{"identifier":"/us/usc/t26/s7519","title":26,"num":"\u00a7\u202f7519.","heading":"Required payments for entities electing not to have required taxable year","text":"\u00a7\u202f7519.\nRequired payments for entities electing not to have required taxable year\n(a)\nGeneral rule\nThis section applies to a partnership or S corporation for any taxable year, if\u2014\n(1) an election under section 444 is in effect for the taxable year, and\n(2) the required payment determined under subsection (b) for such taxable year (or any preceding taxable year) exceeds $500.\n(b)\nRequired payment\nFor purposes of this section, the term \u201crequired payment\u201d means, with respect to any applicable election year of a partnership or S corporation, an amount equal to\u2014\n(1) the excess of the product of\u2014\n(A) the applicable percentage of the adjusted highest section 1 rate, multiplied by\n(B) the net base year income of the entity, over\n(2) the net required payment balance.\nFor purposes of paragraph (1)(A), the term \u201cadjusted highest section 1 rate\u201d means the highest rate of tax in effect under section 1 as of the end of the base year plus 1 percentage point (or, in the case of applicable election years beginning in 1987, 36 percent).\n(c)\nRefund of payments\n(1)\nIn general\nIf, for any applicable election year, the amount determined under subsection (b)(2) exceeds the amount determined under subsection (b)(1), the entity shall be entitled to a refund of such excess for such year.\n(2)\nTermination of elections, etc.\nIf\u2014\n(A) an election under section 444 is terminated effective with respect to any year, or\n(B) the entity is liquidated during any year, the entity shall be entitled to a refund of the net required payment balance.\n(3)\nDate on which refund payable\nAny refund under this subsection shall be payable on the later of\u2014\n(A) April 15 of the calendar year following\u2014\n(i) in the case of the year referred to in paragraph (1), the calendar year in which it begins,\n(ii) in the case of the year referred to in paragraph (2), the calendar year in which it ends, or\n(B) the day 90 days after the day on which claim therefor is filed with the Secretary.\n(d)\nNet base year income\nFor purposes of this section\u2014\n(1)\nIn general\nAn entity\u2019s net base year income shall be equal to the sum of\u2014\n(A) the deferral ratio multiplied by the entity\u2019s net income for the base year, plus\n(B) the excess (if any) of\u2014\n(i) the deferral ratio multiplied by the aggregate amount of applicable payments made by the entity during the base year, over\n(ii) the aggregate amount of such applicable payments made during the deferral period of the base year.\nFor purposes of this paragraph, the term \u201cdeferral ratio\u201d means the ratio which the number of months in the deferral period of the base year bears to the number of months in the partnership\u2019s or S corporation\u2019s taxable year.\n(2)\nNet income\nNet income is determined by taking into account the aggregate amount of the following items\u2014\n(A)\nPartnerships\nIn the case of a partnership, net income shall be the amount (not below zero) determined by taking into account the aggregate amount of the partnership\u2019s items described in section 702(a) (other than credits and tax-exempt income).\n(B)\nS corporations\nIn the case of an S corporation, net income shall be the amount (not below zero) determined by taking into account the aggregate amount of the S corporation\u2019s items described in section 1366(a) (other than credits and tax-exempt income). If the S corporation was a C corporation for the base year, its taxable income for such year shall be treated as its net income for such year (and such corporation shall be treated as an S corporation for such taxable year for purposes of paragraph (3)).\n(C)\nCertain limitations disregarded\nFor purposes of subparagraph (A) or (B), any limitation on the amount of any item described in either such paragraph which may be taken into account for purposes of computing the taxable income of a partner or shareholder shall be disregarded.\n(3)\nApplicable payments\n(A)\nIn general\nThe term \u201capplicable payment\u201d means amounts paid by a partnership or S corporation which are includible in gross income of a partner or shareholder.\n(B)\nExceptions\nThe term \u201capplicable payment\u201d shall not include any\u2014\n(i) gain from the sale or exchange of property between the partner or shareholder and the partnership or S corporation, and\n(ii) dividend paid by the S corporation.\n(4)\nApplicable percentage\nThe applicable percentage is the percentage determined in accordance with the following table:\nIf the applicable election year of\nthe partnership or S corporation\nbegins during:\nThe applicable percentage is:\n1987\n25\n1988\n50\n1989\n75\n1990 or thereafter\n100.\nNotwithstanding the preceding provisions of this paragraph, the applicable percentage for any partnership or S corporation shall be 100 percent unless more than 50 percent of such entity\u2019s net income for the short taxable year which would have resulted if the entity had not made an election under section 444 would have been allocated to partners or shareholders who would have been entitled to the benefits of section 806(e)(2)(C) of the Tax Reform Act of 1986 with respect to such income.