Title 26 — Internal Revenue Code
Chapter 42 — Private Foundations; and Certain Other Tax-Exempt Organizations
§ 4958. Taxes on excess benefit transactions
Statutory text
Initial taxes
On the disqualified person
There is hereby imposed on each excess benefit transaction a tax equal to 25 percent of the excess benefit. The tax imposed by this paragraph shall be paid by any disqualified person referred to in subsection (f)(1) with respect to such transaction.
On the management
In any case in which a tax is imposed by paragraph (1), there is hereby imposed on the participation of any organization manager in the excess benefit transaction, knowing that it is such a transaction, a tax equal to 10 percent of the excess benefit, unless such participation is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by any organization manager who participated in the excess benefit transaction.
Additional tax on the disqualified person
In any case in which an initial tax is imposed by subsection (a)(1) on an excess benefit transaction and the excess benefit involved in such transaction is not corrected within the taxable period, there is hereby imposed a tax equal to 200 percent of the excess benefit involved. The tax imposed by this subsection shall be paid by any disqualified person referred to in subsection (f)(1) with respect to such transaction.
Excess benefit transaction; excess benefit
For purposes of this section—
Excess benefit transaction
In general
The term “excess benefit transaction” means any transaction in which an economic benefit is provided by an applicable tax-exempt organization directly or indirectly to or for the use of any disqualified person if the value of the economic benefit provided exceeds the value of the consideration (including the performance of services) received for providing such benefit. For purposes of the preceding sentence, an economic benefit shall not be treated as consideration for the performance of services unless such organization clearly indicated its intent to so treat such benefit.
Excess benefit
The term “excess benefit” means the excess referred to in subparagraph (A).
Special rules for donor advised funds
In the case of any donor advised fund (as defined in section 4966(d)(2))—
the term “excess benefit transaction” includes any grant, loan, compensation, or other similar payment from such fund to a person described in subsection (f)(7) with respect to such fund, and
the term “excess benefit” includes, with respect to any transaction described in subparagraph (A), the amount of any such grant, loan, compensation, or other similar payment.
Special rules for supporting organizations
In general
In the case of any organization described in section 509(a)(3)—
the term “excess benefit transaction” includes—
any grant, loan, compensation, or other similar payment provided by such organization to a person described in subparagraph (B), and
any loan provided by such organization to a disqualified person (other than an organization described in subparagraph (C)(ii)), and
the term “excess benefit” includes, with respect to any transaction described in clause (i), the amount of any such grant, loan, compensation, or other similar payment.
Person described
A person is described in this subparagraph if such person is—
a substantial contributor to such organization,
a member of the family (determined under section 4958(f)(4)) of an individual described in clause (i), or
a 35-percent controlled entity (as defined in section 4958(f)(3) by substituting “persons described in clause (i) or (ii) of section 4958(c)(3)(B)” for “persons described in subparagraph (A) or (B) of paragraph (1)” in subparagraph (A)(i) thereof).
Substantial contributor
For purposes of this paragraph—
In general
The term “substantial contributor” means any person who contributed or bequeathed an aggregate amount of more than $5,000 to the organization, if such amount is more than 2 percent of the total contributions and bequests received by the organization before the close of the taxable year of the organization in which the contribution or bequest is received by the organization from such person. In the case of a trust, such term also means the creator of the trust. Rules similar to the rules of subparagraphs (B) and (C) of section 507(d)(2) shall apply for purposes of this subparagraph.
Exception
Such term shall not include—
any organization described in paragraph (1), (2), or (4) of section 509(a), and
any organization which is treated as described in such paragraph (2) by reason of the last sentence of section 509(a) and which is a supported organization (as defined in section 509(f)(3)) of the organization to which subparagraph (A) applies.
Authority to include certain other private inurement
To the extent provided in regulations prescribed by the Secretary, the term “excess benefit transaction” includes any transaction in which the amount of any economic benefit provided to or for the use of a disqualified person is determined in whole or in part by the revenues of 1 or more activities of the organization but only if such transaction results in inurement not permitted under paragraph (3) or (4) of section 501(c), as the case may be. In the case of any such transaction, the excess benefit shall be the amount of the inurement not so permitted.
Special rules
For purposes of this section—
Joint and several liability
If more than 1 person is liable for any tax imposed by subsection (a) or subsection (b), all such persons shall be jointly and severally liable for such tax.
Limit for management
With respect to any 1 excess benefit transaction, the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $20,000.
