26 U.S.C. § 4402 — Exemptions

Page 2973 TITLE 26—INTERNAL REVENUE CODE § 4402 1 Section numbers editorially supplied. Editorial Notes REFERENCES IN TEXT The Social Security Act, referred to in subsec. (b)(3)(A), (B), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Titles XVIII, XIX, and XXI of the Act are classified generally to subchapters XVIII (§ 1395 et seq.), XIX (§ 1396 et seq.), and XXI (§ 1397aa et seq.), respectively, of chapter 7 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables. Section 4(d) of the Indian Health Care Improvement Act, referred to in subsec. (b)(3)(D), is classified to sec- tion 1603(d) of Title 25, Indians. CHAPTER 35—TAXES ON WAGERING Subchapter Sec.1 A. Tax on wagers ........................................ 4401 B. Occupational tax ................................... 4411 C. Miscellaneous provisions ....................... 4421 Subchapter A—Tax on Wagers Sec. 4401. Imposition of tax. 4402. Exemptions. 4403. Record requirements. 4404. Territorial extent. 4405. Cross references. § 4401. Imposition of tax (a) Wagers (1) State authorized wagers There shall be imposed on any wager author- ized under the law of the State in which ac- cepted an excise tax equal to 0.25 percent of the amount of such wager. (2) Unauthorized wagers There shall be imposed on any wager not de- scribed in paragraph (1) an excise tax equal to 2 percent of the amount of such wager. (b) Amount of wager In determining the amount of any wager for the purposes of this subchapter, all charges inci- dent to the placing of such wager shall be in- cluded; except that if the taxpayer establishes, in accordance with regulations prescribed by the Secretary, that an amount equal to the tax im- posed by this subchapter has been collected as a separate charge from the person placing such wager, the amount so collected shall be ex- cluded. (c) Persons liable for tax Each person who is engaged in the business of accepting wagers shall be liable for and shall pay the tax under this subchapter on all wagers placed with him. Each person who conducts any wagering pool or lottery shall be liable for and shall pay the tax under this subchapter on all wagers placed in such pool or lottery. Any per- son required to register under section 4412 who receives wagers for or on behalf of another per- son without having registered under section 4412 the name and place of residence of such other person shall be liable for and shall pay the tax under this subchapter on all such wagers re- ceived by him. (Aug. 16, 1954, ch. 736, 68A Stat. 525; Pub. L. 85–859, title I, § 151(a), Sept. 2, 1958, 72 Stat. 1304; Pub. L. 93–499, § 3(a), Oct. 29, 1974, 88 Stat. 1550; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97–362, title I, § 109(a), Oct. 25, 1982, 96 Stat. 1731.) Editorial Notes AMENDMENTS 1982—Subsec. (a). Pub. L. 97–362 substituted provision that there shall be imposed on any wager authorized under the law of the State in which accepted an excise tax equal to 0.25 percent of the amount of such wager and that there shall be imposed on any other wager an excise tax equal to 2 percent of the amount of such wager for provision that there be imposed on wagers, as defined in section 4421, an excise tax equal to 2 percent of the amount thereof. 1976—Subsec. (b). Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’. 1974—Subsec. (a). Pub. L. 93–499 substituted ‘‘2 per- cent’’ for ‘‘10 percent’’. 1958—Subsec. (c). Pub. L. 85–859 made all persons re- quired to register under section 4412 of this title who receive wagers for or on behalf of another person with- out having registered under section 4412 of this title the name and place of residence of such other person liable for the tax on all such wagers received by them. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1982 AMENDMENT Pub. L. 97–362, title I, § 109(c)(1), Oct. 25, 1982, 96 Stat. 1731, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall take effect on January 1, 1983.’’ EFFECTIVE DATE OF 1974 AMENDMENT Pub. L. 93–499, § 3(d)(1), Oct. 29, 1974, 88 Stat. 1551, pro- vided that: ‘‘The amendments made by this section [en- acting section 4424 and amending this section and sec- tion 4411 of this title] take effect on December 1, 1974, and shall apply only with respect to wagers placed on or after such date.’’ EFFECTIVE DATE OF 1958 AMENDMENT Pub. L. 85–859, title I, § 151(b), Sept. 2, 1958, 72 Stat. 1304, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall apply with re- spect to wagers received after the date of the enact- ment of this Act [Sept. 2, 1958].’’ § 4402. Exemptions No tax shall be imposed by this subchapter— (1) Parimutuels On any wager placed with, or on any wager placed in a wagering pool conducted by, a pari- mutuel wagering enterprise licensed under State law, (2) Coin-operated devices On any wager placed in a coin-operated de- vice (as defined in section 4462 as in effect for years beginning before July 1, 1980), or on any amount paid, in lieu of inserting a coin, token, or similar object, to operate a device described in section 4462(a)(2) (as so in effect), or (3) State-conducted lotteries, etc. On any wager placed in a sweepstakes, wa- gering pool, or lottery which is conducted by an agency of a State acting under authority of State law, but only if such wager is placed with the State agency conducting such sweep- stakes, wagering pool, or lottery, or with its authorized employees or agents. Page 2974 TITLE 26—INTERNAL REVENUE CODE § 4403 (Aug. 16, 1954, ch. 736, 68A Stat. 525; Pub. L. 85–859, title I, § 152(b), Sept. 2, 1958, 72 Stat. 1305; Pub. L. 89–44, title IV, § 405(a), title VIII, § 813(a), June 21, 1965, 79 Stat. 149, 170; Pub. L. 94–455, title XII, § 1208(a), Oct. 4, 1976, 90 Stat. 1709; Pub. L. 95–600, title V, § 521(c)(1), Nov. 6, 1978, 92 Stat. 2884.) Editorial Notes REFERENCES IN TEXT Section 4462, referred to in par. (2), was repealed by Pub. L. 95–600, title V, § 521(b), Nov. 6, 1978, 92 Stat. 2884. AMENDMENTS 1978—Par. (2). Pub. L. 95–600 substituted ‘‘(as defined in section 4462 as in effect for years beginning before July 1, 1980)’’ for ‘‘with respect to which an occupa- tional tax is imposed by section 4461’’ and ‘‘(as so in ef- fect), or’’ for ‘‘if an occupational tax is imposed with respect to such device by section 4461, or’’. 