Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 72-29

1972-1 C.B. 283

Sec. 1494

IRS Headnote

The statutory deficiency procedures described in sections 6211 through 6216 of the Code are not applicable to the tax imposed by section 1491 on transfers of stocks or securities to avoid income tax.

Full Text

Rev. Rul. 72-29

Advice has been requested whether the statutory deficiency procedures described in sections 6211 through 6216 of the Internal Revenue Code of 1954 as amended by the Tax Reform Act of 1969 are applicable to the tax imposed by section 1491 of the Code.

Section 1491 of the Code, contained in Subtitle A, Chapter 5, imposes an excise tax upon the transfer of appreciated stocks or securities by United States persons to certain foreign entities. Section 1494(a) of the Code provides that the tax imposed by section 1491 of the Code shall, without assessment or notice and demand, be due and payable by the transferor at the time of the transfer, and shall be assessed, collected, and paid under regulations prescribed by the Secretary or his delegate.

Sections 6211 through 6216 of the Code describes certain deficiency procedures in the case of the assessment and collection of income, estate, gift, and certain excise taxes. Prior to the enactment of the Tax Reform Act of 1969, there was no question that the deficiency procedures did not apply to the excise tax imposed by section 1491 of the Code. Section 6211(a) then provided:

For purposes of this title in the case of income, estate, and gift taxes, imposed by subtitles A and B, the term "deficiency" means the amount by which the tax imposed by subtitles A or B exceeds the excess of * * * (Emphasis added).

This provision was amended by section 101(f) of the Tax Reform Act of 1969 and now reads as follows:

For purposes of this title in the case of income, estate, gift, and excise taxes, imposed by subtitles A and B, and Chapter 42, the term "deficiency" means the amount by which the tax imposed by subtitle A or B or Chapter 42 exceeds the excess of * * * (Emphasis added).

The addition of the word "excise" to section 6211 of the Code raises a question as to whether Congress intended to extend the deficiency procedures described in sections 6211 through 6216 of the Code to the tax imposed by section 1491 of the Code.

The legislative history of the relevant provisions of the Tax Reform Act of 1969 indicates that the amendment of section 6211(a) of the Code did not affect the authority to collect the tax imposed by section 1491 of the Code upon notice and demand, and that Congress did not intend to alter the procedures under section 1494(a) of the Code. House Report No. 91-413 (Part 2) Ninety-first Congress, C.B. 1969-3, 340 at 351, states:

(f) Petition to the Tax Court; deficiency proceedings made applicable.--Subsection (f) of section 101 of the bill extends the deficiency procedures applicable under the Code to the taxes imposed by chapter 42. Under existing law, a petition in the Tax Court can be filed only with respect to a deficiency of income, estate, or gift taxes. Section 101(f) of the bill amends section 6211 and other related sections to extend deficiency jurisdiction to the taxes imposed by Chapter 42. (Emphasis added.)

This reading of the intent of Congress is also confirmed by language elsewhere in the Code, for example, section 6201(d) of the Code which is a cross reference to procedures applicable to "deficiencies of income, estate, gift, and chapter 42 taxes." It is also important to note that section 1494 of the Code was not in any way altered by the Tax Reform Act of 1969.

Accordingly, it is held that the statutory deficiency procedures described in sections 6211 through 6216 of the Code are not applicable to the tax imposed by section 1491 of the Code.