Applicable tax-exempt organization
For purposes of this subchapter, the term “applicable tax-exempt organization” means—
any organization which (without regard to any excess benefit) would be described in paragraph (3), (4), or (29) of section 501(c) and exempt from tax under section 501(a), and
any organization which was described in paragraph (1) at any time during the 5-year period ending on the date of the transaction.
Such term shall not include a private foundation (as defined in section 509(a)).
Other definitions
For purposes of this section—
Disqualified person
The term “disqualified person” means, with respect to any transaction—
any person who was, at any time during the 5-year period ending on the date of such transaction, in a position to exercise substantial influence over the affairs of the organization,
a member of the family of an individual described in subparagraph (A),
a 35-percent controlled entity,
any person who is described in subparagraph (A), (B), or (C) with respect to an organization described in section 509(a)(3) and organized and operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of the applicable tax-exempt organization,
which involves a donor advised fund (as defined in section 4966(d)(2)), any person who is described in paragraph (7) with respect to such donor advised fund (as so defined), and
which involves a sponsoring organization (as defined in section 4966(d)(1)), any person who is described in paragraph (8) with respect to such sponsoring organization (as so defined).
Organization manager
The term “organization manager” means, with respect to any applicable tax-exempt organization, any officer, director, or trustee of such organization (or any individual having powers or responsibilities similar to those of officers, directors, or trustees of the organization).
35-percent controlled entity
In general
The term “35-percent controlled entity” means—
a corporation in which persons described in subparagraph (A) or (B) of paragraph (1) own more than 35 percent of the total combined voting power,
a partnership in which such persons own more than 35 percent of the profits interest, and
a trust or estate in which such persons own more than 35 percent of the beneficial interest.
Constructive ownership rules
Rules similar to the rules of paragraphs (3) and (4) of section 4946(a) shall apply for purposes of this paragraph.
Family members
The members of an individual’s family shall be determined under section 4946(d); except that such members also shall include the brothers and sisters (whether by the whole or half blood) of the individual and their spouses.
Taxable period
The term “taxable period” means, with respect to any excess benefit transaction, the period beginning with the date on which the transaction occurs and ending on the earliest of—
the date of mailing a notice of deficiency under section 6212 with respect to the tax imposed by subsection (a)(1), or
the date on which the tax imposed by subsection (a)(1) is assessed.
Correction
The terms “correction” and “correct” mean, with respect to any excess benefit transaction, undoing the excess benefit to the extent possible, and taking any additional measures necessary to place the organization in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards, except that in the case of any correction of an excess benefit transaction described in subsection (c)(2), no amount repaid in a manner prescribed by the Secretary may be held in any donor advised fund.
Donors and donor advisors
For purposes of paragraph (1)(E), a person is described in this paragraph if such person—
is described in section 4966(d)(2)(A)(iii),
is a member of the family of an individual described in subparagraph (A), or
is a 35-percent controlled entity (as defined in paragraph (3) by substituting “persons described in subparagraph (A) or (B) of paragraph (7)” for “persons described in subparagraph (A) or (B) of paragraph (1)” in subparagraph (A)(i) thereof).
Investment advisors
For purposes of paragraph (1)(F)—
In general
A person is described in this paragraph if such person—
is an investment advisor,
is a member of the family of an individual described in clause (i), or
is a 35-percent controlled entity (as defined in paragraph (3) by substituting “persons described in clause (i) or (ii) of paragraph (8)(A)” for “persons described in subparagraph (A) or (B) of paragraph (1)” in subparagraph (A)(i) thereof).
