Internal Revenue Code:Sec. 6038C. Information with respect to foreign corporations engaged in U.S. business

From TaxAlmanac

Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle F - Procedure and Administration
       CHAPTER 61 - INFORMATION AND RETURNS
        Subchapter A - Returns and Records
         PART III - INFORMATION RETURNS
          Subpart A - Information Concerning Persons Subject to Special
                Provisions
         

Statute

    Sec. 6038C. Information with respect to foreign corporations
        engaged in U.S. business
 
    (a) Requirement
      If a foreign corporation (hereinafter in this section referred to
    as the ''reporting corporation'') is engaged in a trade or business
    within the United States at any time during a taxable year -
        (1) such corporation shall furnish (at such time and in such
      manner as the Secretary shall by regulations prescribe) the
      information described in subsection (b), and
        (2) such corporation shall maintain (at the location, in the
      manner, and to the extent prescribed in regulations) such records
      as may be appropriate to determine the liability of such
      corporation for tax under this title as the Secretary shall by
      regulations prescribe (or shall cause another person to so
      maintain such records).
    (b) Required information
      For purposes of subsection (a), the information described in this
    subsection is -
        (1) the information described in section 6038A(b), and
        (2) such other information as the Secretary may prescribe by
      regulations relating to any item not directly connected with a
      transaction for which information is required under paragraph
      (1).
    (c) Penalty for failure to furnish information or maintain records
      The provisions of subsection (d) of section 6038A shall apply to
    -
        (1) any failure to furnish (within the time prescribed by
      regulations) any information described in subsection (b), and
        (2) any failure to maintain (or cause another to maintain)
      records as required by subsection (a),
    in the same manner as if such failure were a failure to comply with
    the provisions of section 6038A.
    (d) Enforcement of requests for certain records
      (1) Agreement to treat corporation as agent
        The rules of paragraph (3) shall apply to any transaction
      between the reporting corporation and any related party who is a
      foreign person unless such related party agrees (in such manner
      and at such time as the Secretary shall prescribe) to authorize
      the reporting corporation to act as such related party's limited
      agent solely for purposes of applying sections 7602, 7603, and
      7604 with respect to any request by the Secretary to examine
      records or produce testimony related to any such transaction or
      with respect to any summons by the Secretary for such records or
      testimony.  The appearance of persons or production of records by
      reason of the reporting corporation being such an agent shall not
      subject such persons or records to legal process for any purpose
      other than determining the correct treatment under this title of
      any transaction between the reporting corporation and such
      related party.
      (2) Rules where information not furnished
        If -
          (A) for purposes of determining the amount of the reporting
        corporation's liability for tax under this title, the Secretary
        issues a summons to such corporation to produce (either
        directly or as an agent for a related party who is a foreign
        person) any records or testimony,
          (B) such summons is not quashed in a proceeding begun under
        paragraph (4) of section 6038A(e) (as made applicable by
        paragraph (4) of this subsection) and is not determined to be
        invalid in a proceeding begun under section 7604(b) to enforce
        such summons, and
          (C) the reporting corporation does not substantially comply
        in a timely manner with such summons and the Secretary has sent
        by certified or registered mail a notice to such reporting
        corporation that such reporting corporation has not so
        substantially complied,
      the Secretary may apply the rules of paragraph (3) with respect
      to any transaction or item to which such summons relates (whether
      or not the Secretary begins a proceeding to enforce such
      summons).  If the reporting corporation fails to maintain (or
      cause another to maintain) records as required by subsection (a),
      and by reason of that failure, the summons is quashed in a
      proceeding described in subparagraph (B) or the reporting
      corporation is not able to provide the records requested in the
      summons, the Secretary may apply the rules of paragraph (3) with
      respect to any transaction or item to which the records relate.
      (3) Applicable rules
        If the rules of this paragraph apply to any transaction or
      item, the treatment of such transaction (or the amount and
      treatment of any such item) shall be determined by the Secretary
      in the Secretary's sole discretion from the Secretary's own
      knowledge or from such information as the Secretary may obtain
      through testimony or otherwise.
      (4) Judicial proceedings
        The provisions of section 6038A(e)(4) shall apply with respect
      to any summons referred to in paragraph (2)(A); except that
      subparagraph (D) of such section shall be applied by substituting
      ''transaction or item'' for ''transaction''.
    (e) Definitions
      For purposes of this section, the terms ''related party'',
    ''foreign person'', and ''records'' have the respective meanings
    given to such terms by section 6038A(c).
 

Sources

    (Added Pub. L. 101-508, title XI, Sec. 11315(a), Nov. 5, 1990, 104
    Stat. 1388-456.)
 

Miscellaneous

                               EFFECTIVE DATE
      Section applicable to (1) any requirement to furnish information
    under this section if the time for furnishing such information is
    after Nov. 5, 1990, (2) any requirement under subsec. (a) of this
    section to maintain records which were in existence on or after
    Mar. 20, 1990, (3) any requirement to authorize a corporation to
    act as a limited agent under subsec. (d)(1) of this section if the
    time for authorizing such action is after Nov. 5, 1990, and (4) any
    summons issued after Nov. 5, 1990, without regard to when the
    taxable year (to which the information, records, authorization, or
    summons relates) began, see section 11315(c) of Pub. L. 101-508,
    set out as an Effective Date of 1990 Amendment note under section
    6038A of this title.