraw-n from the agreement. Returns, applications, elec-
tions, and other forms previously filed with the Secretary or his 
tlelegate for that taxable year, which are thereafter requir-ed to 
l)e filed with the appropriate State official shall be treated as 
having been filed with the appropriate State official. 
" (2) 
PREVENTION OF UNINTENDED HARDSHIPS OR BENEFITS.—Thei 
State may by law pi-ovide for the transition to a qualified State 
individual income tax or from such a tax to the extent necessary 
to prevent double taxation or other unintended hardships, or to 
|>revent unintended benefits, under State law. 
*'(8) ADMINISTRATION OF SUBSECTION.—The pr-ovisions of this 
subsection shall be administered by the Seci-etary or- his delegate, 
by the State, or- jointly, to the exteait 2>r'OAided in regulations pre--
scribed by the Secretai-y or- his delegate, 
" ( d ) JuDioiAL REVIEW.— 
"(1) I N GENERAL.—Whenever under- tiiis section the Seci*eta.ry 
or his delegate deter-mines that a State does not have a qualified 
State individual income tax, such State may, within 60 days aftei* 
the Governor of the State has been notified of such action, file 
with the United States court of appeals for the circuit in which 
such State is located, or with the ITnited States Court of Appeals 
. . . 
, ^ 
for- the District of Columbia, a petition for it^view of such action. 
i n 
PUBLIC L
A
W 92-512-OCT. 20, 1972 
[86 STAT. 
.&€.€ ,--1 ,BSnf'iv 
A copy of the petition shall be forthwith transmitted by the clerk 
of the couit to the Secretary or his delegate. The Secretary or 
his delegate thereupon shall file in the court the record of the 
proceedings on which he based his action as provided in section 
72 Stat. 941: 
. , 2112 of title 28, United States Code. 
80 Stat. 1323. 
u^2) JURISDICTION OF COURT; REVIEW.—The court shall have 
jurisdiction to affirm the action of the Secretary or his delegate 
or to set it aside in whole or in part and to issue such other orders 
as may be appropriate with regard to taxable years which include 
any part of the period of litigation. The judgment of the court 
shall be subject to review by the Supreme Court of the United 
States upon certiorari or certification as provided in section 1254 
62 Stat. 928. 
of title 28, United States Code. 
"(3) STAY OF DECISION.— 
"(A) If judgment on a petition to review a determination 
under subsection (a) includes a determination that the State 
has a qualified State individual income tax, then the provi-
sions of this subchapter shall apply on and after the first 
January 1 which is more than 6 months after the date of the 
L 
judgment. 
"(B) If judgment on a petition to review a determination 
by the Secretary under subsection (b) (2) includes a deter-
mination that the State does not have a qualified State indi-
... 
vidual income tax, then the provisions of this subchapter 
ii' 
(other than this section) shall not apply on and after the 
first January 1 which is more than 6 months after the date 
of the judgment. 
" (4) PREFERENCE.—Any judicial proceedings under this section 
~ shall be entitled to, and, upon request of the Secretary or the State, 
i 
shall receive a preference and shall be heard and determined as 
expeditiously as possible. 
"SEC. 6364. REGULATIONS. 
"The Secretary or his delegate shall prescribe such regulations as 
may be necessary or appropriate to carry out the purposes of this 
subchapter. 
«SEC. 6365. DEFINITIONS AND SPECIAL RULES. 
"(a) STATE.—For purposes of this subchapter, the term 'State' 
includes the District of Columbia. 
"(b) GOVERNOR.—For purposes of this subchapter, the term 'Gov-
ernor' includes the Commissioner of the District of Columbia. 
"(c) APPLICATION 
OF SUBCHAPTER.—^Whenever this subchapter 
begins to apply, or ceases to apply, to any State tax on any January 1— 
"(1) except as provided in paragraph (2), such change shall 
apply to taxable years beginning on or after such date, and 
69 Stat. 616. 
"(2) for puTposcs of chapter 24, such change shall apply to 
wages paid on or after such date." 
(b) CLERICAL AMENDMENT.—The table of subchapters for chapter 
(>4 of such Code is amended by adding at the end thereof the follow-
ing: 
"SUBCHAPTER E. Collection of State individual income taxes." 
SEC. 203. CONFORMING AMENDMENTS. 
(a) LARGE REFUNDS.—Section 6405 of the Internal Revenue Code 
Ante, p. 657. 
gf 1954 (relating to reports of refunds and credits) is amended by 
adding at the end thereof the following new subsection: 
"(e) QUALIFIED STATE INDIVIDUAL INCOME TAXES.—For purposes 
of this section, a refund or credit made under subchapter E of chapter 
Ante, p. 936. 
^^ (relating to Federal collection of qualified State individual income 
86 STAT. ] 
PUBLIC LAW 92-512-OCT. 20, 1972 
945 
taxes) for a taxable year shall be treated as a poition of a refund or 
credit of the income tax for that taxable year." 