Investment advisor defined
For purposes of subparagraph (A), the term “investment advisor” means, with respect to any sponsoring organization (as defined in section 4966(d)(1)), any person (other than an employee of such organization) compensated by such organization for managing the investment of, or providing investment advice with respect to, assets maintained in donor advised funds (as defined in section 4966(d)(2)) owned by such organization.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Taxpayer Bill of Rights 2
Pub. L. 104–168 title XIII § 1311(a) · 110 Stat. 1452
Enacted · 26 U.S.C. § 4958
Added Pub. L. 104–168, title XIII, § 1311(a), July 30, 1996, 110 Stat. 1475
Source evidence
Code source credit
Added Pub. L. 104–168, title XIII, § 1311(a), July 30, 1996, 110 Stat. 1475Enacted provision · exact public law section
(a) In general.— Chapter 42 (relating to private foundations and certain other tax-exempt organizations) is amended by redesignating subchapter D as subchapter E and by inserting after subchapter C the following new subchapter: “Subtitle D— Failure by Certain Charitable Organizations to Meet Certain Qualification Requirements “Sec. 4958. Taxes on excess benefit transactions. Sec. 4958. TAXES ON EXCESS BENEFIT TRANSACTIONS. “(a) Initial Taxes.— “(1) On the Disqualified Person.— There is hereby imposed on each excess benefit transaction a tax equal to 25 percent of the excess benefit the tax imposed by this paragraph shall be paid by any disqualified person referred to in subsection (f)(1) with respect to such transaction. “(2) On the Management.— In any case in which a tax is imposed by paragraph (1), there is hereby imposed on the participation of any organization manager in the excess benefit transaction, knowing that it is such a transaction, a tax equal to 10 percent of the excess benefit, unless such participation is not willful and is due to reasonable cause. the tax imposed by this paragraph shall be paid by any organization manager who participated in the excess benefit transaction. “(b) Additional Tax On the Disqualified Person.— In any case in which an initial tax is imposed by subsection (a)(1) on an excess benefit transaction and the excess benefit involved in such transaction is not corrected within the taxable period, there is hereby imposed a tax equal to 200 percent of the excess benefit involved. the tax imposed by this subsection shall be paid by any disqualified person referred to in subsection (f)(1) with respect to such transaction. “(c) Excess Benefit Transaction; Excess Benefit.— for purposes of this section— “(1) Excess Benefit Transaction.— “(A) In general.— The term ‘excess benefit transaction’ means any transaction in which an economic benefit is provided by an applicable tax-exempt organization directly or indirectly to or for the use of any disqualified person if the value of the economic benefit provided exceeds the value of the consideration (including the performance of services) received for providing such benefit. for purposes of the preceding sentence, an economic benefit shall not be treated as consideration for the performance of services unless such organization clearly indicated its intent to so treat such benefit. “(B) Excess Benefit.— The term ‘excess benefit’ means the excess referred to in subparagraph (A). “(2) Authority to Include Certain Other Private Inurement.— To the extent provided in regulations prescribed by the Secretary, the term ‘excess benefit transaction’ includes any transaction in which the amount of any economic benefit provided to or for the use of a disqualified person is determined in whole or in part by the revenues of 1 or more activities of the organization but only if such transaction results in inurement not permitted under paragraph (3) or (4) of section 501(c), as the case may be. in the case of any such transaction, the excess benefit shall be the amount of the inurement not so permitted. “(d) Special Rules.— for purposes of this section— “(1) Joint And Several Liability.— If more than 1 person is liable for any tax imposed by subsection (a) or subsection (b), all such persons shall be jointly and severally liable for such tax. “(2) Limit for Management.— With respect to any 1 excess benefit transaction, the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $10,000. “(e) Applicable Tax-Exempt Organization.— for purposes of this subchapter, the term ‘applicable tax-exempt organization’ means— “(1) any organization which (without regard to any excess benefit) would be described in paragraph (3) or (4) of section 501(c) and exempt from tax under section 501(a), and “(2) any organization which was described in paragraph (1) at any time during the 5-year period ending on the date of the transaction. Such term shall not include a private foundation (as defined in section 509(a)). “(f) Other Definitions.— for purposes of this section— “(1) Disqualified Person.— The term ‘disqualified person’ means, with respect to any transaction— “(A) any person who was, at any time during the 5-year period ending on the date of such transaction, in a position to exercise substantial influence over the affairs of the organization, “(B) a member of the family of an individual described in subparagraph (A), and “(C) a 35-percent controlled entity. “(2) Organization Manager.