§ 616. — Stock on hand when tax takes effect or terminates.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC616]
TITLE 7--AGRICULTURE
CHAPTER 26--AGRICULTURAL ADJUSTMENT
SUBCHAPTER III--COMMODITY BENEFITS
Sec. 616. Stock on hand when tax takes effect or terminates
(a) Upon the sale or other disposition of any article processed
wholly or in chief value from any commodity with respect to which a
processing tax is to be levied, that on the date the tax first takes
effect or wholly terminates with respect to the commodity, is held for
sale or other disposition (including articles in transit) by any person,
there shall be made a tax adjustment as follows:
(1) Whenever the processing tax first takes effect, there shall
be levied, assessed, and collected a tax to be paid by such person
equivalent to the amount of the processing tax which would be
payable with respect to the commodity from which processed if the
processing had occurred on such date. Such tax upon articles
imported prior to, but in customs custody or control on, the
effective date, shall be paid prior to release therefrom. In the
case of sugar, the tax on floor stocks, except the retail stocks of
persons engaged in retail trade, shall be paid for the month in
which the stocks are sold, or used in the manufacture of other
articles, under rules and regulations prescribed by the Commissioner
of Internal Revenue with the approval of the Secretary of the
Treasury.
(2) Whenever the processing tax is wholly terminated, (A) there
shall be refunded or credited in the case of a person holding such
stocks with respect to which a tax under this chapter has been paid,
or (B) there shall be credited or abated in the case of a person
holding such stocks with respect to which a tax under this chapter
is payable, where such person is the processor liable for the
payment of such tax, or (C) there shall be refunded or credited (but
not before the tax has been paid) in the case of a person holding
such stocks with respect to which a tax under this chapter is
payable, where such person is not the processor liable for the
payment of such tax, a sum in an amount equivalent to the processing
tax which would have been payable with respect to the commodity from
which processed if the processing had occurred on such date:
Provided, That in the case of any commodity with respect to which
there was any increase, effective prior to June 1, 1934, in the rate
of the processing tax, no such refund, credit, or abatement, shall
be in an amount which exceeds the equivalent of the initial rate of
the processing tax in effect with respect to such commodity.
(b) The tax imposed by subsection (a) of this section shall not
apply to the retail stocks of persons engaged in retail trade, held at
the date the processing tax first takes effect; but such retail stocks
shall not be deemed to include stocks held in a warehouse on such date,
or such portion of other stocks held on such date as are not sold or
otherwise disposed of within thirty days thereafter. Except as to flour
and prepared flour, and cereal preparations made chiefly from wheat, as
classified in Wheat Regulations, Series 1, Supplement 1, and as to any
article processed wholly or in chief value from cotton, the tax refund,
credit, or abatement provided in subsection (a) of this section shall
not apply to the retail stocks of persons engaged in retail trade, nor
to any article (except sugar) processed wholly or in chief value from
sugar beets, sugarcane, or any product thereof, nor to any article
(except flour, prepared flour and cereal preparations made chiefly from
wheat, as classified in Wheat Regulations, Series 1, Supplement 1)
processed wholly or in chief value from wheat, held on the date the
processing tax is wholly terminated.
(c)(1) Any sugar, imported prior to the effective date of a
processing tax on sugar beets and sugarcane, with respect to which it is
established (under regulations prescribed by the Commissioner of
Internal Revenue, with the approval of the Secretary of the Treasury)
that there was paid at the time of importation a duty at the rate in
effect on January 1, 1934, and (2) any sugar held on April 25, 1934, by,
or to be delivered under a bona fide contract of sale entered into prior
to April 25, 1934, to, any manufacturer or converter, for use in the
production of any article (except sugar) and not for ultimate
consumption as sugar, and (3) any article (except sugar) processed
wholly or in chief value from sugar beets, sugarcane, or any product
thereof, shall be exempt from taxation under subsection (a) of this
section, but sugar held in customs custody or control on April 25, 1934,
shall not be exempt from taxation under subsection (a) of this section,
unless the rate of duty paid upon the withdrawal thereof was the rate of
duty in effect on January 1, 1934.
(d) The Secretary of Agriculture is authorized to purchase, out of
such proceeds of taxes as are available therefor, during the period this
chapter is in effect with respect to sugar beets and sugarcane, not in
excess of three hundred thousand tons of sugar raw value from the
surplus stocks of direct-consumption sugar produced in the United States
beet-sugar area, at a price not in excess of the market price for direct
consumption sugar on the date of purchase, and to dispose of such sugar
by sale or otherwise, including distribution to any organization for the
relief of the unemployed, under such conditions and at such times as
will tend to effectuate the declared policy of section 608a of this
title. The sugar so purchased shall not be included in the quota for the
United States beet-sugar area. All proceeds received by the Secretary of
Agriculture, in the exercise of the powers granted, are appropriated to
be available to the Secretary of Agriculture for the purposes described
in subsections (a) and (b) of section 612 of this title.
(e) Upon the sale or other disposition of any article processed
wholly or in chief value from any commodity with respect to which the
existing rate of the processing tax is to be increased, or decreased,
that on the date such increase, or decrease, first takes effect with
respect to the commodity, is held for sale or other disposition
(including articles in transit) by any person, and upon the production
of any article from a commodity in process on the date on which the rate
of the processing tax is to be increased or decreased, there shall be
made a tax adjustment as follows:
(1) Whenever, on or after June 1, 1934, the rate of the
processing tax on the processing of the commodity generally or for
any designated use or uses, or as to any designated product or
products thereof for any designated use or uses, or as to any class
of products, is decreased, there shall be credited or refunded to
such person an amount equivalent to the difference between the rate
of the processing tax payable or paid at the time immediately
preceding the decrease in rate and the rate of the processing tax
which would have been payable with respect to the commodity from
which processed, if the processing had occurred on such date:
Provided, however, That no such credit or refund shall be made in
the case of hogs unless the rate of the processing tax immediately
preceding said decrease is equal to, or less than, the rate of the
processing tax in effect on the date on which any floor stocks tax
was paid prior to the adoption of this subsection. In the case of
wheat the provisions of this paragraph and of paragraph (2) of this
subsection shall apply to flour, prepared flour and cereal
preparations made chiefly from wheat, as classified in Wheat
Regulations, Series 1, Supplement 1 only; in the case of sugarcane
and sugar beets the provisions of this paragraph and of paragraph
(2) of this subsection shall apply to sugar only.
