Tax Compliance Act of 1982

Summary

Tax Compliance Act of 1982 - Title I: Crimes, Abusive Tax Shelters, Fraud, Etc. - Amends the Internal Revenue Code to set forth rules for taxpayer compliance with the tax law. Establishes a presumption of jeopardy (procedure for immediate assessment of tax liability) in cases where the Internal Revenue Service (IRS) finds that certain taxpayers possessing large sums of cash have engaged in illegal activities and where individuals possessing amounts of cash in excess of $10,000 have not been identified. Amends the Second Liberty Bond Act to require registration of every obligation of the United States or any of its agencies. Requires registration of tax-exempt securities as a condition for the tax exclusion of interest earned on such securities. Disallows income tax deductions for interest paid on unregistered securities and for losses with respect to such securities. Establishes a penalty for promoting abusive tax shelters. Sets such penalty at the greater of $1,000 or ten percent of the gross income derived from the tax shelter. Imposes such penalty if valuations of tax shelter property are grossly overstated (more than 200 percent). Permits the IRS to waive the penalty for overvaluation if there was a reasonable basis for the valuation and such valuation was made in good faith. Permits injunctions against promoters of abusive tax shelters. Places the burden of proof on the IRS to show liability for the abusive tax shelter penalty, the false document preparation penalty, and the frivolous return penalty. Increases the civil fraud penalty for underpayment of tax by imposing a penalty of 50 percent of the interest payable on the portion of the underpayment attributable to fraud. Imposes a civil penalty on individuals who are involved in the preparation or presentation of a tax return document which results in the understatement of taxpayer liability. Sets such penalty at $1,000 for individual returns and $5,000 for corporate returns. Specifies that taxpayer knowledge that the document is false or fraudulent is not material for the imposition of the penalty. Imposes a $500 penalty for the filing of a frivolous tax return. Revises requirements for compliance with summonses for third-party recordkeepers. Requires a recordkeeper to assemble subpoened records upon receipt of a summons. Prohibits the issuance of a third-party summons if the case has been referred to the Attorney General with a recommendation for prosecution. Title II: Improved Information Reporting - Expands the definition of "interest" for information reporting purposes to include interest on any evidence of indebtedness issued in registered form or of a type offered to the public (other than an instrument held by a corporation with a maturity of less than one year). Revises reporting requirements for original issue discount. Expands reporting requirements for all payors of interest, regardless of the amount paid. Revises requirements for the filing of informational returns by brokers. Requires brokers to furnish to their customers statements showing the name and address of the broker and the information about individual customers included in such broker's informational return. Expands the definition of "broker" to include a dealer, a barter exchange, and any other person who (for a profit) regularly acts as a middleman with respect to property transactions. Requires employers to file information returns for payments of $600 or more to nonemployees. Requires individuals who sell products aggregating $600 or more on a direct sale basis to file informational returns on the amount of sales and the identity of the buyer. Requires the filing of information returns for payments of refunds of State and local income tax of $10 or more. Requires payors of compensation for casualty losses to file information returns with respect to such payments. Increases civil penalties for failure to file information returns and taxpayer identifying numbers. Requires a withholding of ten percent of certain payments made to a payee if such payee fails to furnish his taxpayer identification number or furnishes the wrong number. Requires the IRS to prescribe regulations for requiring the filing of certain returns on magnetic tape or in other machine-readable form. Exempts Treasury regulations and tax forms from Office of Management and Budget review and approval as required under the Paperwork Reduction Act of 1980. Title III: Pensions and Other Retirement Income - Requires withholding of periodic and lump sum payments from pension, individual retirement accounts, and other deferred compensation plans. Specifies a ten percent withholding for lump sum payments. Permits a recipient of pension or other retirement income to elect out of the withholding requirements of this title. Requires employers, plan administrators, and other payors of deferred compensation to make returns and reports regarding deferred compensation plans to which withholding requirements apply. Prescribes penalties for failure to keep records necessary to meet such return or reporting requirements. Increases from ten to 15 percent the penalty for early distributions from individual retirement accounts, individual retirement bond plans, and deferred annuity plans. Permits partial tax-free rollovers of distributions from individual retirement accounts, beginning in 1983. Title IV: Transactions Outside the United States - Treats a U.S. citizen or resident residing outside of the United States as residing in the District of Columbia for tax purposes relating to jurisdiction of courts and enforcement of summons. Requires courts to prohibit a taxpayer from admitting into evidence any foreign-based documentation which the taxpayer has failed to provide the IRS in its tax investigation. Permits the taxpayer to show reasonable cause for failure to supply such documentation. Imposes a $1,000 penalty for failure to furnish required information on controlled foreign corporations. Imposes additional penalties for continued noncompliance. Revises requirements for the filing of information returns for foreign personal holding companies. Authorizes the IRS to delay the date for filing certain information returns relating to foreign corporations and foreign trusts. Title V: Modification of Interest Provisions - Requires the daily compounding of interest payable by or to the United States under the tax laws, beginning in 1983. Extends from 45 to 90 days the period during which the IRS is required to pay a refund of taxes claimed on a late return before it is required to pay interest on such refund. Absolves the IRS from paying interest on refunds claimed on returns which were not in processible form. Imposes a surcharge on interest penalties incurred due to a substantial underpayment of taxes. Sets such surcharge at 20 percent of the interest penalty imposed for such underpayment. Permits the IRS to waive the surcharge if the taxpayer shows reasonable cause for the underpayment and acted in good faith. Title VI: Tax Treatment of Partnership Items and Subchapter S Items - Subtitle A: Partnership Items - Tax Treatment of Partnership Items Act of 1982 - Specifies that the tax treatment of any partnership income item shall be determined at the partnership level. Establishes procedures for the review of partnership income tax returns and the rights of partners to challenge IRS determinations with respect to items of partnership income. Subtitle B: Subchapter S Items - Specifies that the tax treatment of any item of subchapter s corporation income shall be determined at the corporate level. Applies the same audit procedures to subchapter s corporations as are used for partnership audits.

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• Introduced in House

  summary · EN · 6 May 1982

  Open at official source

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