— The term ‘organization manager’ means, with respect to any applicable tax-exempt organization, any officer, director, or trustee of such organization (or any individual having powers or responsibilities similar to those of officers, directors, or trustees of the organization). “(3) 35-Percent Controlled Entity.— “(A) In general.— The term 35-percent controlled entity means— “(i) a corporation in which persons described in subparagraph (A) or (B) of paragraph (1) own more than 35 percent of the total combined voting power, “(ii) a partnership in which such persons own more than 35 percent of the profits interest, and “(iii) a trust or estate in which such persons own more than 35 percent of the beneficial interest. “(B) Constructive Ownership Rules.— Rules similar to the rules of paragraphs (3) and (4) of section 4946(a) shall apply for purposes of this paragraph. “(4) Family Members.— The members of an individual’s family shall be determined under section 4946(d); except that such members also shall include the brothers and sisters (whether by the whole or half blood) of the individual and their spouses. “(5) Taxable Period.— The term ‘taxable period’ means, with respect to any excess benefit transaction, the period beginning with the date on which the transaction occurs and ending on the earliest of— “(A) the date of mailing a notice of deficiency under section 6212 with respect to the tax imposed by subsection (a)(1), or “(B) the date on which the tax imposed by subsection (a)(1) is assessed. “(6) Correction.— The terms ‘correction’ and ‘correct’ mean, with respect to any excess benefit transaction, undoing the excess benefit to the extent possible, and taking any additional measures necessary to place the organization in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards.”.Pub. L. 109–280 § 1232(b)(1) · 120 Stat. 780
Redesignated · 26 U.S.C. § 4958(c)(2)
Pub. L. 109–280, § 1232(b)(1), added par. (2). Former par. (2) redesignated (3). See Codification note above
Source evidence
Code amendment note
Subsec. (c)(2). Pub. L. 109–280, § 1232(b)(1), added par. (2). Former par. (2) redesignated (3). See Codification note above.Enacted provision · exact public law section
(1) In general.— Section 4958(c) 26 USC 4958. is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph: “(2) Special rules for donor advised funds.— In the case of any donor advised fund (as defined in section 4966(d)(2))— “(A) the term ‘excess benefit transaction’ includes any grant, loan, compensation, or other similar payment from such fund to a person described in subsection (f)(7) with respect to such fund, and “(B) the term ‘excess benefit’ includes, with respect to any transaction described in subparagraph (A), the amount of any such grant, loan, compensation, or other similar payment.” .Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Pub. L. 109–280 § 1242(b) · 120 Stat. 780
Redesignated · 26 U.S.C. § 4958(c)(3)
Pub. L. 109–280, § 1242(b), added par. (3). Former par. (3) redesignated (4). See Codification note above
Source evidence
Code amendment note
Subsec. (c)(3). Pub. L. 109–280, § 1242(b), added par. (3). Former par. (3) redesignated (4). See Codification note above.Enacted provision · exact public law section
(b) Certain Transactions Treated as Excess Benefit Transactions.— Section 4958(c), as amended by this Act, is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph: “(3) Special rules for supporting organizations.— “(A) In general.— In the case of any organization described in section 509(a)(3)— “(i) the term ‘excess benefit transaction’ includes— “(I) any grant, loan, compensation, or other similar payment provided by such organization to a person described in subparagraph (B), and “(II) any loan provided by such organization to a disqualified person (other than an organization described in paragraph (1), (2), or (4) of section 509(a)), and “(ii) the term ‘excess benefit’ includes, with respect to any transaction described in clause (i), the amount of any such grant, loan, compensation, or other similar payment. “(B) Person described.— A person is described in this subparagraph if such person is— “(i) a substantial contributor to such organization, “(ii) a member of the family (determined under section 4958(f)(4)) of an individual described in clause (i), or “(iii) a 35-percent controlled entity (as defined in section 4958(f)(3) by substituting ‘persons described in clause (i) or (ii) of section 4958(c)(3)(B)’ for ‘persons described in subparagraph (A) or (B) of paragraph (1)’ in subparagraph (A)(i) thereof). “(C) Substantial contributor.— For purposes of this paragraph— “(i) In general.— The term ‘substantial contributor’ means any person who contributed or bequeathed an aggregate amount of more than $5,000 to the organization, if such amount is more than 2 percent of the total contributions and bequests received by the organization before the close of the taxable year of the organization in which the contribution or bequest is received by the organization from such person. In the case of a trust, such term also means the creator of the trust. Rules similar to the rules of subparagraphs (B) and (C) of section 507(d)(2) shall apply for purposes of this subparagraph. “(ii) Exception.— Such term shall not include any organization described in paragraph (1), (2), or (4) of section 509(a).” .Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Pub. L. 109–280 § 1232(b)(1) · 120 Stat. 780