(2) Whenever the rate of the processing tax on the processing of
the commodity generally, or for any designated use or uses, or as to
any designated product or products thereof for any designated use or
uses, or as to any class of products, is increased, there shall be
levied, assessed and collected a tax to be paid by such person
equivalent to the difference between the rate of the processing tax
payable or paid at the time immediately preceding the increase in
rate and the rate of the processing tax which would be payable with
respect to the commodity from which processed, if the processing had
occurred on such date.
(3) Whenever the processing tax is suspended or is to be
refunded pursuant to a certification of the Secretary of Agriculture
to the Secretary of the Treasury, under section 615(a) of this
title, the provisions of subdivision (1) of this subsection shall
become applicable.
(4) Whenever the Secretary of Agriculture revokes any
certification to the Secretary of the Treasury under section 615(a)
of this title, the provisions of paragraph (2) of this subsection
shall become applicable.
(5) The provisions of this subsection shall be effective on and
after June 1, 1934.
(f) The provisions of this section shall not be applicable with
respect to rice.
(May 12, 1933, ch. 25, title I, Sec. 16, 48 Stat. 40; May 9, 1934, ch.
263, Secs. 10, 17, 48 Stat. 676, 678; June 26, 1934, ch. 759, Sec. 1, 48
Stat. 1241; Mar. 18, 1935, ch. 32, Sec. 10, 49 Stat. 48; Aug. 24, 1935,
ch. 641, Secs. 20(b), 25-27, 49 Stat. 768, 769; June 4, 1936, ch. 501,
49 Stat. 1464; June 22, 1936, ch. 690, Sec. 601(a), (c), (g), 49 Stat.
1739, 1740.)
Amendments
1936--Subsec. (e)(1). Act June 22, 1936, Sec. 601(a), (g), reenacted
par. (1) for certain refund purposes only and substituted ``on or after
June 1, 1934'' for ``subsequent to June 26, 1934'', respectively.
Act June 4, 1936, substituted ``on or after June 1, 1934'' for
``subsequent to June 26, 1934''.
Subsec. (e)(3). Act June 22, 1936, Sec. 601(a), reenacted par. (3)
for certain refund purposes only.
Subsec. (g). Act June 22, 1936, Sec. 601(c), repealed subsec. (g)
which related to the time for filing refunds.
1935--Subsec. (a)(2). Act Aug. 24, 1935, Sec. 25, substituted a new
par. (2) for former par. (2).
Subsec. (b). Act Aug. 24, 1935, Sec. 26, amended second sentence
generally.
Subsec. (c). Act Aug. 24, 1935, Sec. 20(b), struck out last
sentence.
Subsec. (e). Act Mar. 18, 1935, redesignated former subsec. (c) as
(e).
Subsec. (e)(1). Act Aug. 24, 1935, Sec. 27(a), inserted ``subsequent
to June 26, 1934'' at beginning of paragraph, and ``in the case of
hogs'' after ``made'' in proviso and inserted ``In the case of wheat the
provisions of this paragraph and of paragraph (2) of this subsection
shall apply to flour, prepared flour and cereal preparations made
chiefly from wheat, as classified in Wheat Regulations, Series 1,
Supplement 1 only; in the case of sugarcane and sugar beets the
provisions of this paragraph and of paragraph (2) of this subsection
shall apply to sugar only.''
Subsec. (f). Act Mar. 18, 1935, added subsec. (f).
Subsec. (g). Act Aug. 24, 1935, Sec. 27(b), added subsec. (g).
1934--Subsec. (a)(1). Act May 9, 1934, Sec. 10, inserted second
sentence.
Subsec. (c). Act June 26, 1934, added subsec. (c).
Subsec. (c)(1). Act May 9, 1934, Sec. 17, added par. (1).
Subsec. (d). Act May 9, 1934, Sec. 17, added subsec. (d).
Separability
Validity of remainder of this chapter as not affected should any of
the provisions of this chapter be declared unconstitutional. See section
614 of this title.
Transfer of Functions
Functions of all officers of Department of the Treasury, and
functions of all agencies and employees of such Department, transferred,
with certain exceptions, to Secretary of the Treasury, with power vested
in him to authorize their performance or performance of any of his
functions, by any of such officers, agencies, and employees, by 1950
Reorg. Plan No. 26, Secs. 1, 2, eff. July 31, 1950, 15 F.R. 4935, 64
Stat. 1280, set out in the Appendix to Title 5, Government Organization
and Employees. Commissioner of Internal Revenue, referred to in this
section, is an officer of Department of the Treasury.
Constitutionality
Section may be obsolete in view of the Supreme Court's holding that
the processing and floor stock taxes provided for by the Agricultural
Adjustment Act of 1933 are unconstitutional. See U.S. v. Butler, Mass.
1936, 56 S.Ct. 312, 297 U.S. 1, 80 L.Ed. 477, 102 A.L.R. 914.
Appropriations
Appropriations for refunds, etc., see note set out under section 610
of this title.
Section Referred to in Other Sections
This section is referred to in sections 609, 621, 673 of this title.