' 
(b) 
TAX COURT SMALL CLAIMS.— 
(1) Section 7463 of such code (relating to disputes involving 
^^ ^
^
^
^
'
^
^
^
^
a
^
* 
$1,000 or less) is amended by adding at the end thereof the fol-
lowing new subsection: 
"(f) 
QUALIFIED STATE INDIVIDUAL INCOME TAXES.—For purposes 
of this section, a deficiency placed in dispute or claimed overpayment 
with regard to a qualified State individual income tax to which sub-
chapter E of chapter 64 applies, for a taxable year, shall be treated as 
^"^^' P* ^^^' 
a portion of a deficiency placed in dispute or claimed overpayment of 
the income tax for that taxable year.'' 
(2) Section 7463 of such Code is amended by striking out 
"$1,000" in the heading and each place it appears in subsection 
i 
(a) thereof and inserting in lieu thereof "$1,500". 
(3) The table of sections for part I I of subchapter C of chap-
ter 76 of such Code is amended by striking out "$1,000" in the 
item relating to section 7463 and inserting in lieu thereof "$1,500". 
SEC. 204. EFFECTIVE DATE. 
(a) GENERAL RULE.—Except as provided in subsections (b) and 
(c), the provisions of this title (and the amendments made thereby) 
shall take effect on the date of the enactment of this Act. 
(b) 
COLLECTION AND ADMINISTRATION or 
STATE TAXES BY THE 
UNITED STATES MAY NOT BEGIN BEFORE JANUARY 1, 1974.—Section 
6361 of the Internal Revenue Code of 1954 (as added bv section 202(a) 
of this Act) shall take effect on whichever of the following is the 
later: 
(1) January 1,1974, or 
(2) the first January 1 which is more than one year after the 
first date on which at least 2 States having residents who in the 
aggregate filed 5 percent or more of the Federal individual 
income tax returns filed during 1972 have notified the Secretary 
'" 
of the Treasury or his delegate of an election to enter into an 
agreement under section 6363 of such Code. 
^"'^' P* ^'^^' 
(c) JURISDICTION OF TAX COURT IN DISPUTES INVOLVING $1,500 OR Effective date. 
LESS.—The amendments made by paragraphs (2) and (3) of section 
203 (b) of this Act shall take effect on January 1,1974. 
TITLE III—LIMITATION ON GRANTS FOR SOCIAL SERV-
ICES UNDER PUBLIC ASSISTANCE PROGRAMS 
SEC. 301. (a) Title X I of the Social Security Act is amended by 8i^stat?9*2o?' 
adding at the end thereof the following new section: 
4 2 use 13*01. 
"LIMITATION ON FUNDS FOR CERTAIN SOCIAL SERVICES 
"SEC. 1130. (a) Notwithstanding the provisions of section 3(a) (4) 
and (5),403(a) (3), 1003(a) (3) and (4), 1403(a) (3) and (4),or 1603 
(a) (4) and (5), amounts payable for any fiscal year (commencing 
42 use 303, 
with the fiscal year beginning July 1, 1972) under such section (as ^3^^^^°^* ^^^^' 
determined without regard to this section) to any State with respect 
to expenditures made after June 30, 1972, for services referred to in 
t.^ s* 
such section (other than the services provided pursuant to section 
402 (a) (19) (G)), shall be reduced by such amounts as may be necessary 
^2 use 602. 
to assure that— 
"(1) the total amount paid to such State (under all of such 
sections) for such fiscal year for such services does not exceed the 
allotment of such State (as determined under subsection ( b ) ) ; and 
946 
PUBLIC LAW 92-512-OCT. 20, 1972 
[86 STAT. 
i«^ 
"(2) of the amounts paid (under all of such sections) to such 
State for such fiscal year with respect to such expenditures, other 
than expenditures for— 
, 
"(A) services provided to meet the needs of a child for 
>
^ 
personal care, protection, and supervision, but only in the 
case of a child where the provision of such services is needed 
(i) in order to enable a member of such child's family to 
accept or continue in employment or to participate in train-
ing to prepare such member for employment, or (ii) because 
of the death, continued absence from the home, or incapacity 
of the child's mother and the inability of any member of 
such child's family to provide adequate care and supervision 
' • 
for such child; 
= • •' 
"(B) family planning services; 
"(C) services provided to a mentally retarded individual 
(whether a child or an adult), but only if such services are 
needed (as determined in accordance with criteria prescribed 
by the Secretary) by such individual by reason of his con-
dition of being mentally retarded; 
i,fr; 
"(D) services provided to an individual who is a drug 
f ; f
. 
addict or an alcoholic, but only if such services are needed 
(as determined in accordance with criteria prescribed by 
the Secretary) by such individual as part of a program of 
active treatment of his condition as a drug addict or an 
alcoholic; and 
"(E) services provided to a child who is under foster care 
75 Stat. 76. 
in a foster family home (as defined in section 408) or in a 
child-care institution (as defined in such section), or while 
,}i ^ 
awaiting placement in such a home or institution, but only 
if such services are needed (as determined in accordance 
with criteria prescribed by the Secretary) by such child 
because he is under foster care, 
not more than 10 per centum thereof are paid with respect to 
expenditures incurred in providing services to individuals who are 
not recipients of aid or assistance (under State plans approved 
i2ol"iT5i?l38i. 