Redesignated · 26 U.S.C. § 4958(c)(3)
Pub. L. 109–280, § 1232(b)(1), redesignated par. (2) as (3). See Codification note above
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 109–280, § 1232(b)(1), redesignated par. (2) as (3). See Codification note above.Enacted provision · exact public law section
(1) In general.— Section 4958(c) 26 USC 4958. is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph: “(2) Special rules for donor advised funds.— In the case of any donor advised fund (as defined in section 4966(d)(2))— “(A) the term ‘excess benefit transaction’ includes any grant, loan, compensation, or other similar payment from such fund to a person described in subsection (f)(7) with respect to such fund, and “(B) the term ‘excess benefit’ includes, with respect to any transaction described in subparagraph (A), the amount of any such grant, loan, compensation, or other similar payment.” .Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Pub. L. 109–280 § 1242(b) · 120 Stat. 780
Redesignated · 26 U.S.C. § 4958(c)(4)
Pub. L. 109–280, § 1242(b), redesignated par. (3) as (4). See Codification note above
Source evidence
Code amendment note
Subsec. (c)(4). Pub. L. 109–280, § 1242(b), redesignated par. (3) as (4). See Codification note above.Enacted provision · exact public law section
(b) Certain Transactions Treated as Excess Benefit Transactions.— Section 4958(c), as amended by this Act, is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph: “(3) Special rules for supporting organizations.— “(A) In general.— In the case of any organization described in section 509(a)(3)— “(i) the term ‘excess benefit transaction’ includes— “(I) any grant, loan, compensation, or other similar payment provided by such organization to a person described in subparagraph (B), and “(II) any loan provided by such organization to a disqualified person (other than an organization described in paragraph (1), (2), or (4) of section 509(a)), and “(ii) the term ‘excess benefit’ includes, with respect to any transaction described in clause (i), the amount of any such grant, loan, compensation, or other similar payment. “(B) Person described.— A person is described in this subparagraph if such person is— “(i) a substantial contributor to such organization, “(ii) a member of the family (determined under section 4958(f)(4)) of an individual described in clause (i), or “(iii) a 35-percent controlled entity (as defined in section 4958(f)(3) by substituting ‘persons described in clause (i) or (ii) of section 4958(c)(3)(B)’ for ‘persons described in subparagraph (A) or (B) of paragraph (1)’ in subparagraph (A)(i) thereof). “(C) Substantial contributor.— For purposes of this paragraph— “(i) In general.— The term ‘substantial contributor’ means any person who contributed or bequeathed an aggregate amount of more than $5,000 to the organization, if such amount is more than 2 percent of the total contributions and bequests received by the organization before the close of the taxable year of the organization in which the contribution or bequest is received by the organization from such person. In the case of a trust, such term also means the creator of the trust. Rules similar to the rules of subparagraphs (B) and (C) of section 507(d)(2) shall apply for purposes of this subparagraph. “(ii) Exception.— Such term shall not include any organization described in paragraph (1), (2), or (4) of section 509(a).” .Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Pub. L. 109–280 § 1212(a)(3) · 120 Stat. 780
Substituted · 26 U.S.C. § 4958(d)(2)
Pub. L. 109–280, § 1212(a)(3), substituted “$20,000” for “$10,000”. See Codification note above
Source evidence
Code amendment note
Subsec. (d)(2). Pub. L. 109–280, § 1212(a)(3), substituted “$20,000” for “$10,000”. See Codification note above.Enacted provision · exact public law section
(3) Increased limitation for managers on excess benefit transactions.— Section 4958(d)(2) is amended by striking “$10,000” and inserting “$20,000”.Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Pub. L. 109–280 § 1242(a) · 120 Stat. 780
Redesignated · 26 U.S.C. § 4958(f)(1)(D)
Pub. L. 109–280, § 1242(a), added subpar. (D). Former subpar. (D) redesignated (E). See Codification note above
Source evidence
Code amendment note
Subsec. (f)(1)(D). Pub. L. 109–280, § 1242(a), added subpar. (D). Former subpar. (D) redesignated (E). See Codification note above.Enacted provision · exact public law section
(a) Disqualified Persons.— Paragraph (1) of section 4958(f), as amended by this Act, 26 USC 4958. is amended by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively, and by adding after subparagraph (C) the following new subparagraph: “(D) any person who is described in subparagraph (A), (B), or (C) with respect to an organization described in section 509(a)(3) and organized and operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of the applicable tax-exempt organization.” .Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Pub. L. 109–280 § 1232(a)(1) · 120 Stat. 780
