A bill to repeal the contemporaneous recordkeeping requirements added by the Tax Reform Act of 1984, and for other purposes.
PL 99-44 (H.R.1869), enacted 05/24/1985

PUBLIC LAW 99-44—MAY 24, 1985 
99 STAT. 77 
Public Law 99-44 
99th Congress 
An Act 
To amend the Internal Revenue Code of 1954 to repeal the contemporaneous 
j^^y 24 1935 
recordkeeping requirements added by the Tax Reform Act of 1984, and for other 
purposes. 
[H.R. 1869] 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
Taxes. 
SECTION 1. REPEAL OF CONTEMPORANEOUS RECORDKEEPING REQUIRE-
MENTS, ETC. 
(a) CONTEMPORANEOUS RECORDKEEPING REQUIREMENTS.—Subsec-
tion (d) of section 274 of the Internal Revenue Code of 1954 (relating 
98 Stat. 718. 
to substantiation requirements for certain deductions and credits) is 
26 USC 274. 
amended by striking out "adequate contemporaneous records" and 
inserting in lieu thereof "adequate records or bv sufficient evidence 
corroborating the taxpayer's own statement , and the Internal 
26 USC 274 note. 
Revenue Code of 1954 shall be applied and administered as if the 
26 USC 1 et seq. 
word "contemporaneous" had not been added to such subsection (d). 
(b) PROVISIONS RELATING TO RETURN PREPARERS AND NEGLIGENCE 
PENALTY.—Paragraphs (2) and (3) of section 179(b) of the Tax Reform 
Act of 1984 are hereby repealed, and the Internal Revenue Code of 
98 Stat. 713. 
1954 shall be applied and administered as if such paragraphs (and 
^6 use 6695, 
the amendments made by such paragraphs) had not been enacted. 
26 use 6653 
(c) REPEAL OF REGULATIONS.—Regulations issued before the date of note. 
the enactment of this Act to carry out the amendments made by 
26 use 274 note. 
paragraphs (1)(C), (2), and (3) of section 179(b) of the Tax Reform Act 
of 1984 shall have no force and effect. 
SEC. 2. SUBSTANTIATION REQUIREMENTS NOT TO APPLY TO CERTAIN 
VEHICLES WITH LITTLE PERSONAL USE. 
(a) IN GENERAL.—Subsection (d) of section 274 of the Internal 
Revenue Code of 1954 (relating to substantiation required) is 
26 use 274. 
amended by adding at the end thereof the following new sentence: 
"This subsection shall not apply to any qualified nonpersonal use 
vehicle (as defined in subsection (i))." 
(b) QUALIFIED NONPERSONAL USE VEHICLE DEFINED.—Section 274 
of such Code is amended by redesignating subsection (i) as subsec-
tion (j) and by inserting after subsection (h) the following new 
subsection: 
"(i) QUALIFIED NONPERSONAL USE VEHICLE.—For purposes of 
subsection (d), the term 'qualified nonpersonal use vehicle' means 
any vehicle which, by reason of its nature, is not likely to be used 
more than a de minimis amount for personal purposes." 
SEC. 3. EXEMPTION FROM REQUIRED INCOME TAX WITHHOLDING FOR 
CERTAIN FRINGE BENEFITS. 
Section 3402 of the Internal Revenue Code of 1954 (relating to 
26 use 3402. i^^^ 
income tax collected at source) is amended by adding at the end 
thereof the following new subsection: 
"(s) EXEMPTION FROM WITHHOLDING FOR ANY VEHICLE FRINGE 
BENEFIT.— 
99 STAT. 78 
PUBLIC LAW 99-44—MAY 24, 1985 
"(1) EMPLOYER ELECTION NOT TO WITHHOLD.—The employer 
may elect not to deduct and withhold any tax under this 
chapter with respect to any vehicle fringe benefit provided to 
any employee if such employee is notified by the employer of 
such election (at such time and in such manner as the Secretary 
shall by regulations prescribe). The preceding sentence shall not 
apply to any vehicle fringe benefit unless the amount of such 
benefit is included by the employer on a statement timely 
26 use 6051. 
furnished under section 6051. 
"(2) EMPLOYER MUST FURNISH W-2.—Any vehicle fringe bene-
fit shall be treated as wages from which amounts are required 
to be deducted and withheld under this chapter for purposes of 
section 6051. 
"(3) VEHICLE FRINGE BENEFIT.—For purposes of this subsec-
tion, the term 'vehicle fringe benefit' means any fringe 
benefit— 
"(A) which constitutes wages (as defined in section 3401), 
and 
"(B) which consists of providing a highway motor vehicle 
for the use of the employee." 
