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Title 26, Internal Revenue CodeRelease 119-110

§6038C Information with Respect to Foreign Corporations Engaged in U.s. Business

Title 26 › Subtitle F — Procedure and Administration › CHAPTER 61 — INFORMATION AND RETURNS › Subchapter A — Returns and Records › PART III — INFORMATION RETURNS › Subpart A — Information Concerning Persons Subject to Special Provisions › § 6038C

Last updated Sep 22, 2026|Official source

Summary

Foreign corporations that do business in the United States must give the IRS certain information and must keep records the IRS says are needed. The IRS will set when and how the information and records must be provided. The required facts include the items listed in a related reporting rule and any other items the IRS requires about transactions. If the company fails to give the information or keep the records, it faces the same penalties and rules that apply to similar reporting failures. When the IRS asks for records or testimony about deals with related foreign parties, the related party may be asked to let the U.S. company act as its limited agent so the company can produce the records or witnesses. If the company won’t comply or cannot produce records, the IRS can decide the tax treatment of the transaction from its own information. Definitions: related party = a connected person or business; foreign person = a non-U.S. person or entity; records = documents used to check tax.

Full Legal Text

Title 26, §6038C

Internal Revenue Code, Source: USLM XML via OLRC

(a)Requirement
If a foreign corporation (hereinafter in this section referred to as the “reporting corporation”) is engaged in a trade or business within the United States at any time during a taxable year—
(1)such corporation shall furnish (at such time and in such manner as the Secretary shall by regulations prescribe) the information described in subsection (b), and
(2)such corporation shall maintain (at the location, in the manner, and to the extent prescribed in regulations) such records as may be appropriate to determine the liability of such corporation for tax under this title as the Secretary shall by regulations prescribe (or shall cause another person to so maintain such records).
(b)Required information
For purposes of subsection (a), the information described in this subsection is—
(1)the information described in section 6038A(b), and
(2)such other information as the Secretary may prescribe by regulations relating to any item not directly connected with a transaction for which information is required under paragraph (1).
(c)Penalty for failure to furnish information or maintain records
The provisions of subsection (d) of section 6038A shall apply to—
(1)any failure to furnish (within the time prescribed by regulations) any information described in subsection (b), and
(2)any failure to maintain (or cause another to maintain) records as required by subsection (a),
in the same manner as if such failure were a failure to comply with the provisions of section 6038A.
(d)Enforcement of requests for certain records
(1)Agreement to treat corporation as agent
The rules of paragraph (3) shall apply to any transaction between the reporting corporation and any related party who is a foreign person unless such related party agrees (in such manner and at such time as the Secretary shall prescribe) to authorize the reporting corporation to act as such related party’s limited agent solely for purposes of applying section 7602, 7603, and 7604 with respect to any request by the Secretary to examine records or produce testimony related to any such transaction or with respect to any summons by the Secretary for such records or testimony. The appearance of persons or production of records by reason of the reporting corporation being such an agent shall not subject such persons or records to legal process for any purpose other than determining the correct treatment under this title of any transaction between the reporting corporation and such related party.
(2)Rules where information not furnished
If—
(A)for purposes of determining the amount of the reporting corporation’s liability for tax under this title, the Secretary issues a summons to such corporation to produce (either directly or as an agent for a related party who is a foreign person) any records or testimony,
(B)such summons is not quashed in a proceeding begun under paragraph (4) of section 6038A(e) (as made applicable by paragraph (4) of this subsection) and is not determined to be invalid in a proceeding begun under section 7604(b) to enforce such summons, and
(C)the reporting corporation does not substantially comply in a timely manner with such summons and the Secretary has sent by certified or registered mail a notice to such reporting corporation that such reporting corporation has not so substantially complied,
the Secretary may apply the rules of paragraph (3) with respect to any transaction or item to which such summons relates (whether or not the Secretary begins a proceeding to enforce such summons). If the reporting corporation fails to maintain (or cause another to maintain) records as required by subsection (a), and by reason of that failure, the summons is quashed in a proceeding described in subparagraph (B) or the reporting corporation is not able to provide the records requested in the summons, the Secretary may apply the rules of paragraph (3) with respect to any transaction or item to which the records relate.
(3)Applicable rules
If the rules of this paragraph apply to any transaction or item, the treatment of such transaction (or the amount and treatment of any such item) shall be determined by the Secretary in the Secretary’s sole discretion from the Secretary’s own knowledge or from such information as the Secretary may obtain through testimony or otherwise.
(4)Judicial proceedings
The provisions of section 6038A(e)(4) shall apply with respect to any summons referred to in paragraph (2)(A); except that subparagraph (D) of such section shall be applied by substituting “transaction or item” for “transaction”.
(e)Definitions
For purposes of this section, the terms “related party”, “foreign person”, and “records” have the respective meanings given to such terms by section 6038A(c).

Legislative History

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Section applicable to (1) any requirement to furnish information under this section if the time for furnishing such information is after Nov. 5, 1990, (2) any requirement under subsec. (a) of this section to maintain records which were in existence on or after Mar. 20, 1990, (3) any requirement to authorize a corporation to act as a limited agent under subsec. (d)(1) of this section if the time for authorizing such action is after Nov. 5, 1990, and (4) any summons issued after Nov. 5, 1990, without regard to when the taxable year (to which the information, records, authorization, or summons relates) began, see section 11315(c) of Pub. L. 101–508, set out as an

Effective Date

of 1990 Amendment note under section 6038A of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 6038C

Title 26, Internal Revenue Code

Last Updated

Sep 22, 2026

Release point: 119-110