Added · 26 U.S.C. § 4958(f)(1)(D)
Pub. L. 109–280, § 1232(a)(1), added subpar. (D). See Codification note above
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 109–280, § 1232(a)(1), added subpar. (D). See Codification note above.Enacted provision · exact public law section
(1) In general.— Paragraph (1) of section 4958(f) is amended by striking “and” at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting a comma, and by adding after subparagraph (C) the following new subparagraphs: “(D) which involves a donor advised fund (as defined in section 4966(d)(2)), any person who is described in paragraph (7) with respect to such donor advised fund (as so defined), and “(E) which involves a sponsoring organization (as defined in section 4966(d)(1)), any person who is described in paragraph (8) with respect to such sponsoring organization (as so defined).” .Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Pub. L. 109–280 § 1242(a) · 120 Stat. 780
Redesignated · 26 U.S.C. § 4958(f)(1)(E)
Pub. L. 109–280, § 1242(a), redesignated subpar. (D) as (E). Former subpar. (E) redesignated (F). See Codification note above
Source evidence
Code amendment note
Subsec. (f)(1)(E). Pub. L. 109–280, § 1242(a), redesignated subpar. (D) as (E). Former subpar. (E) redesignated (F). See Codification note above.Enacted provision · exact public law section
(a) Disqualified Persons.— Paragraph (1) of section 4958(f), as amended by this Act, 26 USC 4958. is amended by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively, and by adding after subparagraph (C) the following new subparagraph: “(D) any person who is described in subparagraph (A), (B), or (C) with respect to an organization described in section 509(a)(3) and organized and operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of the applicable tax-exempt organization.” .Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Pub. L. 109–280 § 1232(a)(1) · 120 Stat. 780
Added · 26 U.S.C. § 4958(f)(1)(E)
Pub. L. 109–280, § 1232(a)(1), added subpar. (E). See Codification note above
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 109–280, § 1232(a)(1), added subpar. (E). See Codification note above.Enacted provision · exact public law section
(1) In general.— Paragraph (1) of section 4958(f) is amended by striking “and” at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting a comma, and by adding after subparagraph (C) the following new subparagraphs: “(D) which involves a donor advised fund (as defined in section 4966(d)(2)), any person who is described in paragraph (7) with respect to such donor advised fund (as so defined), and “(E) which involves a sponsoring organization (as defined in section 4966(d)(1)), any person who is described in paragraph (8) with respect to such sponsoring organization (as so defined).” .Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Pub. L. 109–280 § 1242(a) · 120 Stat. 780
Redesignated · 26 U.S.C. § 4958(f)(1)(F)
Pub. L. 109–280, § 1242(a), redesignated subpar. (E) as (F). See Codification note above
Source evidence
Code amendment note
Subsec. (f)(1)(F). Pub. L. 109–280, § 1242(a), redesignated subpar. (E) as (F). See Codification note above.Enacted provision · exact public law section
(a) Disqualified Persons.— Paragraph (1) of section 4958(f), as amended by this Act, 26 USC 4958. is amended by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively, and by adding after subparagraph (C) the following new subparagraph: “(D) any person who is described in subparagraph (A), (B), or (C) with respect to an organization described in section 509(a)(3) and organized and operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of the applicable tax-exempt organization.” .Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Pub. L. 109–280 § 1232(b)(2) · 120 Stat. 780
Inserted · 26 U.S.C. § 4958(f)(6)
Pub. L. 109–280, § 1232(b)(2), inserted “, except that in the case of any correction of an excess benefit transaction described in subsection (c)(2), no amount repaid in a manner prescribed by the Secretary may be held in any donor advised fund” after “standards”. See Codification note above
Source evidence
Code amendment note
Subsec. (f)(6). Pub. L. 109–280, § 1232(b)(2), inserted “, except that in the case of any correction of an excess benefit transaction described in subsection (c)(2), no amount repaid in a manner prescribed by the Secretary may be held in any donor advised fund” after “standards”. See Codification note above.Enacted provision · exact public law section
(2) Special rule for correction of transaction.— Section 4958(f)(6) is amended by inserting “, except that in the case of any correction of an excess benefit transaction described in subsection (c)(2), no amount repaid in a manner prescribed by the Secretary may be held in any donor advised fund” after “standards”.Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Pub. L. 109–280 § 1232(a)(2) · 120 Stat. 780
Added · 26 U.S.C. § 4958(f)(7); 26 U.S.C. § 4958(f)(8)
Pub. L. 109–280, § 1232(a)(2), added pars. (7) and (8). See Codification note above
Source evidence
Code amendment note
Subsec. (f)(7), (8). Pub. L. 109–280, § 1232(a)(2), added pars. (7) and (8). See Codification note above.Enacted provision · exact public law section