\n(5)\nTreatment of guaranteed payments\n(A)\nIn general\nAny guaranteed payment by a partnership shall not be treated as an applicable payment, and the amount of the net income of the partnership shall be determined by not taking such guaranteed payment into account.\n(B)\nGuaranteed payment\nFor purposes of subparagraph (A), the term \u201cguaranteed payment\u201d means any payment referred to in section 707(c).\n(e)\nOther definitions and special rules\nFor purposes of this section\u2014\n(1)\nDeferral period\nThe term \u201cdeferral period\u201d has the meaning given to such term by section 444(b)(4).\n(2)\nYears\n(A)\nBase year\nThe term \u201cbase year\u201d means, with respect to any applicable election year, the taxable year of the partnership or S corporation preceding such applicable election year.\n(B)\nApplicable election year\nThe term \u201capplicable election year\u201d means any taxable year of a partnership or S corporation with respect to which an election is in effect under section 444.\n(3)\nRequirement of reporting\nEach partnership or S corporation which makes an election under section 444 shall include on any required return or statement such information as the Secretary shall prescribe as is necessary to carry out the provisions of this section.\n(4)\nNet required payment balance\nThe term \u201cnet required payment balance\u201d means the excess (if any) of\u2014\n(A) the aggregate of the required payments under this section for all preceding applicable election years, over\n(B) the aggregate amount allowable as a refund to the entity under subsection (c) for all preceding applicable election years.\n(f)\nAdministrative provisions\n(1)\nIn general\nExcept as otherwise provided in this subsection or in regulations prescribed by the Secretary, any payment required by this section shall be assessed and collected in the same manner as if it were a tax imposed by subtitle C.\n(2)\nDue date\nThe amount of any payment required by this section shall be paid on or before April 15 of the calendar year following the calendar year in which the applicable election year begins (or such later date as may be prescribed by the Secretary).\n(3)\nInterest\nFor purposes of determining interest, any payment required by this section shall be treated as a tax; except that no interest shall be allowed with respect to any refund of a payment made under this section.\n(4)\nPenalties\n(A)\nIn general\nIn the case of any failure by any person to pay on the date prescribed therefor any amount required by this section, there shall be imposed on such person a penalty of 10 percent of the underpayment. For purposes of the preceding sentence, the term \u201cunderpayment\u201d means the excess of the amount of the payment required under this section over the amount (if any) of such payment paid on or before the date prescribed therefor. No penalty shall be imposed under this subparagraph on any failure which is shown to be due to reasonable cause and not willful neglect.\n(B)\nNegligence and fraud penalties made applicable\nFor purposes of part II of subchapter A of chapter 68, any payment required by this section shall be treated as a tax.\n(C)\nWillful failure\nIf any partnership or S corporation willfully fails to comply with the requirements of this section, section 444 shall cease to apply with respect to such partnership or S corporation.\n(g)\nRegulations\nThe Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the provisions of this section and section 280H, including regulations providing for appropriate adjustments in the application of this section and sections 280H and 444 in cases where\u2014\n(1) 2 or more applicable election years begin in the same calendar year, or\n(2) the base year is a taxable year of less than 12 months.","url":"https://projectusc.org/usc/t26/s7519.html","content":[{"t":"sec","id":"/us/usc/t26/s7519","children":[{"t":"num","text":"\u00a7\u202f7519."},{"t":"heading","text":"Required payments for entities electing not to have required taxable year"},{"t":"subsec","id":"/us/usc/t26/s7519/a","children":[{"t":"num","text":"(a)"},{"t":"heading","text":"General rule"},{"t":"chapeau","text":"This section applies to a partnership or S corporation for any taxable year, if\u2014"},{"t":"para","id":"/us/usc/t26/s7519/a/1","children":[{"t":"num","text":"(1)"},{"t":"content","text":" an election under section 444 is in effect for the taxable year, and","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/a/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" the required payment determined under subsection (b) for such taxable year (or any preceding taxable year) exceeds $500.