§ 505. Additional requirements for organizations described in paragraph (9) or (17) of section 501(c)

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.

1. 1984

   Tax Reform Act of 1984

   Pub. L. 98–369 div. A title V § 513(a) · 98 Stat. 494

   Enacted · 26 U.S.C. § 505

   Added Pub. L. 98–369, div. A, title V, § 513(a), July 18, 1984, 98 Stat. 863

   Source evidence

   Code source credit
   Added Pub. L. 98–369, div. A, title V, § 513(a), July 18, 1984, 98 Stat. 863

   Enacted provision · exact public law section
   (a) General Rule.— Part I of subchapter F of chapter 1 (relating to exempt organizations) is amended by adding at the end thereof the following new section: “SEC. 505. ADDITIONAL REQUIREMENTS FOR ORGANIZATIONS DESCRIBED IN PARAGRAPH (9), (17), OR (20) OF SECTION 501(c). “(a) Certain Requirements Must Be Met in the Case of Organizations Described in Paragraph (9) or (20) of Section 501(c).— “(1) Voluntary employees’ beneficiary associations, etc.— An organization described in paragraph (9) or (20) of subsection (c) of section 501 which is part of a plan of an employer shall not be exempt from tax under section 501(a) unless such plan meets the requirements of subsection (b) of this section. “(2) Exception for collective bargaining agreements.— Paragraph (1) shall not apply to any organization which is part of a plan maintained pursuant to 1 or more collective bargaining agreements between 1 or more employee organizations and 1 or more employers. “(b) Nondiscrimination Requirements.— “(1) In general.— Except as provided in paragraph (2), a plan meets the requirements of this subsection only if— “(A) each class of benefits under the plan is provided under a classification of employees which is set forth in the plan and which is found by the Secretary not to be discriminatory in favor of employees who are highly compensated individuals, and “(B) in the case of each class of benefits, such benefits do not discriminate in favor of employees who are highly compensated employees. A life insurance, disability, severance pay, or supplemental unemployment compensation benefit shall not be considered to fail to meet the requirements of subparagraph (B) merely because the benefits available bear a uniform relationship to the total compensation, or the basic or regular rate of compensation, of employees covered by the plan. “(2) Exclusion of certain employees.— For purposes of paragraph (1), there may be excluded from consideration— “(A) employees who have not completed 3 years of service, “(B) employees who have not attained age 21, “(C) seasonal employees or less than half-time employees, “(D) employees not included in the plan who are included in a unit of employees covered by an agreement between employee representatives and 1 or more employers which the Secretary finds to be a collective bargaining agreement if the class of benefits involved was the subject of good faith bargaining between such employee representatives and such employer or employers, and “(E) employees who are nonresident aliens and who receive no earned income (within the meaning of section 911(d)(2)) from the employer which constitutes income from sources within the United States (within the meaning of section 861(a)(3)). “(3) Application of subsection where other nondiscrimination rules provided.— In the case of any benefit for which a provision of this chapter other than this subsection provides nondiscrimination rules, paragraph (1) shall not apply but the requirements of this subsection shall be met only if the nondiscrimination rules so provided are satisfied with respect to such benefit. “(4) Aggregation rules.— For purposes of this subsection— “(A) Aggregation of plans.— At the election of the employer, 2 or more plans of such employer may be treated as 1 plan. “(B) Treatment of related employers.— Rules similar to the rules of subsections (b), (c), (m), and (n) of section 414 shall apply. For purposes of the preceding sentence, section 414(n) shall be applied without regard to paragraph (5). “(5) Highly compensated individual.— For purposes of this subsection, the term ‘highly compensated individual’ has the meaning given such term by section 105(h)(5). For purposes of the preceding sentence, section 105(h)(5) shall be applied by substituting ‘10 percent’ for ‘25 percent’. “(c) Requirement That Organization Notify Secretary That It Is Applying for Tax-Exempt Status.— “(1) In general.— An organization shall not be treated as an organization described in paragraph (9), (17), or (20) of section 501(c)— “(A) unless it has given notice to the Secretary, in such manner as the Secretary may by regulations prescribe, that it is applying for recognition of such status, or “(B) for any period before the giving of such notice, if such notice is given after the time prescribed by the Secretary by regulations for giving notice under this subsection. “(2) Special rule for existing organizations.— In the case of any organization in existence on the date of the enactment of the Tax Reform Act of 1984, the time for giving notice under Ante, p. 494. paragraph (1) shall not expire before the date 1 year after such date of the enactment.”

2. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 1851(c)(1) · 100 Stat. 2085

   Struck · 26 U.S.C. § 505(a)(1)

   Pub. L. 99–514, § 1851(c)(1), struck out “of an employer” before “shall”

   Source evidence

   Code amendment note
   Subsec. (a)(1). Pub. L. 99–514, § 1851(c)(1), struck out “of an employer” before “shall”.

