1975 U.S. Tax Ct. LEXIS 149">*159 Petitioner makes basically two arguments against such an apparently straightforward reading of the statute. He first contends that, because the dividends paid on September 27 were included by Rendar's two 50-percent shareholders in their own personal income tax returns for the calendar year 1968, the abuses which Congress attempted to remedy by the phc provisions are simply not present in the instant case. Hence, petitioner asserts it is appropriate, in the instant case, to allow the subsequently paid dividend to be considered as having been paid during Rendar's 1968 fiscal year in order to prevent the imposition of the 70-percent tax. Congress, however, has given us virtually no leeway to consider such a position. The clear import of the second 64 T.C. 217">*221 sentence of section 563(b) is that if a company fails to actually pay any dividends during its fiscal year, then it is not entitled to rely on section 563(c) in having dividends paid subsequent to the fiscal year considered as having been paid during such fiscal year. When the congressional language is so clear, arguments such as petitioner's are in effect requesting us to rewrite a section of the Code, an action we simply cannot1975 U.S. Tax Ct. LEXIS 149">*160 take in the instant situation.

Petitioner finally argues that because the 70-percent tax may be, and has been described as a penalty-type imposition ( Pembroke Realty & S. Corp. v. Commissioner, 122 F.2d 252, 253 (2d Cir. 1941), revg. 42 B.T.A. 341">42 B.T.A. 341 (1940); Sicanoff Veg. Oil Corp. v. Commissioner, 251 F.2d 764, 770 (7th Cir. 1958), revg. 27 T.C. 1056">27 T.C. 1056 (1957); S. Rept. No. 558, 73d Cong., 2d Sess. (1934), 1939-1 C.B. (Part 2) 586, 596), that its assessment should not be permitted when as here the taxpayer can show that its failure to escape the clutches of the statute was due to reasonable cause. The phc provisions, however, contain no mention of a reasonable cause standard for determining a taxpayer's phc status and liability, and we must again reject petitioner's efforts to have us legislate in these matters.

In enacting the phc surcharge in the Revenue Act of 1934, it was the congressional intent to set forth specific standards for the determination of whether or not a company should be deemed a phc and taxed accordingly. If a company meets1975 U.S. Tax Ct. LEXIS 149">*161 the criteria set down by Congress in the statute, the imposition of the tax is to follow without further question: "The effect of this system recommended by your committee is to provide for a tax which will be automatically levied upon the holding company without any necessity for proving a purpose of avoiding surtaxes. It is believed that the majority of these corporations are in fact formed for the sole purpose of avoiding the imposition of the surtax upon the stockholders." H. Rept. No. 704, 73d Cong., 2d Sess. (1934), 1939-1 C.B. (Part 2) 554, 563. See also S. Rept. No. 558, 73d Cong., 2d Sess. (1934), 1939-1 C.B. (Part 2) 586, 597.

Relying upon this language in the legislative history, we and other courts have been consistent in holding that the phc provisions must be applied strictly in order to fulfill this expression of congressional intent. O'Sullivan Rubber Co. v. Commissioner, 120 F.2d 845, 848 (2d Cir. 1941), affg. 42 B.T.A. 721">42 B.T.A. 721 (1940); Litchfield Securities Corp. v. United States, 325 F.2d 667 (2d Cir. 1963), cert. denied 377 U.S. 931">377 U.S. 931 (1964);1975 U.S. Tax Ct. LEXIS 149">*162 Cedarburg 64 T.C. 217">*222 , 149 F.2d 526, 528-529 (7th Cir. 1945), affg. a Memorandum Opinion of this Court; Kurt Frings Agency, Inc., 42 T.C. 472">42 T.C. 472, 42 T.C. 472">477 (1964), affd. per curiam 351 F.2d 951 (9th Cir. 1965). Despite any harshness or other subjective factors which may be present, if a company fits the literal description of a phc contained in the Code, and if it has undistributed phc income as defined in the statute, imposition of the 70-percent tax is a matter of course. Porto Rico Coal Co. v. Commissioner, 126 F.2d 212, 213 (2d Cir. 1942), affg. 44 B.T.A. 221">44 B.T.A. 221 (1941); Coshocton Securities Co., 26 T.C. 935">26 T.C. 935, 26 T.C. 935">939 (1956).