SEC. 4. REDUCTION IN LIMITATIONS ON INVESTMENT TAX CREDIT AND 
DEPRECIATION FOR LUXURY AUTOMOBILES. 
(a) GENERAL RULE.— 
(1) INVESTMENT TAX CREDIT.—Paragraph (1) of section 280F(a) 
98 Stat. 713. 
of the Internal Revenue Code of 1954 (relating to investment tax 
26 use 280F. 
credit) is amended by striking out "$1,000" and inserting in lieu 
thereof "$675". 
(2) DEPRECIATION.—Paragraph (2) of section 280F(a) of such 
Code (relating to depreciation) is amended— 
(A) by striking out "$4,000" in subparagraph (AXi) and 
inserting in lieu thereof "$3,200", and 
(B) by striking out "$6,000" each place it appears in 
subparagraphs (AXii) and (BXii) and inserting in lieu 
thereof "$4,800". 
(b) 4-YEAR DEFERRAL OF INFLATION ADJUSTMENT.— 
(1) ADJUSTMENT AFTER 1988.—Subparagraph (A) of section 
280F(dX7) of such Code (relating to automobile price inflation 
adjustment) is amended by striking out "passenger automobile" 
and inserting in lieu thereof "passenger automobile placed in 
service after 1988". 
(2) 1987 BASE PERIOD.—Subclause (II) of section 280F(dX7XBXi) 
of such Code is amended by striking out "1983" and inserting in 
lieu thereof "1987". 
(3) TECHNICAL AMENDMENT.—Clause (i) of section 280F(dX7XB) 
of such Code is amended by striking out the last sentence. 
SEC. 5. NEW REGULATIONS. 
26 use 274 note. 
Not later than October 1, 1985, the Secretary of the Treasury or 
his delegate shall prescribe regulations to carry out the provisions of 
this Act which shall fully reflect such provisions. 
SEC. 6. EFFECTIVE DATES. 
26 use 274 note. 
(a) REPEALS.—The amendment and repeals made by subsections 
(a) and (b) of section 1 shall take effect as if included in the 
Ante, p. 77. 
amendments made by section 179(b) of the Tax Reform Act of 1984. 
PUBLIC LAW 99-44—MAY 24, 1985 
99 STAT. 79 
(b) RESTORATION OF PRIOR LAW FOR 1985.—For taxable years 
beginning in 1985, section 274(d) of the Internal Revenue Code of 
1954 shall apply as it read before the amendments made by section 
179(bXl) of the Tax Reform Act of 1984. 
(c) EXCEPTION FROM SUBSTANTIATION REQUIREMENTS FOR QUAU-
FiED NoNPERSONAL UsE VEHICLES.—The amendments made by sec-
tion 2 shall apply to taxable years beginning after December 31, 
1985. 
(d) WITHHOLDING AMENDMENT.—The amendment made by section 
3 shall take effect on January 1,1985. 
(e) REDUCTION IN LIMITATIONS ON INVESTMENT TAX CREDIT AND 
DEPRECIATION.— 
(1) Except as provided in paragraph (2), the amendments 
made by section 4 shall apply to— 
(A) property placed in service after April 2, 1985, in 
taxable years ending after such date, and 
(B) property leased after April 2, 1985, in taxable years 
ending after such date. 
(2) The amendments made by section 4 shedl not apply to any 
property— 
(A) acquired by the taxpayer pursuant to a binding con-
tract in effect on April 1, 1985, and at all times thereafter, 
but only if the property is placed in service before August 1, 
1985, or 
(B) of which the taxpayer is the lessee, but only if the 
lease is pursuant to a binding contract in effect on April 1, 
1985, and at all times thereafter, and only if the taxpayer 
first uses such property under the lease before August 1, 
1985. 
Approved May 24, 1985. 
26 u s e 274 note. 
26 u s e 274. 
Ante, p. 77. 
26 u s e 274 note. 
Effective date. 
26 u s e 3402 
note. 
Effective dates. 
26 u s e 280F 
note. 
LEGISLATIVE HISTORY—H.R. 1869 (S. 245): 
HOUSE REPORTS: No. 99-34 (eomm. on Ways and Means) and No. 99-67 (eomm. of 
SENATE REPORT No. 99-23 accompanying S. 245 (Coram, on Finance). 
eONGRESSIONAL REGORD, Vol. 131 (1985): 
Apr. 2, considered and passed House. 
Apr. 3, considered and passed Senate, amended. 
May 8, House agreed to conference report. 
May 15, 16, Senate considered and agreed to conference report. 
WEEKLY C O M P I L A T I O N OF PRESIDENTIAL DOCUMENTS, Vol. 21, No. 21 (1985): 
May 24, Presidential statement.