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s7519/b","children":[{"t":"num","text":"(b)"},{"t":"heading","text":"Required payment"},{"t":"chapeau","text":"For purposes of this section, the term \u201crequired payment\u201d means, with respect to any applicable election year of a partnership or S corporation, an amount equal to\u2014"},{"t":"para","id":"/us/usc/t26/s7519/b/1","children":[{"t":"num","text":"(1)"},{"t":"chapeau","text":" the excess of the product of\u2014"},{"t":"subpara","id":"/us/usc/t26/s7519/b/1/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" the applicable percentage of the adjusted highest section 1 rate, multiplied by","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/b/1/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" the net base year income of the entity, over","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/b/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" the net required payment balance.","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"For purposes of paragraph (1)(A), the term \u201cadjusted highest section 1 rate\u201d means the highest rate of tax in effect under section 1 as of the end of the base year plus 1 percentage point (or, in the case of applicable election years beginning in 1987, 36 percent).","tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s7519/c","children":[{"t":"num","text":"(c)"},{"t":"heading","text":"Refund of payments"},{"t":"para","id":"/us/usc/t26/s7519/c/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"If, for any applicable election year, the amount determined under subsection (b)(2) exceeds the amount determined under subsection (b)(1), the entity shall be entitled to a refund of such excess for such year.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/c/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Termination of elections, etc."},{"t":"chapeau","text":"If\u2014"},{"t":"subpara","id":"/us/usc/t26/s7519/c/2/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" an election under section 444 is terminated effective with respect to any year, or","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/c/2/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" the entity is liquidated during any year, the entity shall be entitled to a refund of the net required payment balance.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/c/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Date on which refund payable"},{"t":"chapeau","text":"Any refund under this subsection shall be payable on the later of\u2014"},{"t":"subpara","id":"/us/usc/t26/s7519/c/3/A","children":[{"t":"num","text":"(A)"},{"t":"chapeau","text":" April 15 of the calendar year following\u2014"},{"t":"clause","id":"/us/usc/t26/s7519/c/3/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" in the case of the year referred to in paragraph (1), the calendar year in which it begins,","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s7519/c/3/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" in the case of the year referred to in paragraph (2), the calendar year in which it ends, or","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/c/3/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" the day 90 days after the day on which claim therefor is filed with the Secretary.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s7519/d","children":[{"t":"num","text":"(d)"},{"t":"heading","text":"Net base year income"},{"t":"chapeau","text":"For purposes of this section\u2014"},{"t":"para","id":"/us/usc/t26/s7519/d/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"An entity\u2019s net base year income shall be equal to the sum of\u2014"},{"t":"subpara","id":"/us/usc/t26/s7519/d/1/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" the deferral ratio multiplied by the entity\u2019s net income for the base year, plus","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/d/1/B","children":[{"t":"num","text":"(B)"},{"t":"chapeau","text":" the excess (if any) of\u2014"},{"t":"clause","id":"/us/usc/t26/s7519/d/1/B/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" the deferral ratio multiplied by the aggregate amount of applicable payments made by the entity during the base year, over","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s7519/d/1/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" the aggregate amount of such applicable payments made during the deferral period of the base year.","tail":"\n"}],"tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"For purposes of this paragraph, the term \u201cdeferral ratio\u201d means the ratio which the number of months in the deferral period of the base year bears to the number of months in the partnership\u2019s or S corporation\u2019s taxable year.","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/d/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Net income"},{"t":"chapeau","text":"Net income is determined by taking into account the aggregate amount of the following items\u2014"},{"t":"subpara","id":"/us/usc/t26/s7519/d/2/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"Partnerships"},{"t":"content","children":[{"t":"p","text":"In the case of a partnership, net income shall be the amount (not below zero) determined by taking into account the aggregate amount of the partnership\u2019s items described in section 702(a) (other than credits and tax-exempt income).