26 U.S.C. § 4401 — Imposition of tax

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.