26 U.S.C. § 912 — Exemption for certain allowances

Page 2159 TITLE 26—INTERNAL REVENUE CODE § 912 Committee on Ways and Means of the House of Rep- resentatives and to the Committee on Finance of the Senate on the operation and effects of sections 911 and 912 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]. ‘‘(b) INFORMATION FROM FEDERAL AGENCIES.—Each agency of the Federal Government which pays allow- ances excludable from gross income under section 912 of such Code shall keep such records and furnish to the Secretary of the Treasury such information as he de- termines to be necessary to carry out his responsibility under subsection (a).’’ § 912. Exemption for certain allowances The following items shall not be included in gross income, and shall be exempt from taxation under this subtitle: (1) Foreign areas allowances In the case of civilian officers and employees of the Government of the United States, amounts received as allowances or otherwise (but not amounts received as post differen- tials) under— (A) chapter 9 of title I of the Foreign Serv- ice Act of 1980, (B) section 4 of the Central Intelligence Agency Act of 1949, as amended (50 U.S.C. 3505), (C) title II of the Overseas Differentials and Allowances Act, or (D) subsection (e) or (f) of the first section of the Administrative Expenses Act of 1946, as amended, or section 22 of such Act. (2) Cost-of-living allowances In the case of civilian officers or employees of the Government of the United States sta- tioned outside the continental United States (other than Alaska), amounts (other than amounts received under title II of the Over- seas Differentials and Allowances Act) re- ceived as cost-of-living allowances in accord- ance with regulations approved by the Presi- dent (or in the case of judicial officers or em- ployees of the United States, in accordance with rules similar to such regulations). (3) Peace Corps allowances In the case of an individual who is a volun- teer or volunteer leader within the meaning of the Peace Corps Act and members of his fam- ily, amounts received as allowances under sec- tion 5 or 6 of the Peace Corps Act other than amounts received as— (A) termination payments under section 5(c) or section 6(1) of such Act, (B) leave allowances, (C) if such individual is a volunteer leader training in the United States, allowances to members of his family, and (D) such portion of living allowances as the President may determine under the Peace Corps Act as constituting basic com- pensation. (Aug. 16, 1954, ch. 736, 68A Stat. 290; Pub. L. 86–707, title V, § 523(a), Sept. 6, 1960, 74 Stat. 802; Pub. L. 87–293, title II, § 201(a), Sept. 22, 1961, 75 Stat. 625; Pub. L. 96–465, title II, § 2206(e)(3), Oct. 17, 1980, 94 Stat. 2163; Pub. L. 100–647, title VI, § 6137(a), Nov. 10, 1988, 102 Stat. 3723; Pub. L. 115–141, div. U, title IV, § 401(a)(161), Mar. 23, 2018, 132 Stat. 1192.) Editorial Notes REFERENCES IN TEXT The Foreign Service Act of 1980, referred to in par. (1)(A), is Pub. L. 96–465, Oct. 17, 1980, 94 Stat. 2071. Chap- ter 9 of title I of the Foreign Service Act of 1980 is clas- sified generally to subchapter IX (§ 4081 et seq.) of chap- ter 52 of Title 22, Foreign Relations and Intercourse. For complete classification of this Act to the Code, see Short Title note set out under section 3901 of Title 22 and Tables. Title II of the Overseas Differentials and Allowances Act, referred to in pars. (1)(C) and (2), was title II of Pub. L. 86–707, Sept. 6, 1960, 74 Stat. 793, which was re- pealed and reenacted as sections 5922 to 5925 of Title 5, Government Organization and Employees, by Pub. L. 89–554, Sept. 6, 1966, 80 Stat. 378. Sections 1(e) and (f) and 22 of the Administrative Ex- penses Act of 1946, referred to in par. (1)(D), were re- pealed and the provisions thereof reenacted as sections 5726(b), 5727(b) to (e), and 5913 of Title 5, by Pub. L. 89–554, Sept. 6, 1966, 80 Stat. 378. The Peace Corps Act, referred to in par. (3), is Pub. L. 87–293, Sept. 22, 1961, 75 Stat. 612, which is classified principally to chapter 34 (§ 2501 et seq.) of Title 22, For- eign Relations and Intercourse. Sections 5 and 6 of that act are classified to sections 2504 and 2505 of Title 22. For complete classification of this act to the Code, see Short Title note set out under section 2501 of Title 22 and Tables. AMENDMENTS 2018—Par. (1)(B). Pub. L. 115–141 substituted ‘‘(50 U.S.C. 3505)’’ for ‘‘(50 U.S.C., sec. 403e)’’. 