In light of the above long-standing authority, we can accord very little attention to petitioner's request that we allow a taxpayer to escape phc characterization if he can show "reasonable cause" for having failed to avoid the grasp of the statute. Such a rewriting of the statute would clearly impinge upon the automatic quality of the phc provisions which Congress intended, 1975 U.S. Tax Ct. LEXIS 149">*163 an intent which has caused the courts, as described above, to consistently refuse to take into account subjective factors in determining the applicability of the phc provisions to individual cases.

Petitioner also argues that there is a "general policy" in the tax law, as interpreted by the courts, which requires that taxpayers be allowed a reasonable cause defense in the case of penalty-like provisions such as section 541. Petitioner, however, does not support his theory that, as a general matter, penalty-like provisions in the Code are or should be subject to a reasonable cause standard. He instead relies solely on case law interpreting section 6651(a), which section explicitly provides for the taxpayer a "reasonable cause" escape route from the penalty imposed by that section. See also sec. 6652(a). The phc provisions, on the other hand, posit no such reasonable cause defense for a taxpayer attempting to contest the imposition of the 70-percent tax. Thus, cases dealing with section 6651 are simply not in point in considering the proper interpretation and application of section 541.

Indeed, an examination of the history of section 6651(a) clearly refutes petitioner's theory1975 U.S. Tax Ct. LEXIS 149">*164 that all penalty-like provisions must have read into them a "reasonable cause" defense. Prior to 1936, the predecessor to section 6651(a) did not contain the "reasonable cause and not due to willful neglect" language as to "failure to file," which is today contained in section 6651(a)(1). In interpreting this earlier section, the courts uniformly held 64 T.C. 217">*223 that if a return was never filed the imposition of the penalty was mandatory, and considerations of "reasonable cause" were irrelevant. Commissioner v. Lane-Wells Co., 321 U.S. 219">321 U.S. 219, 321 U.S. 219">224-225 (1944); Axel Holmstrom, 35 B.T.A. 1092">35 B.T.A. 1092, 35 B.T.A. 1092">1105 (1937), affd. 94 F.2d 747">94 F.2d 747 (3d Cir. 1937); Scranton, Lackawanna Trust Co., Trustee, 29 B.T.A. 698">29 B.T.A. 698, 29 B.T.A. 698">702 (1934), affd. per curiam 80 F.2d 519 (3d Cir. 1935), cert. denied 297 U.S. 723">297 U.S. 723 (1936). It was only after the Revenue Act of 1936 had specifically posited a "reasonable cause" standard for taxpayers who had failed to file a return that the courts began applying such a standard. 321 U.S. 219">Commissioner v. Lane-Wells Co., supra at 224-225.1975 U.S. Tax Ct. LEXIS 149">*165 In the instant case, we too feel constrained to await the lead of Congress before applying any reasonable cause standard in the phc situation.

At most, courts which have characterized section 541 as imposing a penalty, have demanded a very strict reading of the phc provisions before allowing the imposition of the 70-percent tax. Sicanoff Veg. Oil Corp. v. Commissioner, 251 F. 2d at 764. Frelbro Corp. v. Commissioner, 315 F.2d 784, 788 (2d Cir. 1963), revg. 36 T.C. 864">36 T.C. 864 (1961). We are very sympathetic toward petitioner's position, but on the facts of the instant case we must hold that the phc provisions, strictly read, do not allow any dividends paid after the close of Rendar's 1968 fiscal year to be deemed as having been paid on the last day of such fiscal year pursuant to section 563(c).

Decision will be entered for the respondent.