---
kind: "section"
citation: "26 U.S.C. § 6038C"
title: "26"
title_heading: "Internal Revenue Code"
number: "6038C"
heading: "Information with respect to foreign corporations engaged in U.S. business"
release: "119-102"
url: "https://uscodex.org/usc/26/6038C"
units:
  - "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. Information with respect to foreign corporations engaged in U.S. business

- (a) **Requirement—** If a [foreign](/usc/26/7701.md?p=a-5) [corporation](/usc/26/7701.md?p=a-3) (hereinafter in this section referred to as the “reporting [corporation](/usc/26/7701.md?p=a-3)”) is engaged in a [trade or business](/usc/26/7701.md?p=a-26) within the [United States](/usc/26/7651.md?p=1) at any time during a [taxable year](/usc/26/7701.md?p=a-23)—
  - (1) such [corporation](/usc/26/7701.md?p=a-3) shall furnish (at such time and in such manner as the [Secretary](/usc/26/7701.md?p=a-11-B) shall by regulations prescribe) the information described in [subsection (b)](#b), and
  - (2) such [corporation](/usc/26/7701.md?p=a-3) shall maintain (at the location, in the manner, and to the extent prescribed in regulations) such [records](#e) as may be appropriate to determine the liability of such [corporation](/usc/26/7701.md?p=a-3) for tax under this title as the [Secretary](/usc/26/7701.md?p=a-11-B) shall by regulations prescribe (or shall cause another [person](/usc/26/7701.md?p=a-1) to so maintain such [records](#e)).
- (b) **Required information—** For purposes of [subsection (a)](#a), the information described in this subsection is—
  - (1) the information described in [section 6038A(b)](/usc/26/6038A.md?p=b), and
  - (2) such other information as the [Secretary](/usc/26/7701.md?p=a-11-B) may prescribe by regulations relating to any item not directly connected with a transaction for which information is required under [paragraph (1)](#b-1).
- (c) **Penalty for failure to furnish information or maintain records—** The provisions of [subsection (d)](/usc/26/6038A.md?p=d) of section 6038A shall apply to—
  - (1) any failure to furnish (within the time prescribed by regulations) any information described in [subsection (b)](#b), and
  - (2) any failure to maintain (or cause another to maintain) [records](#e) as required by [subsection (a)](#a),

  in the same manner as if such failure were a failure to comply with the provisions of [section 6038A](/usc/26/6038A.md).

- (d) **Enforcement of requests for certain records—**
  - (1) **Agreement to treat corporation as agent—** The rules of [paragraph (3)](#d-3) shall apply to any transaction between the reporting [corporation](/usc/26/7701.md?p=a-3) and any [related party](#e) who is a [foreign person](#e) unless such [related party](#e) agrees (in such manner and at such time as the [Secretary](/usc/26/7701.md?p=a-11-B) shall prescribe) to authorize the reporting [corporation](/usc/26/7701.md?p=a-3) to act as such [related party](#e)’s limited agent solely for purposes of applying sections [7602](/usc/26/7602.md), [7603](/usc/26/7603.md), and [7604](/usc/26/7604.md) with respect to any request by the [Secretary](/usc/26/7701.md?p=a-11-B) to examine [records](#e) or produce testimony related to any such transaction or with respect to any summons by the [Secretary](/usc/26/7701.md?p=a-11-B) for such [records](#e) or testimony. The appearance of [persons](/usc/26/7701.md?p=a-1) or production of [records](#e) by reason of the reporting [corporation](/usc/26/7701.md?p=a-3) being such an agent shall not subject such [persons](/usc/26/7701.md?p=a-1) or [records](#e) to legal process for any purpose other than determining the correct treatment under this title of any transaction between the reporting [corporation](/usc/26/7701.md?p=a-3) and such [related party](#e).
  - (2) **Rules where information not furnished—** If—
    - (A) for purposes of determining the amount of the reporting [corporation](/usc/26/7701.md?p=a-3)’s liability for tax under this title, the [Secretary](/usc/26/7701.md?p=a-11-B) issues a summons to such [corporation](/usc/26/7701.md?p=a-3) to produce (either directly or as an agent for a [related party](#e) who is a [foreign person](#e)) any [records](#e) or testimony,
    - (B) such summons is not quashed in a proceeding begun under [paragraph (4)](/usc/26/6038A.md?p=e-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)](/usc/26/7604.md?p=b) to enforce such summons, and
    - (C) the reporting [corporation](/usc/26/7701.md?p=a-3) does not substantially comply in a timely manner with such summons and the [Secretary](/usc/26/7701.md?p=a-11-B) has sent by certified or registered mail a notice to such reporting [corporation](/usc/26/7701.md?p=a-3) that such reporting [corporation](/usc/26/7701.md?p=a-3) has not so substantially complied,

    the [Secretary](/usc/26/7701.md?p=a-11-B) may apply the rules of [paragraph (3)](#d-3) with respect to any transaction or item to which such summons relates (whether or not the [Secretary](/usc/26/7701.md?p=a-11-B) begins a proceeding to enforce such summons). If the reporting [corporation](/usc/26/7701.md?p=a-3) fails to maintain (or cause another to maintain) [records](#e) as required by [subsection (a)](#a), and by reason of that failure, the summons is quashed in a proceeding described in [subparagraph (B)](#d-2-B) or the reporting [corporation](/usc/26/7701.md?p=a-3) is not able to provide the [records](#e) requested in the summons, the [Secretary](/usc/26/7701.md?p=a-11-B) may apply the rules of [paragraph (3)](#d-3) with respect to any transaction or item to which the [records](#e) 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](/usc/26/7701.md?p=a-11-B) in the [Secretary](/usc/26/7701.md?p=a-11-B)’s sole discretion from the [Secretary](/usc/26/7701.md?p=a-11-B)’s own knowledge or from such information as the [Secretary](/usc/26/7701.md?p=a-11-B) may obtain through testimony or otherwise.
  - (4) **Judicial proceedings—** The provisions of [section 6038A(e)(4)](/usc/26/6038A.md?p=e-4) shall apply with respect to any summons referred to in [paragraph (2)(A)](#d-2-A); except that [subparagraph (D)](/usc/26/6038A.md?p=e-4-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)](/usc/26/6038A.md?p=c).

## Source credit

(Added Pub. L. 101–508, title XI, § 11315(a), Nov. 5, 1990, 104 Stat. 1388–456.)

## Notes

### 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.