26 U.S.C. § 6867

Presumptions where owner of large amount of cash is not identified

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(a) General ruleIf the individual who is in physical possession of cash in excess of $10,000 does not claim such cash—(1) as his, or(2) as belonging to another person whose identity the Secretary can readily ascertain and who acknowledges ownership of such cash,then, for purposes of sections 6851 and 6861, it shall be presumed that such cash represents gross income of a single individual for the taxable year in which the possession occurs, and that the collection of tax will be jeopardized by delay.(b) Rules for assessingIn the case of any assessment resulting from the application of subsection (a)—(1) the entire amount of the cash shall be treated as taxable income for the taxable year in which the possession occurs,(2) such income shall be treated as taxable at the highest rate of tax specified in section 1, and(3) except as provided in subsection (c), the possessor of the cash shall be treated (solely with respect to such cash) as the taxpayer for purposes of chapters 63 and 64 and section 7429(a)(1).(c) Effect of later substitution of true owner

If, after an assessment resulting from the application of subsection (a), such assessment is abated and replaced by an assessment against the owner of the cash, such later assessment shall be treated for purposes of all laws relating to lien, levy and collection as relating back to the date of the original assessment.

(d) DefinitionsFor purposes of this section—(1) Cash

The term “cash” includes any cash equivalent.

(2) Cash equivalentThe term “cash equivalent” means—(A) foreign currency,(B) any bearer obligation, and(C) any medium of exchange which—(i) is of a type which has been frequently used in illegal activities, and(ii) is specified as a cash equivalent for purposes of this part in regulations prescribed by the Secretary.(3) Value of cash equivalentAny cash equivalent shall be taken into account—(A) in the case of a bearer obligation, at its face amount, and(B) in the case of any other cash equivalent, at its fair market value.(Added Pub. L. 97–248, title III, § 330(a), Sept. 3, 1982, 96 Stat. 619; amended Pub. L. 100–647, title I, § 1001(a)(1), Nov. 10, 1988, 102 Stat. 3349.)Editorial NotesAmendments

1988—Subsec. (b)(2). Pub. L. 100–647 substituted “the highest rate of tax specified in section 1” for “a 50-percent rate”.

Statutory Notes and Related SubsidiariesEffective Date of 1988 Amendment

Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.

Effective Date

Pub. L. 97–248, title III, § 330(c), Sept. 3, 1982, 96 Stat. 620, provided that: “The amendments made by subsections (a) and (b) [enacting this section] shall take effect on the day after the date of the enactment of this Act [Sept. 3, 1982].”

Notes of Decisions

Cited in 4 cases, 1983–1989 · leading case: Comm'r of Internal Revenue, Petitioner-Cross-Respondent v. Leon E. Hendrickson, Respondent-Cross-Petitioner, & Peoples Loan & Trust Co., 873 F.2d 1018 (7th Cir. 1989).

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Comm'r of Internal Revenue, Petitioner-Cross-Respondent v. Leon E. Hendrickson, Respondent-Cross-Petitioner, & Peoples Loan & Trust Co., 873 F.2d 1018 (7th Cir. 1989). · cites it 5× “” 26 U.S.C. §§ 6867 (a), (b)(3), (d)(2). The gross income imputed to the possessor is taxable at a 50 percent rate.”

Robrish v. United States, 579 F. Supp. 477 (D. Mass. 1983). · cites it 3× “26 U.S.C. § 6867 (a). The possessor of the cash is treated as the taxpayer for purposes of 26 U.”

Schaefer v. United States, 656 F. Supp. 631 (E.D. Wis. 1987). · cites it 7× “According to the written statement of computation attached to this notice, the amount assessed was calculated pursuant to 26 U.S.C. § 6867 (b)(2) to be $24,785, 50% of the cash found in Mr.”

Albert Matut, as the Possessor of Certain Cash v. Comm'r of Internal Revenue, 858 F.2d 683 (11th Cir. 1988). · cites it 2× “26 U.S.C. § 6867 . Section 6867 provides as follows: (a) General Rule.”

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