§ 504. Status after organization ceases to qualify for exemption under section 501(c)(3) because of substantial lobbying or because of political activities

Statutory text

General rule

An organization which—

was exempt (or was determined by the Secretary to be exempt) from taxation under section 501(a) by reason of being an organization described in section 501(c)(3), and

is not an organization described in section 501(c)(3)—

by reason of carrying on propaganda, or otherwise attempting, to influence legislation, or

by reason of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office,

shall not at any time thereafter be treated as an organization described in section 501(c)(4).

Regulations to prevent avoidance

The Secretary shall prescribe such regulations as may be necessary or appropriate to prevent the avoidance of subsection (a), including regulations relating to a direct or indirect transfer of all or part of the assets of an organization to an organization controlled (directly or indirectly) by the same person or persons who control the transferor organization.

Churches, etc.

Subsection (a) shall not apply to any organization which is a disqualified organization within the meaning of section 501(h)(5) (relating to churches, etc.) for the taxable year immediately preceding the first taxable year for which such organization is described in paragraph (2) of subsection (a).

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.

1976
Pub. L. 94–455 title XIII § 1307(a)(2) · 90 Stat. 1520
Enacted · 26 U.S.C. § 504
Added Pub. L. 94–455, title XIII, § 1307(a)(2), Oct. 4, 1976, 90 Stat. 1721
Source evidence
Code source credit
Added Pub. L. 94–455, title XIII, § 1307(a)(2), Oct. 4, 1976, 90 Stat. 1721
Enacted provision · exact public law section
(2) Status of organization which ceases to qualify for exemption under section 301(c)(3) because of substantial lobbying.— Part I of subchapter F of chapter 1 (relating to general rules as to exempt organizations) is amended by adding at the end thereof the following new section: “SEC. 504. STATUS AFTER ORGANIZATION CEASES TO QUALIFY FOR EXEMPTION UNDER SECTION 501(c)(3) BECAUSE OF SUBSTANTIAL LOBBYING. “(a) General Rule.— An organization which— “(1) was exempt (or was determined by the Secretary to be exempt) from taxation under section 501(a) by reason of being an organization described in section 501(c)(3), and “(2) is not an organization described in section 501(e)(3) by reason of carrying on propaganda, or otherwise attempting, to influence legislation, shall not at any time thereafter be treated as an organization described insection501(c)(4). “(b) Regulations To Prevent Avoidance.— The Secretary shall prescribe such regulations as may be necessary or appropriate to prevent the avoidance of subsection (a), including regulations relating to a direct or indirect transfer of all or part of the assets of an organization to an organization controlled (directly or indirectly) by the same person or persons who control the transferor organization. “(c) Churches, Etc.— Subsection (a) shall not apply to any organization which is a disqualified organization within the meaning of section 501(h)(5) (relating to churches, etc.) for the taxable year immediately preceding the first taxable year for which such organization is described in paragraph (2) of subsection (a).”.
1987
Pub. L. 100–203 § 10711(b)(2)(A) · 101 Stat. 1330
Substituted · 26 U.S.C. § 504
Pub. L. 100–203, § 10711(b)(2)(A), substituted “substantial lobbying or because of political activities” for “substantial lobbying” in section catchline
Source evidence
Code amendment note
Pub. L. 100–203, § 10711(b)(2)(A), substituted “substantial lobbying or because of political activities” for “substantial lobbying” in section catchline.
Enacted provision · exact public law section
(A) The section heading for section 504 is amended by striking out “SUBSTANTIAL LOBBYING” and inserting in lieu thereof “SUBSTANTIAL LOBBYING OR BECAUSE OF POLITICAL ACTIVITIES”.
Effective date note
Amendment by Pub. L. 100–203 applicable with respect to activities after Dec. 22, 1987, see section 10711(c) of Pub. L. 100–203, set out as a note under section 170 of this title.
1987
Pub. L. 100–203 § 10711(b)(1) · 101 Stat. 1330
Amended · 26 U.S.C. § 504(a)(2)
Pub. L. 100–203, § 10711(b)(1), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “is not an organization described in section 501(c)(3) by reason of carrying on propaganda, or otherwise attempting, to influence legislation,”
Source evidence
Code amendment note
Subsec. (a)(2). Pub. L. 100–203, § 10711(b)(1), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “is not an organization described in section 501(c)(3) by reason of carrying on propaganda, or otherwise attempting, to influence legislation,”.
Enacted provision · exact public law section
(1) In general.— Paragraph (2) of section 504(a) (relating to status after organization ceases to qualify for exemption under section 501(c)(3) because of substantial lobbying) is amended to read as follows: “(2) is not an organization described in section 501(c)(3)— “(A) by reason of carrying on propaganda, or otherwise attempting, to influence legislation, or “(B) by reason of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office,”.
Effective date note
Amendment by Pub. L. 100–203 applicable with respect to activities after Dec. 22, 1987, see section 10711(c) of Pub. L. 100–203, set out as a note under section 170 of this title.

3 of 3 references resolved to an enrolled provision

Editorial Notes

Prior Provisions

A prior section 504, acts Aug. 16, 1954, ch. 736, 68A Stat. 168; Oct. 22, 1968, Pub. L. 90–630, § 6(a), 82 Stat. 1330, related to denial of exemption, prior to repeal by Pub. L. 91–172, title I, § 101(j)(15), Dec. 30, 1969, 83 Stat. 527. For effective date of repeal, see section 101(k)(2)(B) of Pub. L. 91–172, set out as an Effective Date note under section 4940 of this title.

Amendments

1987—Pub. L. 100–203, § 10711(b)(2)(A), substituted “substantial lobbying or because of political activities” for “substantial lobbying” in section catchline.

Subsec. (a)(2). Pub. L. 100–203, § 10711(b)(1), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “is not an organization described in section 501(c)(3) by reason of carrying on propaganda, or otherwise attempting, to influence legislation,”.

Statutory Notes and Related Subsidiaries

Effective Date of 1987 Amendment

Amendment by Pub. L. 100–203 applicable with respect to activities after Dec. 22, 1987, see section 10711(c) of Pub. L. 100–203, set out as a note under section 170 of this title.

Construction of Amendment

Pub. L. 94–455, title XIII, § 1307(a)(3), Oct. 4, 1976, 90 Stat. 1722, provided that: “It is the intent of Congress that enactment of this section [amending section 501 and enacting section 504 of this title] is not to be regarded in any way as an approval or disapproval of the decision of the Court of Appeals for the Tenth Circuit in Christian Echoes National Ministry, Inc. versus United States, 470 F.2d 849 (1972), or of the reasoning in any of the opinions leading to that decision.”

Credits

1976–1987 · 2 acts

1976Added Pub. L. 94–455, title XIII, § 1307(a)(2), Oct. 4, 1976, 90 Stat. 1721
1987amended Pub. L. 100–203, title X, § 10711(b)(1), (2)(A), Dec. 22, 1987, 101 Stat. 1330–464.

Show as published

(Added Pub. L. 94–455, title XIII, § 1307(a)(2), Oct. 4, 1976, 90 Stat. 1721; amended Pub. L. 100–203, title X, § 10711(b)(1), (2)(A), Dec. 22, 1987, 101 Stat. 1330–464.)