---
kind: "section"
citation: "26 U.S.C. § 534"
title: "26"
title_heading: "Internal Revenue Code"
number: "534"
heading: "Burden of proof"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/534"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter G — Corporations Used to Avoid Income Tax on Shareholders"
  - "Part I — Corporations Improperly Accumulating Surplus"
---

# §534. Burden of proof

- (a) **General rule—** In any proceeding before the Tax Court involving a notice of deficiency based in whole or in part on the allegation that all or any part of the earnings and profits have been permitted to accumulate beyond the reasonable needs of the business, the burden of proof with respect to such allegation shall—
  - (1) if notification has not been sent in accordance with [subsection (b)](#b), be on the Secretary, or
  - (2) if the [taxpayer](/usc/26/1313.md?p=b) has submitted the statement described in [subsection (c)](#c), be on the Secretary with respect to the grounds set forth in such statement in accordance with the provisions of such subsection.
- (b) **Notification by Secretary—** Before mailing the notice of deficiency referred to in [subsection (a)](#a), the Secretary may send by certified mail or registered mail a notification informing the [taxpayer](/usc/26/1313.md?p=b) that the proposed notice of deficiency includes an amount with respect to the accumulated earnings tax imposed by section 531.
- (c) **Statement by taxpayer—** Within such time (but not less than 30 days) after the mailing of the notification described in [subsection (b)](#b) as the Secretary may prescribe by regulations, the [taxpayer](/usc/26/1313.md?p=b) may submit a statement of the grounds (together with facts sufficient to show the basis thereof) on which the [taxpayer](/usc/26/1313.md?p=b) relies to establish that all or any part of the earnings and profits have not been permitted to accumulate beyond the reasonable needs of the business.
- (d) **Jeopardy assessment—** If pursuant to [section 6861(a)](/usc/26/6861.md?p=a) a jeopardy assessment is made before the mailing of the notice of deficiency referred to in [subsection (a)](#a), for purposes of this section such notice of deficiency shall, to the extent that it informs the [taxpayer](/usc/26/1313.md?p=b) that such deficiency includes the accumulated earnings tax imposed by [section 531](/usc/26/531.md), constitute the notification described in [subsection (b)](#b), and in that event the statement described in [subsection (c)](#c) may be included in the [taxpayer](/usc/26/1313.md?p=b)’s petition to the Tax Court.

## Source credit

(Aug. 16, 1954, ch. 736, 68A Stat. 180; Aug. 11, 1955, ch. 805, §§ 4, 5, 69 Stat. 690, 691; Pub. L. 85–866, title I, § 89(b), Sept. 2, 1958, 72 Stat. 1665; Pub. L. 94–455, title XIX, §§ 1901(a)(73), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1776, 1834.)

## Notes

### Editorial Notes

### Amendments

1976—Subsec. (a)(1), (2). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

Subsec. (b). Pub. L. 94–455, §§ 1901(a)(73)(A), 1906(b)(13)(A), struck out “In the case of a notice of deficiency to which subsection (e)(2) applies and which is mailed on or before the 30th day after the date of enactment of this sentence, the notification referred to in the preceding sentence may be mailed at any time on or before such 30th day” after “section 531”, and “or his delegate” after “Secretary”.

Subsec. (c). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

Subsec. (e). Pub. L. 94–455, § 1901(a)(73)(B), struck out subsec. (e) relating to application of provisions of section.

1958—Subsec. (b). Pub. L. 85–866 inserted “certified mail or” before “registered mail”.

1955—Subsec. (b). Act Aug. 11, 1955, § 5, inserted second sentence relating to notice of deficiency to which subsec. (e)(2) applies.

Subsec. (e). Act Aug. 11, 1955, § 4, permitted, in certain instances, application of this section to cases involving taxable years to which prior revenue laws apply.

### Statutory Notes and Related Subsidiaries

### Effective Date of 1976 Amendment

Amendment by section 1901(a)(73) 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 a note under section 2 of this title.

### Effective Date of 1958 Amendment

Amendment by Pub. L. 85–866 applicable only if mailing occurred after Sept. 2, 1958, see section 89(d) of Pub. L. 85–866, set out as a note under section 7502 of this title.