(2) Donors, donor advisors, and investment advisors treated as disqualified persons.— Section 4958(f) is amended by adding at the end the following new paragraphs: “(7) Donors and donor advisors.— For purposes of paragraph (1)(E), a person is described in this paragraph if such person— “(A) is described in section 4966(d)(2)(A)(iii), “(B) is a member of the family of an individual described in subparagraph (A), or “(C) is a 35-percent controlled entity (as defined in paragraph (3) by substituting ‘persons described in subparagraph (A) or (B) of paragraph (7)’ for ‘persons described in subparagraph (A) or (B) of paragraph (1)’ in subparagraph (A)(i) thereof). “(8) Investment advisors.— For purposes of paragraph (1)(F)— “(A) In general.— A person is described in this paragraph if such person— “(i) is an investment advisor, “(ii) is a member of the family of an individual described in clause (i), or “(iii) is a 35-percent controlled entity (as defined in paragraph (3) by substituting ‘persons described in clause (i) or (ii) of paragraph (8)(A)’ for ‘persons described in subparagraph (A) or (B) of paragraph (1)’ in subparagraph (A)(i) thereof). “(B) Investment advisor defined.— For purposes of subparagraph (A), the term ‘investment advisor’ means, with respect to any sponsoring organization (as defined in section 4966(d)(1)), any person (other than an employee of such organization) compensated by such organization for managing the investment of, or providing investment advice with respect to, assets maintained in donor advised funds (as defined in section 4966(d)(2)) owned by such organization.” .Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Tax Technical Corrections Act of 2007
Pub. L. 110–172 § 3(i)(1) · 121 Stat. 2473
Substituted · 26 U.S.C. § 4958(c)(3)(A)(i)(II)
Pub. L. 110–172, § 3(i)(1), substituted “subparagraph (C)(ii)” for “paragraph (1), (2), or (4) of section 509(a)”
Source evidence
Code amendment note
Subsec. (c)(3)(A)(i)(II). Pub. L. 110–172, § 3(i)(1), substituted “subparagraph (C)(ii)” for “paragraph (1), (2), or (4) of section 509(a)”.Enacted provision · exact public law section
(1) Subclause (II) of section 4958(c)(3)(A)(i) is amended by striking “paragraph (1), (2), or (4) of section 509(a)” and inserting “subparagraph (C)(ii)”.Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Tax Technical Corrections Act of 2007
Pub. L. 110–172 § 3(i)(2) · 121 Stat. 2473
Amended · 26 U.S.C. § 4958(c)(3)(C)(ii)
Pub. L. 110–172, § 3(i)(2), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “Such term shall not include any organization described in paragraph (1), (2), or (4) of section 509(a).”
Source evidence
Code amendment note
Subsec. (c)(3)(C)(ii). Pub. L. 110–172, § 3(i)(2), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “Such term shall not include any organization described in paragraph (1), (2), or (4) of section 509(a).”Enacted provision · exact public law section
(2) Clause (ii) of section 4958(c)(3)(C) is amended to read as follows: “(ii) Exception.— Such term shall not include— “(I) any organization described in paragraph (1), (2), or (4) of section 509(a), and “(II) any organization which is treated as described in such paragraph (2) by reason of the last sentence of section 509(a) and which is a supported organization (as defined in section 509(f)(3)) of the organization to which subparagraph (A) applies.” .Effective date note
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.Patient Protection and Affordable Care Act
Pub. L. 111–148 title I § 1322(h)(3) · 124 Stat. 119
Substituted · 26 U.S.C. § 4958(e)(1)
Pub. L. 111–148 substituted “paragraph (3), (4), or (29)” for “paragraph (3) or (4)”
Source evidence
Code amendment note
Subsec. (e)(1). Pub. L. 111–148 substituted “paragraph (3), (4), or (29)” for “paragraph (3) or (4)”.Enacted provision · exact public law section
(3) Application of tax on excess benefit transactions.— Section 4958(e)(1) of such Code (defining applicable tax-exempt organization) is amended by striking “paragraph (3) or (4)” and inserting “paragraph (3), (4), or (29)”.Energy and Water Development and Related Agencies Appropriations Act, 2018
Pub. L. 115–141 div. U title IV § 401(a)(224) · 132 Stat. 348
Substituted · 26 U.S.C. § 4958(f)(1)(D)
Pub. L. 115–141 substituted comma for period at end
Source evidence
Code amendment note
Subsec. (f)(1)(D). Pub. L. 115–141 substituted comma for period at end.Enacted provision · exact public law section
Sec. 401. The Nuclear Regulatory Commission shall comply with the July 5, 2011, version of Chapter VI of its Internal Commission Procedures when responding to Congressional requests for information.
17 of 17 references resolved to an enrolled provision
Editorial Notes
Codification
Sections 1212(a)(3), 1232(a), (b), and 1242(a), (b) of Pub. L. 109–280, which directed the amendment of section 4958 without specifying the act to be amended, were executed to this section, which is section 4958 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. See 2006 Amendment notes below.
Amendments2006–2018 · 4 rounds
2018
Subsec. (f)(1)(D). Pub. L. 115–141 substituted comma for period at end.
2010
Subsec. (e)(1). Pub. L. 111–148 substituted “paragraph (3), (4), or (29)” for “paragraph (3) or (4)”.
