Summary

Creates a new federal wealth tax in the Internal Revenue Code, establishes valuation and penalty rules for underreporting of wealth, and lets the Treasury Secretary grant limited deferrals of payment for taxpayers facing severe liquidity constraints or undue hardship. The change also makes wealth taxes nondeductible, adjusts accuracy-related penalty rules for valuation understatements, adds a clerical table entry for the new subtitle, and amends tax-exemption language for certain entities; most provisions apply to calendar years beginning after enactment.

Key Points

• Establishes a new federal wealth tax by adding a new chapter to the Internal Revenue Code.
• Wealth taxes imposed under the new chapter are explicitly nondeductible under Sec. 275.
• Allows Treasury to grant up to 5-year payment deferrals for taxpayers with severe liquidity constraints or undue hardship, with rules due within 12 months.
• Creates a new Sec. 6662 accuracy-related penalty category for "substantial wealth tax valuation understatement," defined as reported values ≤65% of correct value.
• Imposes a $5,000 annual threshold before the new valuation penalties apply.
• Adjusts penalty-rate textual references (including substituting a 20% reference in specified places) and raises the misstatement threshold for "gross" misstatements to 65%.
• Amends Sec. 501(a) to address tax-exempt entities' treatment relative to the new rules (text truncated in summary).
• All changes apply to calendar years beginning after enactment; Treasury must issue deferral application rules within 12 months.

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