^nder titles I, X, XIV, X y i , or part A of title IV), or applicants 
601.' 
' 
' 
(as defined under regulations of the Secretary) for such aid or 
assistance. 
"(b)(1) For each fiscal year (commencing with the fiscal year 
beginning July 1, 1972) the Secretary shall allot to each State an 
amount which bears the same ratio to $2,500,000,000 as the population 
of such State bears to the population of all the States. 
"(2) The allotment for each State shall be promulgated for each 
fiscal year by the Secretary between July 1 and August 31 of the 
calendar year immediately preceding such fiscal year on the basis of 
the population of each State and of all of the States as determined 
from the most recent satisfactory data available from the Depart-
ment of Commerce at such time; except that the allotment for each 
State for the fiscal year beginning July 1, 1972, and the following 
fiscal year shall be promulgated at the earliest practicable date after 
the enactment of this section but not later than January 1,1973. 
" (c) For purposes of this section, the term 'State' means any one of 
the fifty States or the District of Columbia," 
(b) Sections 3(a)(4)(E), 403(a)(3)(D), 1003(a)(3)(E), 1403 
6
0
^
*
3
^ Y
f
o
'
^
s ^uss 
(a) (3) (E), and 1603(a) (4) (E) of such Act are amended by striking 
1383. 
' 
' 
out "subject to limitations" and inserting in lieu thereof "under con-
ditions which shall be". 
state allotment. 
'State' 
86 
STAT.] 
PUBLIC LAW92-513-OCT. 20, 1972 
947 
(c) Section 403(a) (5) of such Act is amended to read as follows: 
" (5) in the case of any State, an amount equal to 50 per centum 
of the total amount expended under the State plan during such 
quarter as emergency assistance to needy families with children." 
(d) Sections 3(a), 403(a), 1003(a), 1403(a), and 1603(a), of such 
Act are amended, in the matter preceding paragraph (1) of each 
such section, by striking out "shall pay" and inserting in lieu thereof 
"shall (subject to section 1130) pay". 
(e) The amendments made by this section (other than by subsec-
tion (b)) shall be effective July 1,1972, and the amendments made by 
subsection (b) shall be effective January 1,1973. 
Approved October 20, 1972. 
81 Stat. 893. 
42 u s e 603. 
42 u s e 303, 
1203, 1353, 1383, 
Ante, p. 945. 
Effective dates.. 
Public Law 92-513 
AN ACT 
To promote competition among motor vehicle manufacturers in the design and 
production of safe motor vehicles having greater resistance to damage, and 
for other purposes. 
October 20, 1972 
[S. 976] 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled. That this Act may 
J^ot""" vehicle 
be cited as the "Motor Velhicle Information and Cost Savings Act". e"ost'savhl^gs'Act. 
DEFINITIONS 
SEC. 2. For the purpose of this Act: 
(1) The term "passenger motor vehicle'* means a motor vehicle 
with motive power, designed for carrying twelve persons or less, 
except (A) a motorcycle or (B) a truck not designed primarily to 
carry its operator or passengers. 
(2) The term "multipurpose passenger vehicle" means a pas-
senger motor vehicle which is constructed either on a truck chassis 
or with special features for occasional off-road operation. 
(3) The term "passenger motor vehicle equipment" means (A) 
any system, part or component of a passenger motor vehicle as 
originally manufactured or any similar part or component manu-
factured or sold for replacement or improvement of such system, 
part, or component or as an accessory, or addition to a passenger 
motor vehicle, or (B) a towing device. 
(4) The term "towing device" means any device manufactured 
or sold for use in towing a passenger motor vehicle. 
(5) The term "property loss reduction standard" means a 
minimum performance standard established for the purpose of 
increasing the resistance of passenger motor vehicles or passenger 
motor vehicle equipment to damage resulting from motor vehicle 
accidents or for the purpose of reducing the cost of repairing such 
vehicles or such equipment damaged as a result of such accidents. 
(6) The term "bumper standard" means any property loss 
reduction standard the purpose of which is (A) to eliminate or 
reduce substantially physical damage to the front or rear ends 
(or both) of a passenger motor vehicle resulting from (i) a low-
speed collision (including but not limited to a low-speed collision