112 STAT. 742 PUBLIC LAW 105-206—JULY 22, 1998 Applicability. 26 USC 6621 note. Applicability. 26 USC 6651 note. Applicability. 26 USC 6656 note. (b) EFFECTIVE DATE.— The amendment made by this section shall apply to interest for the second and succeeding calendar quarters beginning after the date of the enactment of this Act. SEC. 3303. MITIGATION OF PENALTY ON INDIVIDUAL'S FAILURE TO PAY FOR MONTHS DURING PERIOD OF INSTALLMENT AGREEMENT. (a) IN GENERAL.—Section 6651 (relating to failure to file tax return or to pay tax) is amended by adding at the end the following new subsection: "(h) LIMITATION ON PENALTY ON INDIVIDUAL'S FAILURE TO PAY FOR MONTHS DURING PERIOD OF INSTALLMENT AGREEMENT.— In the case of an individual who files a return of tax on or before the due date for the return (including extensions), paragraphs (2) and (3) of subsection (a) shall each be applied by substituting '0.25' for '0.5' each place it appears for purposes of determining the addition to tax for any month during which an installment agreement under section 6159 is in efffect for the pa3mrient of such tax.". (b) EFFECTIVE DATE. —The amendment made by this section shall apply for purposes of determining additions to the tax for months beginning after December 31, 1999. SEC. 3304. MITIGATION OF FAILURE TO DEPOSIT PENALTY. (a) TAXPAYER MAY DESIGNATE PERIODS TO WHICH DEPOSITS APPLY.—Section 6656 (relating to underpayment of deposits) is amended by adding at the end the following new subsection: "(e) DESIGNATION OF PERIODS TO WHICH DEPOSITS APPLY.— "(1) IN GENERAL.— ^A person may, with respect to any deposit of tax to be reported on such person's return for a specified tax period, designate the period or periods within such specified tax period to which the deposit is to be applied for purposes of this section. "(2) TIME FOR MAKING DESIGNATION.— A person may make a designation under paragraph (1) only during the 90-day period beginning on the date of a notice that a penalty under subsection (a) has been imposed for the specified tax period to which the deposit relates.". (b) EXPANSION OF EXEMPTION FOR FIRST-TIME DEPOSITS.— (1) IN GENERAL.—Paragraph (2) of section 6656(c) (relating to exemption for first-time depositors of employment taxes) is amended to read as follows: "(2) such failure— "(A) occurs during the first quarter that such person was required to deposit any emplo3mtient tax; or "(B) if such person is required to change the frequency of deposits of any employment tax, relates to the first deposit to which such change applies, and". (c) PERIODS APPLY TO CURRENT LIABILITIES UNLESS DES- IGNATED OTHERWISE. — Paragraph (1) of section 6656(e) (as added by subsection (a) of this section) is amended to read as follows: "(e) DESIGNATION OF PERIODS TO WHICH DEPOSITS APPLY. — "(1) IN GENERAL.—^A deposit made under this section shall be applied to the most recent period or periods within the specified tax period to which the deposit relates, unless the person making such deposit designates a different period or periods to which such deposit is to be applied.". (d) EFFECTIVE DATE. —
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