Page:United States Statutes at Large Volume 118.djvu/1629

 118 STAT. 1599 PUBLIC LAW 108–357—OCT. 22, 2004 not used for a payment of tax) which the taxpayer requests in writing. ‘‘(d) PAYMENT OF INTEREST.— ‘‘(1) IN GENERAL.—For purposes of section 6611 (relating to interest on overpayments), except as provided in paragraph (4), a deposit which is returned to a taxpayer shall be treated as a payment of tax for any period to the extent (and only to the extent) attributable to a disputable tax for such period. Under regulations prescribed by the Secretary, rules similar to the rules of section 6611(b)(2) shall apply. ‘‘(2) DISPUTABLE TAX.— ‘‘(A) IN GENERAL.—For purposes of this section, the term ‘disputable tax’ means the amount of tax specified at the time of the deposit as the taxpayer’s reasonable estimate of the maximum amount of any tax attributable to disputable items. ‘‘(B) SAFE HARBOR BASED ON 30 DAY LETTER.—In the case of a taxpayer who has been issued a 30 day letter, the maximum amount of tax under subparagraph (A) shall not be less than the amount of the proposed deficiency specified in such letter. ‘‘(3) OTHER DEFINITIONS.—For purposes of paragraph (2)— ‘‘(A) DISPUTABLE ITEM.—The term ‘disputable item’ means any item of income, gain, loss, deduction, or credit if the taxpayer— ‘‘(i) has a reasonable basis for its treatment of such item, and ‘‘(ii) reasonably believes that the Secretary also has a reasonable basis for disallowing the taxpayer’s treatment of such item. ‘‘(B) 30 DAY LETTER.—The term ‘30 day letter’ means the first letter of proposed deficiency which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Office of Appeals. ‘‘(4) RATE OF INTEREST.—The rate of interest under this subsection shall be the Federal short term rate determined under section 6621(b), compounded daily. ‘‘(e) USE OF DEPOSITS.— ‘‘(1) PAYMENT OF TAX.—Except as otherwise provided by the taxpayer, deposits shall be treated as used for the payment of tax in the order deposited. ‘‘(2) RETURNS OF DEPOSITS.—Deposits shall be treated as returned to the taxpayer on a last in, first out basis.’’. (b) CLERICAL AMENDMENT.—The table of sections for subchapter A of chapter 67 is amended by adding at the end the following new item: ‘‘Sec. 6603. Deposits made to suspend running of interest on potential un derpayments, etc.’’. (c) EFFECTIVE DATE.— (1) IN GENERAL.—The amendments made by this section shall apply to deposits made after the date of the enactment of this Act. (2) COORDINATION WITH DEPOSITS MADE UNDER REVENUE PROCEDURE 84–58.—In the case of an amount held by the Sec retary of the Treasury or his delegate on the date of the enactment of this Act as a deposit in the nature of a cash bond deposit pursuant to Revenue Procedure 84–58, the date 26 USC 6603 note. Regulations. Applicability.

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