1976—Par. (3). Pub. L. 94–455, among other changes, substituted in heading ‘‘State-conducted lotteries, etc.’’ for ‘‘State-conducted sweepstakes.’’, and struck out provision that no tax be imposed on any wager placed in a sweepstakes, wagering pool, or lottery in which the ultimate winners are determined by the re- sults of a horse race. 1965—Par. (2). Pub. L. 89–44, § 405(a), substituted ‘‘sec- tion 4462(a)(2),’’ for ‘‘section 4462(a)(2)(B),’’. Par. (3). Pub. L. 89–44, § 813(a), added par. (3). 1958—Par. (2). Pub. L. 85–859 inserted provisions ex- empting from the tax amounts paid to operate a device described in section 4462(a)(2)(B), if an occupational tax is imposed with respect to such device by section 4461 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95–600, title V, § 521(d)(2), Nov. 6, 1978, 92 Stat. 2885, provided that: ‘‘The amendments made by sub- sections (b) [repealing sections 4461 to 4464 of this title] and (c) [amending this section and section 4901 of this title] shall apply with respect to years beginning after June 30, 1980.’’ EFFECTIVE DATE OF 1976 AMENDMENT Pub. L. 94–455, title XII, § 1208(c)(1), Oct. 4, 1976, 90 Stat. 1709, provided that: ‘‘The amendment made by subsection (a) [amending this section)] shall apply with respect to wagers placed after March 10, 1964’’. EFFECTIVE DATE OF 1965 AMENDMENT Pub. L. 89–44, title VII, § 701(c)(2), June 21, 1965, 79 Stat. 157, provided in part that: ‘‘The amendments made by sections 403 [amending sections 4461 and 4462 of this title] (relating to occupational tax on coin-oper- ated devices) and 404 [repealing sections 4471 to 4474] (relating to occupational tax on bowling alleys, billiard and pool tables), and by subsections (a) [amending this section], (b) [amending section 4901 of this title] and (d) [amending section 4914 of this title] of section 405 (re- lating to technical and conforming changes) shall apply on and after July 1, 1965.’’ Pub. L. 89–44, title VIII, § 813(b), June 21, 1965, 79 Stat. 170, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall apply with re- spect to wagers placed after March 10, 1964.’’ EFFECTIVE DATE OF 1958 AMENDMENT Pub. L. 85–859, title I, § 152(c), Sept. 2, 1958, 72 Stat. 1305, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘The amendments made by subsections (a) and (b) [amending this section and sec- tion 4462 of this title] shall take effect on the effective date specified in section 1(c) of this Act [the first day of the first calendar quarter beginning more than 60 days after Sept. 2, 1958]. In the case of the year begin- ning July 1, 1958, where the trade or business on which the tax is imposed under section 4461 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] was com- menced before such effective date, the tax imposed for such year solely by reason of the amendment made by subsection (a)— ‘‘(1) shall be the amount reckoned proportionately from such effective date through June 30, 1959, and ‘‘(2) shall be due on, and payable on or before, the last day of the month the first day of which is such effective date.’’ § 4403. Record requirements Each person liable for tax under this sub- chapter shall keep a daily record showing the gross amount of all wagers on which he is so lia- ble, in addition to all other records required pur- suant to section 6001(a). (Aug. 16, 1954, ch. 736, 68A Stat. 525.) § 4404. Territorial extent The tax imposed by this subchapter shall apply only to wagers (1) accepted in the United States, or (2) placed by a person who is in the United States (A) with a person who is a citizen or resi- dent of the United States, or (B) in a wagering pool or lottery conducted by a person who is a citizen or resident of the United States. (Aug. 16, 1954, ch. 736, 68A Stat. 525.) § 4405. Cross references For penalties and other administrative provisions applicable to this subchapter, see sections 4421 to 4423, inclusive; and subtitle F. (Aug. 16, 1954, ch. 736, 68A Stat. 526.) Subchapter B—Occupational Tax Sec. 4411. Imposition of tax. 4412. Registration. 4413. Certain provisions made applicable. 4414. Cross references. § 4411. Imposition of tax (a) In general There shall be imposed a special tax of $500 per year to be paid by each person who is liable for the tax imposed under section 4401 or who is en- gaged in receiving wagers for or on behalf of any person so liable. (b) Authorized persons Subsection (a) shall be applied by substituting ‘‘$50’’ for ‘‘$500’’ in the case of— (1) any person whose liability for tax under section 4401 is determined only under para- graph (1) of section 4401(a), and (2) any person who is engaged in receiving wagers only for or on behalf of persons de- scribed in paragraph (1). (Aug. 16, 1954, ch. 736, 68A Stat. 527; Pub. L. 93–499, § 3(b), Oct. 29, 1974, 88 Stat. 1550; Pub. L. 97–362, title I, § 109(b), Oct. 25, 1982, 96 Stat. 1731.)