1988—Par. (2). Pub. L. 100–647 inserted ‘‘(or in the case of judicial officers or employees of the United States, in accordance with rules similar to such regulations)’’ after ‘‘President’’. 1980—Par. (1)(A). Pub. L. 96–465 substituted reference to chapter 9 of title I of the Foreign Service Act of 1980 for reference to title IX of the Foreign Service Act of 1946. 1961—Par. (3). Pub. L. 87–293 added par. (3). 1960—Pub. L. 86–707 exempted foreign areas allow- ances received under section 4 of the Central Intel- ligence Agency Act of 1949, title II of the Overseas Dif- ferentials and Allowances Act, subsection (e) or (f) of the first section of the Administrative Expenses Act of 1946, or section 22 of such Act, provided that amounts received as post differentials shall not be exempt and in provisions relating to cost-of-living allowances ex- cluded Alaska from term ‘‘continental United States’’ and amounts received under title II of the Overseas Dif- ferentials and Allowances Act. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Pub. L. 100–647, title VI, § 6137(b), Nov. 10, 1988, 102 Stat. 3723, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to al- lowances received after October 12, 1987, in taxable years ending after such date.’’ EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–465 effective Feb. 15, 1981, except as otherwise provided, see section 2403 of Pub. L. 96–465, set out as an Effective Date note under section 3901 of Title 22, Foreign Relations and Intercourse. EFFECTIVE DATE OF 1961 AMENDMENT Pub. L. 87–293, title II, § 201(d), Sept. 22, 1961, 75 Stat. 625, provided that: ‘‘The amendments made by sub- sections (a) and (b) of this section [amending this sec- tion and section 1303 of this title] shall apply with re- spect to taxable years ending after March 1, 1961. The amendment made by subsection (c) [amending section 3401 of this title] shall apply with respect to remunera- Page 2160 TITLE 26—INTERNAL REVENUE CODE [§ 913 tion paid after the date of the enactment of this Act [Sept. 22, 1961].’’ [Section 201(d) of Pub. L. 87–293 was repealed by Pub. L. 89–572, § 5(a), Sept. 13, 1966, 80 Stat. 765. Such repeal not deemed to affect amendments contained in such provisions, see sections 5(b) of Pub. L. 89–572, set out as a note under former section 2515 of Title 22, Foreign Re- lations and Intercourse.] EFFECTIVE DATE OF 1960 AMENDMENT Pub. L. 86–707, title V, § 523(b), Sept. 6, 1960, 74 Stat. 802, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘Paragraphs (1) and (2) of sec- tion 912 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], as amended by subsection (a) of this sec- tion, shall apply only with respect to amounts received on or after the date of the enactment of this Act [Sept. 6, 1960] in taxable years ending on or after such date.’’ REPEALS; AMENDMENTS AND APPLICATION OF AMENDMENTS UNAFFECTED Section 201(a) of Pub. L. 87–293, cited as a credit to this section, was repealed by Pub. L. 89–572, § 5(a), Sept. 13, 1966, 80 Stat. 765. Such repeal not deemed to affect amendments to this section contained in such provi- sions, and continuation in full force and effect until modified by appropriate authority of all determina- tions, authorization, regulations, orders, contracts, agreements, and other actions issued undertaken, or entered into under authority of the repealed provisions, see section 5(b) of Pub. L. 89–572, set out as a note under former section 2515 of Title 22, Foreign Relations and Intercourse. TREATMENT OF EMPLOYEES OF PANAMA CANAL COMMISSION AND DEPARTMENT OF DEFENSE Pub. L. 99–514, title XII, § 1232(b), Oct. 22, 1986, 100 Stat. 2564, provided that: ‘‘Employees of the Panama Canal Commission and civilian employees of the De- fense Department of the United States stationed in Panama may exclude from gross income allowances which are comparable to the allowances excludable under section 912(1) of the Internal Revenue Code of 1986 by employees of the State Department of the United States stationed in Panama. The preceding sen- tence shall apply to taxable years beginning after De- cember 31, 1986.’’ Executive Documents DELEGATION OF FUNCTIONS Function of determining the portion of living allow- ances constituting basic compensation for Peace Corps volunteers or volunteer leaders under par. (3) of this section delegated by President to Director of Peace Corps to be performed in consultation with the Sec- retary of the Treasury, see section 1–104 of Ex. Ord. No. 12137, May 16, 1979, 44 F.R. 29023, set out as a note under section 2501 of Title 22, Foreign Relations and Inter- course. Authority of President under par. (2) of this section delegated to Secretary of Defense with respect to mili- tary departments, and to Secretary of Transportation with respect to Coast Guard when it is not operating as a service in the Navy, concerning civilian employees of nonappropriated fund instrumentalities of the armed forces, see section 201 of Ex. Ord. No. 11137, Jan. 7, 1964, as amended, set out as a note under section 5921 of Title 5, Government Organization and Employees. [§ 913. Repealed. Pub. L. 97–34, title I, § 112(a), Aug. 13, 1981, 95 Stat. 194] Section, added Pub. L. 95–615, title II, § 203(a), Nov. 8, 1978, 92 Stat. 3100; amended Pub. L. 96–222, title I, § 108(a)(1)(B), (F), Apr. 1, 1980. 94 Stat. 223, 225; Pub. L. 96–608, § 1(a), Dec. 28, 1980, 94 Stat. 3550, related to a de- duction for certain expenses of living abroad. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable with respect to taxable years be- ginning after Dec. 31, 1981, see section 115 of Pub. L. 97–34, set out as an Effective Date of 1981 Amendment note under section 911 of this title. [SUBPART C—REPEALED] [§§ 921 to 927. Repealed. Pub. L. 106–519, § 2, Nov. 15, 2000, 114 Stat. 2423] Section 921, added Pub. L. 98–369, div. A, title VIII, § 801(a), July 18, 1984, 98 Stat. 985, provided for exclusion from gross income of exempt foreign trade income. A prior section 921, acts Aug. 16, 1954, ch. 736, 68A Stat. 290; Oct. 4, 1976, Pub. L. 94–455, title XIX, § 1901(a)(116), 90 Stat. 1784, defined Western Hemisphere trade corporation, prior to repeal by Pub. L. 94–455, title X, § 1052(b), Oct. 4, 1976, 90 Stat. 1648, effective with respect to taxable years beginning after Dec. 31, 1979. Section 922, added Pub. L. 98–369, div. A, title VIII, § 801(a), July 18, 1984, 98 Stat. 986, defined FSC’s. A prior section 922, acts Aug. 16, 1954, ch. 736, 68A Stat. 291; Dec. 10, 1971, Pub. L. 92–178, title V, § 502(c), 85 Stat. 550; Oct. 4, 1976, Pub. L. 94–455, title X, § 1052(a), (c)(1), 90 Stat. 1647, 1648; Nov. 6, 1978, Pub. L. 95–600, title III, § 301(b)(15), 92 Stat. 2822, related to a special deduction for a Western Hemisphere trade corporation, prior to repeal by Pub. L. 94–455, title X, § 1052(b), Oct. 4, 1976, 90 Stat. 1648, effective with respect to taxable years beginning after Dec. 31, 1979. Section 923, added Pub. L. 98–369, div. A, title VIII, § 801(a), July 18, 1984, 98 Stat. 986; amended Pub. L. 99–514, title XVIII, § 1876(b)(3), Oct. 22, 1986, 100 Stat. 2898, related to exempt foreign trade income. Section 924, added Pub. L. 98–369, div. A, title VIII, § 801(a), July 18, 1984, 98 Stat. 987; amended Pub. L. 99–514, title XVIII, § 1876(e)(2), (l), Oct. 22, 1986, 100 Stat. 2899, 2901, related to foreign trading gross receipts. Section 925, added Pub. L. 98–369, div. A, title VIII, § 801(a), July 18, 1984, 98 Stat. 990, related to transfer pricing rules. Section 926, added Pub. L. 98–369, div. A, title VIII, § 801(a), July 18, 1984, 98 Stat. 991, related to distribu- tions to shareholders. Section 927, added Pub. L. 98–369, div. A, title VIII, § 801(a), July 18, 1984, 98 Stat. 991; amended Pub. L. 99–514, title XVIII, § 1876(a)(1), (e)(1), (f)(1), (p)(5), Oct. 22, 1986, 100 Stat. 2897, 2899, 2902; Pub. L. 100–647, title I, § 1012(bb)(8)(A), Nov. 10, 1988, 102 Stat. 3536; Pub. L. 101–508, title XI, § 11704(a)(10), Nov. 5, 1990, 104 Stat. 1388–518; Pub. L. 103–66, title XIII, § 13239(a), Aug. 10, 1993, 107 Stat. 509; Pub. L. 105–34, title XI, § 1171(a), Aug. 5, 1997, 111 Stat. 987, related to other definitions and special rules. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable to transactions after Sept. 30, 2000, with special rules relating to existing foreign sales cor- porations, see section 5 of Pub. L. 106–519, set out as an Effective Date of 2000 Amendments note under section 56 of this title. SUBPART D—POSSESSIONS OF THE UNITED STATES Sec. 931. Income from sources within Guam, American Samoa, or the Northern Mariana Islands. 932. Coordination of United States and Virgin Is- lands income taxes. 933. Income from sources within Puerto Rico. 934. Limitation on reduction in income tax liabil- ity incurred to the Virgin Islands. [934A, 935. Repealed.]