2007
Subsec. (c)(3)(A)(i)(II). Pub. L. 110–172, § 3(i)(1), substituted “subparagraph (C)(ii)” for “paragraph (1), (2), or (4) of section 509(a)”.
Subsec. (c)(3)(C)(ii). Pub. L. 110–172, § 3(i)(2), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “Such term shall not include any organization described in paragraph (1), (2), or (4) of section 509(a).”
2006
Subsec. (c)(2). Pub. L. 109–280, § 1232(b)(1), added par. (2). Former par. (2) redesignated (3). See Codification note above.
Subsec. (c)(3). Pub. L. 109–280, § 1242(b), added par. (3). Former par. (3) redesignated (4). See Codification note above.
Pub. L. 109–280, § 1232(b)(1), redesignated par. (2) as (3). See Codification note above.
Subsec. (c)(4). Pub. L. 109–280, § 1242(b), redesignated par. (3) as (4). See Codification note above.
Subsec. (d)(2). Pub. L. 109–280, § 1212(a)(3), substituted “$20,000” for “$10,000”. See Codification note above.
Subsec. (f)(1)(D). Pub. L. 109–280, § 1242(a), added subpar. (D). Former subpar. (D) redesignated (E). See Codification note above.
Pub. L. 109–280, § 1232(a)(1), added subpar. (D). See Codification note above.
Subsec. (f)(1)(E). Pub. L. 109–280, § 1242(a), redesignated subpar. (D) as (E). Former subpar. (E) redesignated (F). See Codification note above.
Pub. L. 109–280, § 1232(a)(1), added subpar. (E). See Codification note above.
Subsec. (f)(1)(F). Pub. L. 109–280, § 1242(a), redesignated subpar. (E) as (F). See Codification note above.
Subsec. (f)(6). Pub. L. 109–280, § 1232(b)(2), inserted “, except that in the case of any correction of an excess benefit transaction described in subsection (c)(2), no amount repaid in a manner prescribed by the Secretary may be held in any donor advised fund” after “standards”. See Codification note above.
Subsec. (f)(7), (8). Pub. L. 109–280, § 1232(a)(2), added pars. (7) and (8). See Codification note above.
Statutory Notes and Related Subsidiaries
Effective Date of 2007 Amendment
Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title.
Effective Date of 2006 Amendment
Amendment by section 1212(a)(3) of Pub. L. 109–280 applicable to taxable years beginning after , see section 1212(f) of Pub. L. 109–280, set out as a note under section 4941 of this title.
Pub. L. 109–280, title XII, § 1232(c), , 120 Stat. 1099, provided that: “The amendments made by this section [amending this section] shall apply to transactions occurring after the date of the enactment of this Act [].”
Pub. L. 109–280, title XII, § 1242(c), , 120 Stat. 1105, provided that:
“(1) Subsection (a).—
The amendments made by subsection (a) [amending this section] shall apply to transactions occurring after the date of the enactment of this Act [].
“(2) Subsection (b).—
The amendments made by subsection (a) [probably should be “subsection (b)”, amending this section] shall apply to transactions occurring after .”
Effective Date
Section applicable to excess benefit transactions occurring on or after , and not applicable to any benefit arising from a transaction pursuant to any written contract which was binding on , and at all times thereafter before such transaction occurred, see section 1311(d)(1), (2) of Pub. L. 104–168, set out as an Effective Date of 1996 Amendment note under section 4955 of this title.
Credits
1996–2018 · 5 acts
- 1996Added Pub. L. 104–168, title XIII, § 1311(a), , 110 Stat. 1475
- 2006amended Pub. L. 109–280, title XII, §§ 1212(a)(3), 1232(a), (b), 1242(a), (b), , 120 Stat. 1074, 1098, 1099, 1104
- 2007Pub. L. 110–172, § 3(i), , 121 Stat. 2475
- 2010Pub. L. 111–148, title I, § 1322(h)(3), , 124 Stat. 192
- 2018Pub. L. 115–141, div. U, title IV, § 401(a)(224), , 132 Stat. 1194.
Show as published
(Added Pub. L. 104–168, title XIII, § 1311(a), , 110 Stat. 1475; amended Pub. L. 109–280, title XII, §§ 1212(a)(3), 1232(a), (b), 1242(a), (b), , 120 Stat. 1074, 1098, 1099, 1104; Pub. L. 110–172, § 3(i), , 121 Stat. 2475; Pub. L. 111–148, title I, § 1322(h)(3), , 124 Stat. 192; Pub. L. 115–141, div. U, title IV, § 401(a)(224), , 132 Stat. 1194.)