SEC. 1441-Continued (c) (5) - - - - - . (in part) (c) (6). Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 40(b), 72 Stat. 1638: Amended Sec. 1441 (c) (5) 342 by inserting after "section 402(a)(2),”— "section 403(a)(2),”. Effective Date: September 3, 1958-the day following the date of enactment. (Id., § 40(c), 72 Stat. 1639.) July 18, 1956, H.R. 11356, P.L. 84-726, § 11(a), 70 Stat. 563: Amended Sec. 1441 (c) by adding after paragraph (5) (special items) the following new paragraph (6): 343 "(6) PER DIEM OF CERTAIN ALIENS.-No deduction or withholding under subsection (a) shall be required in the case of amounts of per diem for subsistence paid by the United States Government (directly or by contract) to any nonresident alien individual who is engaged in any program of training in the United States under the Mutual Security Act of 1954, as amended." Effective Date: July 18, 1956-the date of enactment. CH. 3, SUBCHAPTER B-TAX-FREE COVENANT BONDS (68A Stat. 359): NOTE: The table of sections for Subchapter B of Chapter 3 reads as follows: "Sec. 1451. Tax-free covenant bonds." No amendments have been made to this table or to section 1451. CH. 3, SUBCHAPTER C-APPLICATION OF WITHHOLDING PROVISIONS (68A Stat. 360): NOTE: The table of sections for Subchapter C of Chapter 3 reads as follows: "Sec. 1461. Return and payment of withheld tax. "Sec. 1462. Withheld tax as credit to recipient of income. "Sec. 1463. Tax paid by recipient of income. "Sec. 1464. Refunds and credits with respect to withheld tax. "Sec. 1465. Definition of withholding agent." No amendments have been made to this table or to any of the sections listed therein. CHAPTER 4-RULES APPLICABLE TO RECOVERY OF EXCESSIVE PROFITS ON GOVERNMENT CONTRACTS (68A Stat. 361, ff.): NOTE: The table of subchapters for Chapter 4 and the heading and table of sections of Subchapter A of such Chapter 4 read as follows (68A Stat. 361): "SUBCHAPTER A. Recovery of excessive profits on government contracts. "SUBCHAPTER B. Mitigation of effect of renegotiation of government contracts. "Subchapter A-Recovery of Excessive Profits on Government Contracts "Sec. 1471. Recovery of excessive profits on Government contracts." No amendments have been made to the above tables and heading or to section 1471. 142 Paragraph (5) of section 1441(c) originally read as follows (68A Stat. 358): "(5) SPECIAL ITEMS. In the case of amounts described in section 402(a)(2), section 631 (b) and (c), and section 1235, which are considered to be gains from the sale or exchange of capital assets, the amount required to be deducted and withheld shall, if the amount of such gain is not known to the withholding agent, be such amount, not exceeding 30 percent of the proceeds from such sale or exchange, as may be necessary to assure that the tax deducted and withheld shall not be less than 30 percent of such gain." 43 The above amendment was accomplished by an amendment to section 544 of the Mutual Security Act of 1954 (83d Cong., Ch. 937, P.L. 665, 68 Stat. 832, 862-relating to amendments to other laws) which added to such section 544 certain new subsections, including a subsection (f) which amended section 1441(c) of the Internal Revenue Code of 1954 by adding the above new paragraph (6). CH. 4. SUBCHAPTER B-MITIGATION OF EFFECT OF RENEGOTIATION OF GOVERNMENT CONTRACTS (68A Stat. 362, ff.): Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 62(b), 72 Stat. 1648: Amended the table of sections for Subchapter B of Chapter 4, reading as follows (68A Stat. 362): Table... (Sec. 1482 added) "Sec. 1481. Mitigation of effect of renegotiation of government contracts.", by adding at the end thereof the following: "Sec. 1482. Readjustment for repayments made pursuant to price redeterminations." Applicability: Only with respect to subcontracts entered into after December 31, 1957. (Id., § 62(c), 72 Stat. 1648.) SEC. 1481. MITIGATION OF EFFECT OF RENEGOTIATION OF GOVERNMENT CONTRACTS (68A Stat. 362-364): (b)(2)(A)(i). June 21, 1965, H.R. 8371, P.L. 89-44, § 809(d) (5) (B), 79 Stat. 168: (in part) Amended Sec. 1481(b)(2)(A)(i) 344 (relating to credit against repayment on account of renegotiation or allowance) by striking out "(b) (1) and (3)" and inserting in lieu thereof "(b) (1), (3), and (4)". Applicability: Taxable years beginning on or after July 1, 1965. 344 Prior to this amendment section 1481 read as follows (68A Stat. 362-364): "(1) EXCESSIVE PROFITS ELIMINATED FOR PRIOR TAXABLE YEAR.