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TITLE 26-INTERNAL REVENUE CODE tion (c)(1)(A), the taxpayer pays wages (as de- fined in section 50B(b)) to an employee with respect to whom work incentive program ex- penses are taken into account under subsec- tion (a) which are less than the wages paid to other employees who perform comparable services, the tax under this chapter for the taxable year in which such wages are so paid shall be increased by an amount (determined under such regulations) equal to the credits allowed under section 40 for such taxable year and all prior taxable years attributable to work incentive program expenses paid or incurred with respect to such employee, and the carrybacks and carryovers under subsec- tion (b) shall be properly adjusted. (2) Special rule Any increase in tax under paragraph (1) shall not be treated as tax imposed by this chapter for purposes of determining the. amount of any credit allowable under subpart A. (Added Pub. L. 92-178, title VI, §601(b), Dec. 10, 1971, 85 Stat. 554, and amended Pub. L. 93-. 406, title II, §§ 2001(g)(2)(B), 2002(g)(2), 2005(c)(4), Sept. 2, 1974, 88 Stat. 957, 968, 991; Pub. L. 94-12, title IV, §401(a)(1), (2), Mar. 29, 1975, 89 Stat. 45; Pub. L. 94-401, § 4(a), Sept. 7, 1976, 90 Stat. 1217; Pub. L. 94-455, title V, § 503(b)(4) title XIX, §§ 1901(a)(6), (b)(1)(D), 1906(b)(13)(A), title XXI, § 2107(a)(1)-(3), (b), (c), Oct. 4, 1976, 90 Stat. 1562, 1765, 1790, 1834, 1903, 1904.) AMENDMENTS 1976-Subsec. (a)(2). Pub. L. 94-455, § 2107(a)(1), substituted "$50,000" for "$25,000" wherever appear- Ing. Pub. L. 94-401, § 4(a)(1), added provision relating to credit allowed by section 40 of this title. Subsec. (a)(3). Pub. L. 94-455, §§503(b)(4), 1901(a)(6), (b)(1)(D), redesignated former subpars. (C), (D), and (E) as (B), (C), and (D), and in subpar. (B) as so redesignated, substituted "credit for the elderly" for "retirement income" and in provisions following subpar. (D) "section 408(f)" for "section 408(e)". Former subpar. (B), providing for a reduction in the li- ability for tax by the sum of the credits allowable under section 35, was struck out. Subsec. (a)(4). Pub. L. 94-455, § 2107(a)(2), substitut- ed "$25,000" for "$12,500", and "$50,000" for "$25,000". Subsec. (a)(5). Pub. L. 94-455, § 2107(a)(3), substitut- ed "$50,000" for "$25,000" wherever appearing. Subsec. (a)(6). Pub. L. 94-401, § 4(a)(2), in catchline substituted "certain" for "nonbusiness", designated existing provisions as subpar. (A) and added subpar. (B). Subsec. (c)(1). Pub. L. 94-455, §§ 1906(b)(13)(A), 2107(b), struck out in provision preceding subpar. (A) "or his delegate" following "Secretary" and in subpar. (A) substituted "90 days" for "12 months" wherever appearing, "90th calendar day" for "12th calendar month", and "the day" for "the calendar month". Subsec. (c)(2)(A). Pub. L. 94-455, § 2107(c), added cl. (v). Subsec. (d)(1). Pub. L. 94-455, § 1906(b)(13YA), struck out "or his delegate" following "Secretary". 1975-Subsec. (a)(6). Pub. L. 94-12, § 401(a)(1), added par. (6). Subsec. (c)(2)(A)(iv). Pub. L. 94-12, § 401(a)(2), added cl. (iv). 1974-Subsec, (a)(3). Pub. L. 93-406 inserted refer- ences to section 402(e) (relating to tax on lump sum distributions), section 72(m)(5)(B) (relating to 10 per- cent tax on premature distributions to owner-employ- ees), and section 403(e) (relating to additional tax on income from certain retirement accounts). EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (a)(3)(C) by section 503(b)(4) of Pub. L. 94-455 substituting "credit for the elderly" for "retirement income" applicable to taxable years beginning after Dec. 31, 1975, see section 508 of Pub. L. 94-455, set out as an Effective Date of 1976 Amend- ment note under section 3 of this title. Amendment of subsec. (a)(3) by section 1901(a)(6), (b)(1)(D) of Pub. L. 94-455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 2 of this title. Section 4(c) of Pub. L. 94-401 provided that: "The amendments made by this section [amending this sec- tion and section 50B of this title] with respect to Fed. eral welfare recipient employment incentive expenses paid or incurred by the taxpayer to an eligible employ- ee whose services are performed in connection with a child day care services program of the taxpayer shall apply to such expenses paid or incurred by a taxpayer to an eligible employee whom such taxpayer hires after the date of the enactment of this Act [Sept. 7. 1976]." EFFECTIVE DATE OF 1975 AMENDMENT Section 401(b) of Pub. L. 94-12 provided that: "The amendments made by this section [amending this rsec - tion and section 50B of this title] with respect to fed- eral welfare recipient employment incentive expenses shall apply to such expenses paid or incurred by a tax- payer to an eligible employee whom such taxpayer hires after the date of the enactment of this Act (Mar. 29, 1975]." EFFECTIVE DATE OF 1974 AMENDMENT Amendment of subsec. (a)(3) of this section by sec- tion 2001(g)(2)(B) of Pub. L. 93-406, which inserted reference to section 72(m)(5)(B) (relating to 10 per- cent tax on premature distributions to owner-employ- ees), applicable to distributions made in taxable years beginning after Dec. 31, 1975, see section 2001(i)(5) of Pub. L. 93-406, set out as an Effective Date of 1974 Amendment note under section 72 of this title. Amendment of subsec. (a)(3) of this section by sec- tion 2002(g)(2) of Pub. L. 93-406, which inserted refer- ence to section 408(e) (relating to additional tax on income from certain retirement accounts), effective on Jan. 1, 1975, see section 2002(i)(2) of Pub. L. 93-406, set out as an Effective Date note under section 4973 of this title. Amendment of subsec. (a)(3) of this section by sec- tion 2005(c)(4) of Pub. L. 93-406, which inserted refer- ence to section 402(e) (relating to tax on lump sum dis- tributions), applicable only with respect to distribu- tions or payments made after Dec. 31, 1973, in taxable years beginning after Dec. 31, 1973, see section 2005(d) of Pub. L. 93-406, set out as an Effective Date of 1974 Amendment note under section 402 of this title. EFFECTIVE DATE Section 601(f) of Pub. L. 92-178 provided that: "The amendments made by this section [enacting sections 40, 50A, 50B, 56(a)(2)(iv), (v), (c)(1)(D), (E), 381(c)(24), 6501(o), 6511(d)(7), 6601(e)(4), and 6611(f)(4) of this title and amending sections 56(c)(1)(C). 6411, and 6501(m) of this title] shall apply to taxable years be- ginning after December 31, 1971." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sectiom 50B, 383, 6411 of this title. 71-999 0 - 78 - 8 (Vol. 7) Page 85 § 50A