PENALTY PROVISIONS OF LAW FOR FAILURE TO DEPOSIT TAXES

The Internal Revenue Code of 1954 provides that a penalty shall be imposed for failure, without reasonable cause, to deposit taxes as required. See section 6656 of the Code. This penalty, in general, is one percent per month of the amount of the underpayment of the deposit for each month, or part of a month during which the underpayment continues, not to exceed six percent in the aggregate. As defined in the statute, the term "underpayment" means the excess of the amount of the tax required to be deposited over the amount, if any, deposited on or before the prescribed due date.

Taxpayers are permitted to deposit taxes for any month for which a deposit is not required. An additional ten days is allowed for filing a tax return on Form 941, Employer's Quarterly Federal Tax Return, or 720, Quarterly Federal Excise Tax Return, (see table below), if timely deposits are made in full payment of taxes due for the entire quarter.

An appropriate form of depositary receipt for use in making the first deposit will be supplied by the Internal Revenue Service. Thereafter, the Federal Reserve Bank will mail with each validated receipt a blank receipt form for use in making the next deposit.

Further information relative to the use of depositary receipts may be secured by reference to the instructions give on Form 941, Form CT-1, Employer's Railroad Retirement Tax Return, or Form 720, or from the District Director of Internal Revenue.

The following table summarizes the deposit requirements for various taxes. Except as shown in the table, a deposit of the taxes for a calendar month must be made if such taxes exceed $100. Each tax deposit must be made with a Federal Reserve Bank or authorized local bank and must be accompanied by depositary receipt Form 450, 515, or 537, as indicated in the table.

The Internal Revenue Bulletin is issued weekly and contains rulings, procedures and decisions published by the Internal Revenue Service and all Treasury Department regulations (including Treasury Decisions) pertaining to Internal Revenue matters. It may be obtained on a subscription basis from the Superintendent of Documents, Government Printing Office, Washington 25, D.C., for $6.00 per year-foreign $8.75. Single copies of the Bulletin-20 cents each.

The contents of the weekly Bulletin are consolidated at least semiannually into a permanent, indexed, Cumulative Bulletin. These are sold on a single-copy basis. Subscribers to the weekly Bulletin will be notified when copies of the Cumulative Bulletins are available.

Certain issues of Cumulative Bulletins are out of print and are, therefore not available. Persons desiring available Cumulative Bulletins which are listed below may obtain them from the Superintendent of Documents at prices as follows:

1 House, Senate, and conference reports on revenue bills enacted as the act of October 3, 1913, the act of October 22, 1914, and the Revenue Acts of 1916 to 1938, inclusive and on amendment to such acts.

Printed in one volume.

All inquiries in regard to these publications and subscriptions should be sent to the Superintendent of Documents, Government Printing Office, Washington 25, D.C.

page 12.

Rev. Rul. 59-99, page 14.

The Revenue Service discusses the meaning of the term Rev. Rul. 59-98,
"securities," as used in section 354 of the 1954 Code,
in connection with a corporate recapitalization in-
volving an exchange of stock for mortgage bonds.
Where a court-appointed trustee receives the proceeds
of a sale of real property, he is required to report the
gain from such sale on a fiduciary return and pay
the tax thereon for the year of sale even though the
trust was not in existence at the time of the sale.
No dividend credit or dividend exclusion is allowable to
a beneficiary of a trust with respect to qualifying
dividends received by the trust in the year of ter-
mination where the trust has excess deductions within
the meaning of section 642 (h)(2) of the Code.
The Revenue Service discusses various questions per- Rev. Rul. 59-101,
taining to the allowance of foreign tax credit for
taxes paid or accrued to Puerto Rico under the pro-
visions of the Puerto Rican "pay as you go" tax law.

Rev. Rul. 59-100, page 15.

page 17.

page 20.

For purposes of the statutory provisions relating to in- Rev. Rul. 59-102,
voluntary conversions involving the "destruction" of
property, it is not necessary that the taxpayer satisfy
the test of "suddenness" if the causes of destruction
otherwise fall within the general concept of a cas-
ualty; I. T. 3696 and Revenue Ruling 54-395,
modified.

Revenue Ruling 58-453, relating to the circumstances
under which employees receiving fixed mileage and
per diem allowances will be deemed to have accounted
to their employers for business travel and transporta-
tion expenses, is expanded.

Announcement 59-36, page 9.

Supplement IV, page 10.

Standardized Government Travel Regulations, relating Rev. Rul. 58-453
to maximum per diem rates allowed by the Govern-
ment to employees for travel outside the United States,
are published in this Bulletin as a Supplement to
Revenue Ruling 58–453.

INTRODUCTION

The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for the announcement of official rulings and procedures of the Internal Revenue Service, and for the publication of Treasury Decisions, Executive Orders, tax conventions, legislation, and court decisions pertaining to internal revenue matters. Other items considered to be of general interest are also published in the Bulletin, such as announcements relating to proposed regulations published with notice of proposed rulemaking, announcements relating to decisions of the Tax Court of the United States, announcements of the disbarment and suspension of attorneys and agents from practice before the Treasury Department, Delegation Orders, etc.

It is the policy of the Service to publish in the Bulletin all substantive and procedural rulings of importance or of general interest, the publication of which is considered necessary to promote a uniform application of the laws administered by the Service. It is also the policy to publish all rulings and statements of procedures which supersede, revoke, modify, or amend any published ruling or procedure. Except where otherwise indicated, published rulings and procedures apply retroactively. Rulings and statements of procedures relating solely to matters of internal management are not published. However, statements of internal practices and procedures affecting rights or duties of taxpayers, or industry regulation, which appear in internal management documents, are published. Revenue Rulings and Revenue Procedures are based upon rulings and internal management documents prepared in the various divisions of the National Office, including the Office of the Chief Counsel for the Internal Revenue Service. In the preparation of these, caution is exercised to conceal the identity of the taxpayer, as well as any confidential personal and business information. All Revenue Rulings published in the Bulletin have received the consideration and concurrence of the Chief Counsel.

Revenue Rulings and Revenue Procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations (including Treasury Decisions), but are published to provide precedents to be used in the disposition of other cases, and may be cited and relied upon for that purpose. Since each published ruling represents the conclusion of the Service as to the application of the law to the entire state of facts involved, Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. (Continued on page 4)