-In the case of a contract with the United States or any agency thereof, or any subcontract thereunder, which is made by the taxpayer, if a renegotiation is made in respect of such contract or subcontract and an amount of excessive profits received or accrued under such contract or subcontract for a taxable year (referred to in this section as 'prior taxable year') is eliminated and, the taxpayer is required to pay or repay to the United States or any agency thereof the amount of excessive profits eliminated or the amount of excessive profits elininated is applied as an offset against other amounts due the taxpayer, the part of the contract or subcontract price which was received or was accrued for the prior taxable year shall be reduced by the amount of excessive profits eliminated. For purposes of this section "(A) The term 'renegotiation' includes any transaction which is a renegotiation within the meaning of the Federal renegotiation act applicable to such transaction, any modificacation of one or more contracts with the United States or any agency thereof, and any agreement with the United States or any agency thereof in respect of one or more such contracts or subcontracts thereunder. "(B) The term 'excessive profits' includes any amount which constitutes excessive profits within the meaning assigned to such term by the applicable Federal renegotiation act, any part of the contract price of a contract with the United States or any agency thereof, any part of the subcontract price of a subcontract under such a contract, and any profits derived from one or more such contracts or subcontracts. "(C) The term 'subcontract' includes any purchase order or agreement which is a subcontract within the meaning assigned to such term by the applicable Federal renegotia tion act. "(D) The term 'Federal renegotiation act' includes section 403 of the Sixth Supplemental National Defense Appropriation Act (Public Law 528, 77th Cong., 2d Sess.), as amended or supplemented, the Renegotiation Act of 1948, as amended or supplemented, and the Renegotiation Act of 1951, as amended or supplemented. "(2) REDUCTION OF REIMBURSEMENT FOR PRIOR TAXABLE YEAR.-In the case of a costplus-a-fixed-fee contract between the United States or any agency thereof and the taxpayer, if an item for which the taxpayer has been reimbursed is disallowed as an item of cost chargeable to such contract and the taxpayer is required to repay the United States or any agency thereof the amount disallowed or the amount disallowed is applied as an offset against other [Footnote 344 continued on following page] SEC. 1481-Continued ANCILLARY PROVISIONS: Renegotiation Act of 1951 (March 23, 1951, H.R. 1724, P.L. 9, Ch. 15, § 102, 65 Stat. 7): 345 "SEC. 102. CONTRACTS SUBJECT TO RENEGOTIATION. "(a) IN GENERAL. The provisions of this title [Title I of the Renegotiation Act of 1951, entitled "RENEGOTIATION OF CONTRACTS"] shall be applicable (1) to all contracts with the Departments specifically named in section 103(a), and Footnote 344-Continued. amounts due the taxpayer, the amount of the reimbursement of the taxpayer under the contract for the taxable year in which the reimbursement for such item was received or was accrued shall be reduced by the amount disallowed. "(3) DEDUCTION DISALLOWED.-The amount of the payment, repayment, or offset described in paragraph (1) or paragraph (2) shall not constitute a deduction for the year in which paid or incurred. "(4) EXCEPTION.-The foregoing provisions of this subsection shall not apply in respect of any contract if the taxpayer shows to the satisfaction of the Secretary or his delegate that a different method of accounting for the amount of the payment, repayment, or disallowance clearly reflects income, and in such case the payment, repayment, or disallowance shall be accounted for with respect to the taxable year provided for under such method, which for the purposes of subsections (b) and (c) shall be considered a prior taxable year. "(b) CREDIT AGAINST REPAYMENT ON ACCOUNT OF RENEGOTIATION OR ALLOWANCE. "(1) GENERAL RULE.-There shall be credited against the amount of excessive profits eliminated the amount by which the tax for the prior taxable year under this subtitle is decreased by reason of the application of paragraph (1) of subsection (a); and there shall be credited against the amount disallowed the amount by which the tax for the prior taxable year under this subtitle is decreased by reason of the application of paragraph (2) of subsection (a). "(2) CREDIT FOR BARRED YEAR.