[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6362-7]

[Page 330-332]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
               Seizure of Property for Collection of Taxes
 
Sec. 301.6362-7  Additional requirements.

    A State tax meets the additional requirements of section 6362(f) and 
this section only if:
    (a) State agreement must be in effect for period concerned. A State 
agreement, as defined in paragraph (a) of Sec. 301.6361-4, is in effect 
with respect to such tax for the taxable period in question.
    (b) State laws must contain certain provisions. Under the laws of 
such State, the provisions of subchapter E and the regulations 
thereunder, as in effect from time to time, are applicable for the 
entire period for which the State agreement is in effect. Any change 
made by the State in such tax (other than an adjustment in the State law 
which is made solely in order to comply with a change in the Federal Law 
or regulations) shall not apply to taxable years beginning in any 
calendar year for which the State agreement is in effect unless the 
change is enacted before November 1 of such year.
    (c) State individual income tax laws can be only of certain kinds. 
Such State does not impose any tax on the income of individuals other 
than (1) a qualified resident tax, and (2) either or both a qualified 
nonresident tax and a separate tax on income which is not wage and other 
business income as defined in paragraph (c) of Sec. 301.6362-5 and 
which is received or accrued by individuals who are domiciled in the 
State, but who are not residents of the State (as defined in paragraph 
(b) of Sec. 301.6362-6). For purposes of this paragraph, a tax imposed 
on the amount taxed under section 56 (as permitted under Sec. 301.6362-
2(b)(2)) shall be treated as an

[[Page 331]]

adjustment to and a part of the qualified resident tax. Also, tax laws 
which were in effect prior to the effective date of a State agreement 
and which are not repealed, but which are made inapplicable for the 
period during which the State agreement is in effect, shall be 
disregarded.
    (d) Taxable years must coincide. The taxable years of all 
individuals, estates, and trusts under such tax are required to coincide 
with their taxable years used for purposes of the taxes imposed by 
chapter 1. Accordingly, when subchapter E begins to apply to a State, a 
taxpayer whose taxable year for purposes of the Federal income tax is 
different from his taxable year for purposes of the State income tax 
which precedes the qualified tax may have one short taxable year for 
purposes of such State income tax, so that thereafter his taxable years 
for purposes of the qualified tax will coincide with the Federal taxable 
year.
    (e) Married individuals. Individuals who are married within the 
meaning of section 143 of the Code are prohibited from filing (1) a 
joint return for purposes of such State tax if they file separate 
Federal income tax returns, or (2) separate returns for purposes for 
such State tax if they file a joint Federal income tax return.
    (f) Penalties; no double jeopardy. Under the laws of such State:
    (1) Civil and criminal sanctions identical to those provided by 
subtitle F, and by title 18 of the United States Code (relating to 
crimes and criminal procedures), with respect to the taxes imposed on 
the income of individuals by chapter 1 and on the wages of individuals 
by chapter 24, apply to individuals and their employers who are subject 
to such State tax (and the collection and administration thereof, 
including the corresponding withholding tax imposed to implement the 
current collection of such State tax) as if such tax were imposed by 
chapter 1 or chapter 24, in the case of the withholding tax), except to 
the extent that the application of such sanctions is modified by 
regulations issued under subchapter E; and
    (2) No other sanctions or penalties apply with respect to any act or 
omission to act in respect of such State tax.

See also paragraph (e) of Sec. 301.6361-1 with respect to criminal 
penalties.
    (g) Partnerships, trusts, subchapter S corporations, and other 
conduit entities. Under the laws of such State, the State tax treatment 
of--
    (1) Partnerships and partners,
    (2) Trusts and their beneficiaries,
    (3) Estate and their beneficiaries,
    (4) Electing small business corporations (within the meaning of 
section 1371(a) and their shareholders, and
    (5) Any other entity and the individuals having beneficial interests 
therein (such as a cooperative corporation and its shareholders), to the 
extent that such entity is treated as a conduit for purposes of the 
taxes imposed by chapter 1, corresponds to the tax treatment provided 
therefor with respect to the taxes imposed by chapter 1. For example, a 
subchapter S corporation shall not be subject to the State's corporate 
income tax on amounts which are includible in shareholders incomes which 
are subject to that State's individual income tax, except to the extent 
that the subchapter S corporation is subject to tax under Federal law. 
Similarly, a partnership shall not be subject to the State's 
unincorporated business income tax on amounts which are includible in 
partners' incomes which are subject to that State's individual income 
tax. However, the laws of the State which set forth the provisions of 
such State individual income tax shall authorize the Commissioner of 
Internal Revenue to require that the conduit entities described in this 
paragraph (or some of them) supply information to the Federal Government 
with respect to the source of income, the State of residence, or the 
amount of income of a particular type, of an individual, estate, or 
trust holding a beneficial interest in such conduit entity.
    (h) Members of armed forces. The relief provided to any member of 
the Armed Forces by section 514 of the Soldiers' and Sailors' Civil 
Relief Act (50 U.S.C. App. section 574) is in no way diminished. 
Accordingly, for purposes of such State tax, an individual shall not be 
considered to have become a resident of a State solely because of his 
absence from his original State of residence under military order. 
Moreover, compensation for military service shall not

[[Page 332]]

be considered as income derived from a source within a State of which 
the individual earning such compensation is not a resident, within the 
meaning of paragraph (d) of Sec. 301.6362-5. The preceding sentence 
shall not apply to nonmilitary compensation. Thus, for example, if an 
individual who is serving in State X as a member of the Armed Forces, 
and who is regarded as a resident of State Y under the Soldiers' and 
Sailors' Civil Relief Act, earns nonmilitary income in State X from a 
part-time job, such nonmilitary income may be subject to a qualified 
nonresident tax imposed by State X.
    (i) Withholding on compensation of employees of railroads, motor 
carriers, airlines, and water carriers. There is no contravention of the 
provisions of section 26, 226A, or 324 of the Interstate Commerce Act, 
or of section 1112 of the Federal Aviation Act of 1958, with respect to 
the withholding of compensation to which such sections apply for 
purposes of the nonresident tax.
    (j) Income derived from interstate commerce. There is no 
contravention of the provisions of the Act of September 14, 1959 (73 
Stat. 555), with respect to the taxation of income derived from 
interstate commerce to which such statute applies.

[T.D. 7577, 43 FR 59372, Dec. 20, 1978]