PART VI ITEMS OF GENERAL INTEREST PENALTY PROVISIONS OF LAW FOR FAILURE TO DEPOSIT TAXES Announcement 59-23 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. REQUEST FOR RETROACTIVE COVERAGE UNDER THE FEDERAL INSURANCE CONTRIBUTIONS ACT Announcement 59-22 Certain organizations exempt from income tax as an organization described in section 501 (c) (3) of the Internal Revenue Code of 1954 may now obtain retroactive coverage for their employees under the Federal Insurance Contributions Act by promptly filing a new form, Form SS-15b, Request for Retroactive Coverage under the Federal Insurance Contributions Act, pursuant to section 3121(k) (1) (F) of the Federal Insurance Contributions Act, as added by the Social Security Amendments Act of 1958, Public Law 85-840, I.R.B. 1958-39, 108. Under prior law, coverage was effective no earlier than the quarter in which the organization filed a Form SS-15, Certificate Waiving Exemption from Taxes under the Federal Insurance Contributions Act. The new provision for retroactive coverage makes allowance for reasonable delays in filing waiver certificates by those organizations which found it difficult to file the certificates promptly. Form SS-15b is for use by those organizations which filed a Form SS-15 after December 31, 1955, but before August 29, 1958, and must be filed prior to January 1, 1960. By filing Form SS-15b, the organization requests that the previously filed Form SS-15 be made effective with respect to services performed in its employ, on or after the date specified in the form, by the employees, or former employees, whose signatures appear on this request. The organization certifies that each of such individuals concurred in the filing of the Form SS-15 by signing the Form SS-15a filed with that form or by signing a Form SS-15a Supplement which was filed by the organization before August 29, 1958. The forms in the SS-15 Series are to be used in place of the forms in the SS-15PR Series, printed in Spanish for use in Puerto Rico, which have been discontinued. Copies of the forms in the SS-15 Series are available from the Offices of the District Directors of Internal Revenue. (48) U. S. GOVERNMENT PRINTING OFFICE: 1959 page 8. The Revenue Service will follow the decisions in Oreste Rev. Rul. 59-79, Where a prize awarded in a contest consists of a Rev. Rul. 59-80, page 9. page 10. Under the circumstances, amounts received by an indi- Rev. Rul. 59-81, page 12. A wife whose husband has no income, except that which Rev. Rul. 59-82, page 13. Banks using the reserve method of accounting for bad Rev. Rul. 59-83, page 14. The Revenue Service discusses "section 306 stock" in Rev. Rul. 59-84, (Continued on page 3) page 37. Finding List begins on page 59. TREASURY DEPARTMENT 497088-59--1 • INTERNAL REVENUE SERVICE 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. In applying rulings and procedures published in the Bulletin, (Continued on page 4) DEPOSITED BY THE UNITED STATES OF AMERICA 3 HIGHLIGHTS OF THIS ISSUE-(Continued from page 1) INCOME TAX-Continued. page 40. Under certain conditions, where a capital asset is ac- Rev. Rul. 59-86, quired by valid gift, the holding period of the donee commences on the date of the gift even though the donor dies subsequent to making the gift and the asset is included in his taxable estate as a gift made in contemplation of death. Regulations have been issued under section 912 of the T. Code relative to the exclusion from gross income of cost-of-living allowances received by Government civilian personnel stationed in Alaska. D. 6365, page 38. Regulations have been issued under section 481 of the T. D. 6366, The application of the income tax convention between EXCISE TAXES: page 15. Announcement 59-21, page 51. Announcement 59-25, page 53. page 41. A so-called “service charge” which is added by a retailer Rev. Rul. 59-87, where taxable articles are sold in small quantities is to be included in the sale price for purposes of computing the retailers tax unless the charge, or a portion of it, is excludable under the provisions of section 4051 of the Code. The manufacturers tax on electric light bulbs applies Rev. Rul. 59-88, to sales by the importer of so-called "super pressure” mercury lamps which are designed for the diffusion of artificial light. page 42. page 43. Where gasoline is used by a milling company in har- Rev. Rul. 59–89, vesting a crop which that company purchased from a farmer, neither the milling company nor the farmer is entitled to the payment provided by section 6420(a) of the Code with respect to gasoline used on a farm for farming purposes. Where a timely filed Form 2240, Claim for Refund of Rev. Rul. 59-90, Federal Tax on Gasoline Used on A Farm, is disallowed, it may be processed, if appropriate, as a claim for payment of the one cent for each gallon of gasoline used for nonhighway purposes. page 44. 59-24, page 53. The effective date of Revenue Ruling 58–620, relating Announcement The new rules for the determination of tax on the lease Announcement 59-26, page 54. |