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/d/2/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"S corporations"},{"t":"content","children":[{"t":"p","text":"In the case of an S corporation, net income shall be the amount (not below zero) determined by taking into account the aggregate amount of the S corporation\u2019s items described in section 1366(a) (other than credits and tax-exempt income). If the S corporation was a C corporation for the base year, its taxable income for such year shall be treated as its net income for such year (and such corporation shall be treated as an S corporation for such taxable year for purposes of paragraph (3)).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/d/2/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Certain limitations disregarded"},{"t":"content","children":[{"t":"p","text":"For purposes of subparagraph (A) or (B), any limitation on the amount of any item described in either such paragraph which may be taken into account for purposes of computing the taxable income of a partner or shareholder shall be disregarded.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/d/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Applicable payments"},{"t":"subpara","id":"/us/usc/t26/s7519/d/3/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"The term \u201capplicable payment\u201d means amounts paid by a partnership or S corporation which are includible in gross income of a partner or shareholder.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/d/3/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Exceptions"},{"t":"chapeau","text":"The term \u201capplicable payment\u201d shall not include any\u2014"},{"t":"clause","id":"/us/usc/t26/s7519/d/3/B/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" gain from the sale or exchange of property between the partner or shareholder and the partnership or S corporation, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s7519/d/3/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" dividend paid by the S corporation.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/d/4","children":[{"t":"num","text":"(4)"},{"t":"heading","text":"Applicable percentage"},{"t":"content","children":[{"t":"p","text":"The applicable percentage is the percentage determined in accordance with the following table:","children":[{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"p","children":[{"t":"text","text":"If the applicable election year of"}]},{"t":"p","children":[{"t":"text","text":"\u2001the partnership or S corporation"}]},{"t":"p","children":[{"t":"text","text":"\u2001begins during:"}]},{"t":"p","children":[{"t":"text","text":"The applicable percentage is:"}]},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"p","children":[{"t":"text","text":"1987"}]},{"t":"p","text":"25\u202f\u202f"},{"t":"text","text":"\n"},{"t":"p","children":[{"t":"text","text":"1988"}]},{"t":"p","text":"50\u202f\u202f"},{"t":"text","text":"\n"},{"t":"p","children":[{"t":"text","text":"1989"}]},{"t":"p","text":"75\u202f\u202f"},{"t":"text","text":"\n"},{"t":"p","children":[{"t":"text","text":"1990 or thereafter"}]},{"t":"p","text":"100."},{"t":"text","text":"\n"},{"t":"text","text":"\n","tail":"\n"}],"tail":"\n"},{"t":"p","text":"Notwithstanding the preceding provisions of this paragraph, the applicable percentage for any partnership or S corporation shall be 100 percent unless more than 50 percent of such entity\u2019s net income for the short taxable year which would have resulted if the entity had not made an election under section 444 would have been allocated to partners or shareholders who would have been entitled to the benefits of section 806(e)(2)(C) of the Tax Reform Act of 1986 with respect to such income.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/d/5","children":[{"t":"num","text":"(5)"},{"t":"heading","text":"Treatment of guaranteed payments"},{"t":"subpara","id":"/us/usc/t26/s7519/d/5/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"Any guaranteed payment by a partnership shall not be treated as an applicable payment, and the amount of the net income of the partnership shall be determined by not taking such guaranteed payment into account.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/d/5/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Guaranteed payment"},{"t":"content","children":[{"t":"p","text":"For purposes of subparagraph (A), the term \u201cguaranteed payment\u201d means any payment referred to in section 707(c).","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s7519/e","children":[{"t":"num","text":"(e)"},{"t":"heading","text":"Other definitions and special rules"},{"t":"chapeau","text":"For purposes of this section\u2014"},{"t":"para","id":"/us/usc/t26/s7519/e/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"Deferral period"},{"t":"content","children":[{"t":"p","text":"The term \u201cdeferral period\u201d has the meaning given to such term by section 444(b)(4).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/e/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Years"},{"t":"subpara","id":"/us/usc/t26/s7519/e/2/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"Base year"},{"t":"content","children":[{"t":"p","text":"The term \u201cbase year\u201d means, with respect to any applicable election year, the taxable year of the partnership or S corporation preceding such applicable election year.