-If at the time of the payment, repayment, or offset described in paragraph (1) or paragraph (2) of subsection (a), refund or credit of tax under this subtitle for the prior taxable year is prevented (except for the provisions of section 1311) by any provision of the internal revenue laws other than section 7122, or by rule of law, the amount by which the tax for such year under this subtitle is decreased by the application of paragraph (1) or paragraph (2) of subsection (a) shall be computed under this paragraph. There shall first be ascertained the tax previously determined for the prior taxable year. The amount of the tax previously determined shall be the excess of— "(A) the sum of— "(i) the amount shown as the tax by the taxpayer on his return (determined as provided in section 6211 (b) (1) and (3)), if a return was made by the taxpayer and an amount was shown as the tax by the taxpayer thereon, plus "(ii) the amounts previously assessed (or collected without assessment) as a deficiency, over "(B) the amount of rebates, as defined in section 6211 (b) (2), made. There shall then be ascertained the decrease in tax previously determined which results solely from the application of paragraph (1) or paragraph (2) of subsection (a) to the prior taxable year. The amount so ascertained, together with any amounts collected as additions to the tax or interest, as a result of paragraph (1) or paragraph (2) of subsection (a) not having been applied to the prior taxable year, shall be the amount by which such tax is decreased. "(3) INTEREST.-In determining the amount of the credit under this subsection no interest shall be allowed with respect to the amount ascertained under paragraph (1); except that if interest is charged by the United States or the agency thereof on account of the disallowance for any period before the date of the payment, repayment, or offset, the credit shall be increased by an amount equal to interest on the amount ascertained under such paragraph at the same rate and for the period (prior to the date of the payment, repayment, or offset) as interest is so charged. "(c) CREDIT IN LIEU OF OTHER CREDIT OR REFUND.-If a credit is allowed under subsection (b) with respect to a prior taxable year no other credit or refund under the internal-revenue laws founded on the application of subsection (a) shall be made on account of the amount allowed with respect to such taxable year. If the amount allowable as a credit under subsection (b) exceeds the amount allowed under such subsection, the excess shall, for purposes of the internal revenue laws relating to credit or refund of tax, be treated as an overpayment for the prior taxable year which was made at the time the payment, repayment, or offset was made. "(d) RENEGOTIATION OF GOVERNMENT CONTRACTS AFFECTING TAXABLE YEARS PRIOR TO 1954. If a recovery of excessive profits through renegotiation as described in this section relates to profits of a taxable year subject to the Internal Revenue Code of 1939, the adjustments in respect of such renegotiation shall be made under section 3806 of such code." 345 For authority and duty of the Joint Committee on Internal Revenue Taxation with respect to the Renegotiation Act of 1951, see "ANCILLARY PROVISIONS" under Sec. 8022, at p. 1200 below. SEC. 1481-Continued ANCILLARY PROVISIONS (Renegotiation Act of 1951, § 102)—Continued related subcontracts, to the extent of the amounts received or accrued by a contractor or subcontractor on or after the first day of January 1951, whether such contracts or subcontracts were made on, before, or after such first day, and (2) to all contracts with the Departments designated by the President under section 103(a), and related subcontracts, to the extent of the amounts received or accrued by a contractor or subcontractor on or after the first day of the first month beginning after the date of such designation, whether such contracts or subcontracts were made on, before, or after such first day; but the provisions of this title shall not be applicable to receipts or accruals attributable to performance, under contracts or subcontracts, after December 31, 1953. "(b) PERFORMANCE PRIOR TO JULY 1, 1950.-Notwithstanding the provisions of subsection (a), the provisions of this title shall not apply to contracts with the Departments, or related subcontracts, to the extent of the amounts received or accrued by a contractor or subcontractor on or after the 1st day of January 1951, which are attributable to performance, under such contracts or subcontracts, prior to July 1, 1950. This subsection shall have no application in the case of contracts, or related subcontracts, which, but for subsection (c), would be subject to the Renegotiation Act of 1948. "(c) RENEGOTIATION ACT OF 1948.