An Act relating to interest on income tax refunds made within 45 days after the filing of the tax return
PL 89-721 (H.R.11660), enacted 11/02/1966

1150 
PUBLIC LAW 89-721-NOV. 2, 1966 
[80 STAT. 
November 2, 1966 
[H. R.11660] 
Public Law 89-721 
AN ACT 
Relating to interest on income tax refunds made within 45 days after the filing 
of the tax return, and for other purposes. 
Income tax. 
Interest on re-
funds. 
68A Stat. 819. 
26 u s e 6611. 
76 Stat. 963. 
68A Stat. 749. 
76 Stat. 971. 
68A Stat. 772. 
Be it enacted by the Senate and House of Representatives 
of the 
United States of America in Congress assembled, That (a) section 
6611(e) of the Internal Eevenue Code of 1954 (relating to income tax 
refunds within 45 days after due date of tax) is amended to read as 
follows: 
"(e) 
INCOME TAX EEFUND W I T H I N 45 DAYS AFTER KETUKN 
I S 
FILED.—If any overpayment of tax imposed by subtitle A is refunded 
within 45 days after the last date prescribed for filing the return of 
such tax (determined without regard to any extension of time for 
filing the return) or, in case the return is filed after such last date, is 
refunded within 45 days after the date the return is filed, no interest 
shall be allowed under subsection (a) on such overpayment." 
(b) The amendment made by subsection (a) shall apply with respect 
to refunds made more than 45 days after the date of the enactment of 
this Act. 
SEC. 2. (a) The first two sentences of section 6411(a) of the In-
ternal Revenue Code of 1954 (relating to quick refunds of income 
taxes attributable to a net operating loss carryback) are amended to 
read as follows: "A taxpayer may file an application for a tentative 
carryback adjustment of the tax for the prior taxable year affected 
by a net operating loss carryback provided in sect'on 172(b), or by 
an investment credit carryback provided in section 46(b), from any 
taxable year. The application shall be verified in the manner pre-
scribed by section 6065 in the case of a return of such taxpayer, and 
shall be filed, on or after the date of filing of the return for the taxable 
year of the net operating loss or unused investment credit from which 
the carryback results and within a period of 12 months from the end 
of such taxable year, in the manner and form required by regulations 
prescribed by the Secretary or his delegate." 
(b) Paragraph (1) of such section 6411(a) is amended by inserting 
after the words "net operating loss" the following: "or unused invest-
ment credit". 
(c) Paragraph (5) of such section 6411(a) is amended by strik-
ing out the words "of such loss" and inserting in lieu thereof "from 
which the carryback is made". 
(d) Subsections (b) and (c) of section 6411 of such Code are 
amended by inserting the words "or unused investment credit" after 
the words "net operating loss" each time they appear in such sub-
sections. 
(e) Subsection (c) of such section 6411 is amended by striking out 
the words "such loss" and inserting in lieu thereof "such loss or 
credit". 
(f) Subsection (j) of section 6501 of such Code (relating to invest-
ment credit carrybacks) is amended by striking out "investment credit 
carryback," and inserting in lieu thereof "investment credit carryback 
(including deficiencies which may be assessed pursuant to the pro-
visions of section 6213(b)(2)),". 
(g) The amendments made by this section shall apply with respect 
to taxable years ending after December 31, 1961, but only in the case 
of applications filed after the date of the enactment of this Act. 
The 
period of 12 months referred to in the second sentence of section 6411 
(a) of the Internal Revenue Code of 1954 (as amended by this section) 
for filing an application for a tentative carryback adjustment of tax 
80 STAT.] 
PUBLIC LAW 8 9 - 7 2 2 - N O V . 2, 1966 
1151 
attributable to the carryback of any unused investment credit shall not 
expire before the close of December 31,1966. 
SEC. 3. (a) Section 6501 of the Internal Kevenue Code of 1954 26 use esoi. 
(relating to limitations on assessment and collection) is amended by 
inserting after subsection (1) the following new subsection: 
"(m) TENTATIVE CARRYBACK ADJUSTMENT ASSESSMENT PERIOD.— 
In a case where an amount has been applied, credited, or refunded 
under section 6411 (relating to tentative carryback adjustments) by 
reason of a net operating loss carryback or an investment credit carry-
back to a prior taxable year, the period described in subsection (a) of 
this section for assessing a deficiency for such prior taxable year shall 
be extended to include the period described in subsection (h) or (j), 
whichever is applicable; except that the amount which may be assessed 
solely by reason of this subsection shall not exceed the amount so 
applied, credited, or refunded under section 6411, reduced by any 
amount which may be assessed solely by reason of subsection (h) or (j), 
as the case may be." 
(b) The amendment made by subsection (a) shall apply in any case 
Avhere the application under section 6411 of the Internal Revenue Code 
of 1954 is filed after the date of the enactment of this Act. 
Approved November 2, 1966. 
Public Law 89-722 
A N A C T 
November 2, 1966 
To amend the Internal Revenue Code of 1954 to allow a deduction for additions 
[H. R. 11782] 
to a reserve for certain guaranteed debt obligations, and for other purposes. 
Taxes. 
68A Stat. 50. 
26 u s e 166. 
Be it eruwted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled. That (a) section 166 
of the Internal Revenue Code of 1954 (relating to bad debts) is tain^gua^ant°e'^e"'^" 
amended bv redesignating subsection (g) as subsection (h), and by debt obligations. 
inserting alter subsection (f) a new subsection (g) as follows: 
"(g) RESERVE FOR CERTAIN GUARANTEED DEBT OBLIGATIONS.— 
"(1) ALLOWANCE OF DEDUCTION.—In the case of a taxpayer 
who is a dealer in property, in lieu of any deduction under sub-
section (a), there shall be allowed (in the discretion of the Secre-
tary or his delegate) for any taxable year ending after October 21, 
1965, a deduction— 
"(A) for a reasonable addition to a reserve for bad debts 
which ma}^ arise out of his liability as a guarantor, endorser, 
or indemnitor of debt obligations arising out of the sale by 
him of real property or tangible personal property (including 
related services) in the ordinary course of his trade or busi-
ness; and 
"(B) for the amount of any reduction in the suspense 
account required by paragraph (4) (B) (i). 
"(2) DEDUCTION DISALLOWED IN OTHER CASES.—Except as pro-
vided in paragraph (1), no deduction shall be allowed to a tax-
payer for any addition to a reserve for bad debts which may arise 
out of his liability as guarantor, endorser, or indemnitor of debt 
obligations. 
"(3) OPENING BALANCE.—The opening balance of a reserve 
described in paragraph (1) (A) for the first taxable year ending 
after October 21, 1965, for which a taxpayer maintains such re-
serve shall, under regulations prescribed by the Secretary or his 
delegate, be determined as if the taxpayer had maintained such 
reserve for the preceding taxable years.