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/e/2/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Applicable election year"},{"t":"content","children":[{"t":"p","text":"The term \u201capplicable election year\u201d means any taxable year of a partnership or S corporation with respect to which an election is in effect under section 444.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/e/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Requirement of reporting"},{"t":"content","children":[{"t":"p","text":"Each partnership or S corporation which makes an election under section 444 shall include on any required return or statement such information as the Secretary shall prescribe as is necessary to carry out the provisions of this section.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/e/4","children":[{"t":"num","text":"(4)"},{"t":"heading","text":"Net required payment balance"},{"t":"chapeau","text":"The term \u201cnet required payment balance\u201d means the excess (if any) of\u2014"},{"t":"subpara","id":"/us/usc/t26/s7519/e/4/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" the aggregate of the required payments under this section for all preceding applicable election years, over","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/e/4/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" the aggregate amount allowable as a refund to the entity under subsection (c) for all preceding applicable election years.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s7519/f","children":[{"t":"num","text":"(f)"},{"t":"heading","text":"Administrative provisions"},{"t":"para","id":"/us/usc/t26/s7519/f/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"Except as otherwise provided in this subsection or in regulations prescribed by the Secretary, any payment required by this section shall be assessed and collected in the same manner as if it were a tax imposed by subtitle C.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/f/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Due date"},{"t":"content","children":[{"t":"p","text":"The amount of any payment required by this section shall be paid on or before April 15 of the calendar year following the calendar year in which the applicable election year begins (or such later date as may be prescribed by the Secretary).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/f/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Interest"},{"t":"content","children":[{"t":"p","text":"For purposes of determining interest, any payment required by this section shall be treated as a tax; except that no interest shall be allowed with respect to any refund of a payment made under this section.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/f/4","children":[{"t":"num","text":"(4)"},{"t":"heading","text":"Penalties"},{"t":"subpara","id":"/us/usc/t26/s7519/f/4/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"In the case of any failure by any person to pay on the date prescribed therefor any amount required by this section, there shall be imposed on such person a penalty of 10 percent of the underpayment. For purposes of the preceding sentence, the term \u201cunderpayment\u201d means the excess of the amount of the payment required under this section over the amount (if any) of such payment paid on or before the date prescribed therefor. No penalty shall be imposed under this subparagraph on any failure which is shown to be due to reasonable cause and not willful neglect.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/f/4/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Negligence and fraud penalties made applicable"},{"t":"content","children":[{"t":"p","text":"For purposes of part II of subchapter A of chapter 68, any payment required by this section shall be treated as a tax.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s7519/f/4/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Willful failure"},{"t":"content","children":[{"t":"p","text":"If any partnership or S corporation willfully fails to comply with the requirements of this section, section 444 shall cease to apply with respect to such partnership or S corporation.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s7519/g","children":[{"t":"num","text":"(g)"},{"t":"heading","text":"Regulations"},{"t":"chapeau","text":"The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the provisions of this section and section 280H, including regulations providing for appropriate adjustments in the application of this section and sections 280H and 444 in cases where\u2014"},{"t":"para","id":"/us/usc/t26/s7519/g/1","children":[{"t":"num","text":"(1)"},{"t":"content","text":" 2 or more applicable election years begin in the same calendar year, or","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s7519/g/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" the base year is a taxable year of less than 12 months.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"}]}]}