-The Renegotiation Act of 1948 shall not be applicable to any contract or subcontract to the extent of the amounts received or accrued by a contractor or subcontractor on or after the 1st day of January 1951, whether such contract or subcontract was made on, before, or after such first day. In the case of a fiscal year beginning in 1950 and ending in 1951, if a contractor or subcontractor has receipts or accruals prior to January 1, 1951, from contracts or subcontracts subject to the Renegotiation Act of 1948, and also has receipts or accruals after December 31, 1950, to which the provisions of this title are applicable, the provisions of this title shall, notwithstanding subsection (a), apply to such receipts and accruals prior to January 1, 1951, if the Board and such contractor or subcontractor agree to such application of this title; and in the case of such an agreement the provisions of the Renegotiation Act of 1948 shall not apply to any of the receipts or accruals for such fiscal year. any "(d) SUSPENSION OF CERTAIN PROFIT LIMITATIONS.-Notwithstanding agreement to the contrary, the profit-limitation provisions of the Act of March 27, 1934 (48 Stat. 503, 505), as amended and supplemented, and of section 505(b) of the Merchant Marine Act, 1936, as amended and supplemented (46 U.S.C. 1155(b)), shall not apply, in the case of such Act of March 27, 1934, to any contract or subcontract if any of the receipts or accruals therefrom are subject to this title, and, in the case of the Merchant Marine Act, 1936, to any contract or subcontract entered into after December 31, 1950, if any of the receipts or accruals therefrom are subject to this title." Sept. 1, 1954, H.R. 6287, P.L. 83-764, § 1, 68 Stat. 1116: Amended section 102(a) of the Renegotiation Act of 1951 by striking out"December 31. 1953" and inserting in lieu thereof "December 31, 1954". Aug. 3, 1955, H.R. 4904, P.L. 84-216, § 1, 69 Stat. 447: Amended section 102(a) of the Renegotiation Act of 1951 (as amended by P.L. 83-764, § 1) by striking out "December 31, 1954" and inserting in lieu thereof "December 31, 1956". SEC. 1481-Continued ANCILLARY PROVISIONS (Renegotiation Act of 1951, § 102)—Continued (1) by striking out in subsection (a) (as amended by P.L. 84–216, § 1)— "; but the provisions of this title shall not be applicable to receipts or accruals attributable to the performance, under contracts or subcontracts, after December 31, 1956"; (2) by relettering subsections (c) and (d) as (d) and (e), respectively; and (3) by inserting after subsection (b) the following new subsection (c): "(c) TERMINATION. "(1) IN GENERAL.-The provisions of this title shall apply only with respect to receipts and accruals, under contracts with the Departments and related subcontracts, which are determined under regulations prescribed by the Board to be reasonably attributable to performance prior to the close of the termination date. Notwithstanding the method of accounting employed by the contractor or subcontractor in keeping his records, receipts or accruals determined to be so attributable, even if received or accrued after the termination date, shall be considered as having been received or accrued not later than the termination date. For the purposes of this title, the term 'termination date' means December 31, 1958. "(2) TERMINATION OF STATUS AS DEPARTMENT.-When the status of any agency of the Government as a Department within the meaning of section 103(a) is terminated, the provisions of this title shall apply only with respect to receipts and accruals, under contracts with such agency and related subcontracts, which are determined under regulations prescribed by the Board to be reasonably attributable to performance prior to the close of the status termination date. Notwithstanding the method of accounting employed by the contractor or subcontractor in keeping his records, receipts or accruals determined to be so attributable, even if received or accrued after the status termination date, shall be considered as having been received or accrued not later than the status termination date. For the purposes of this paragraph, the term 'status termination date' means, with respect to any agency, the date on which the status of such agency as a Department within the meaning of section 103 (a) is terminated." Sept. 6, 1958, H.R. 11749, P.L. 85–930, § 1, 72 Stat. 1789: Amended section 102(c)(1) of the Renegotiation Act of 1951 (as added by P.L. 84-870, § 2) by striking out "December 31, 1958" and inserting in lieu thereof "June 30, 1959". July 13, 1959, H.R. 7086, P.L. 86-89, § 1, 73 Stat. 210: Amended section 102(c)(1) of the Renegotiation Act of 1951 (as amended by P.L. 85-930, 1) by striking out "June 30, 1959" and inserting in lieu thereof "June 30, 1962". July 3, 1962, H.R. 12061, P.L. 87-520, § 1, 76 Stat. 134: Amended section 102(c)(1) of the Renegotiation Act of 1951 (as amended by P.L. 86-89, § 1) by striking out "June 30, 1962" and inserting in lieu thereof"June 30, 1964". |