   Enacted provision · exact public law section
   (1) Paragraph (1) of section 505(a) (relating to certain requirements must be met in case of organizations described in paragraph (9) or (20) of section 501(c)) is amended by striking out “of an employer”.

3. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 1851(c)(4) · 100 Stat. 2085

   Amended · 26 U.S.C. § 505(a)(2)

   Pub. L. 99–514, § 1851(c)(4), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “Paragraph (1) shall not apply to any organization which is part of a plan maintained pursuant to 1 or more collective bargaining agreements between 1 or more employee organizations and 1 or more employers.”

   Source evidence

   Code amendment note
   Subsec. (a)(2). Pub. L. 99–514, § 1851(c)(4), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “Paragraph (1) shall not apply to any organization which is part of a plan maintained pursuant to 1 or more collective bargaining agreements between 1 or more employee organizations and 1 or more employers.”

   Enacted provision · exact public law section
   (4) Paragraph (2) of section 505(a) (relating to exception for collective bargaining agreements) is amended to read as follows “(2) Exception for collective bargaining agreements.— Paragraph (1) shall not apply to any organization which is part of a plan maintained pursuant to an agreement between employee representatives and 1 or more employers if the Secretary finds that such agreement is a collective bargaining agreement and that such plan was the subject of good faith bargaining between such employee representatives and such employer or employers.”

4. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 1851(c)(2) · 100 Stat. 2085

   1. Substituted · 26 U.S.C. § 505(b)(1)

      Pub. L. 99–514, § 1851(c)(2), (3), substituted “as otherwise provided in this subsection” for “as provided in paragraph (2)”

   2. Substituted · 26 U.S.C. § 505(b)(1)

      Pub. L. 99–514, § 1851(c)(2), (3), substituted “highly compensated individuals” for “highly compensated employees”

   Source evidence

   Code amendment note
   Subsec. (b)(1). Pub. L. 99–514, § 1851(c)(2), (3), substituted “as otherwise provided in this subsection” for “as provided in paragraph (2)” in introductory provision, and in subpar. (B) substituted “highly compensated individuals” for “highly compensated employees”.

   Enacted provision · exact public law section
   (2) Paragraph (1) of section 505(b) (relating to nondiscrimination requirements) is amended by striking out “as provided in paragraph (2)” and inserting in lieu thereof “as otherwise provided in this subsection”.

5. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 1151(g)(6) · 100 Stat. 2085

   Amended · 26 U.S.C. § 505(b)(2)

   Pub. L. 99–514, § 1151(g)(6), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “For purposes of paragraph (1), there may be excluded from consideration—

   Source evidence

   Code amendment note
   Subsec. (b)(2). Pub. L. 99–514, § 1151(g)(6), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “For purposes of paragraph (1), there may be excluded from consideration—

   “(A) employees who have not completed 3 years of service, “(B) employees who have not attained age 21, “(C) seasonal employees or less than half-time employees, “(D) employees not included in the plan who are included in a unit of employees covered by an agreement between employee representatives and 1 or more employers which the Secretary finds to be a collective bargaining agreement if the class of benefits involved was the subject of good faith bargaining between such employee representatives and such employer or employers, and “(E) employees who are nonresident aliens and who receive no earned income (within the meaning of section 911(d)(2)) from the employer which constitutes income from sources within the United States (within the meaning of section 861(a)(3)).”

   Enacted provision · exact public law section
   (6) Paragraph (2) of section 505(b) is amended to read as follows: “(2) Exclusion of certain employees.— For purposes of paragraph (1), there may be excluded from consideration employees who may be excluded from consideration under section 89(h).”

6. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 1151(e)(2)(B) · 100 Stat. 2085

   Amended · 26 U.S.C. § 505(b)(4)

   Pub. L. 99–514, § 1151(e)(2)(B), amended par. (4) generally. Prior to amendment, par. (4) read as follows: “For purposes of this subsection—

   Source evidence

   Code amendment note
   Subsec. (b)(4). Pub. L. 99–514, § 1151(e)(2)(B), amended par. (4) generally. Prior to amendment, par. (4) read as follows: “For purposes of this subsection—

   “(A) Aggregation of plans.—At the election of the employer, 2 or more plans of such employer may be treated as 1 plan. “(B) Treatment of related employers.—Rules similar to the rules of subsections (b), (c), (m), and (n) of section 414 shall apply. For purposes of the preceding sentence, section 414(n) shall be applied without regard to paragraph (5).”

   Enacted provision · exact public law section
   (B) Paragraph (4) of section 505(b) (relating to aggregation rules) is amended to read as follows: “(4) Aggregation rules.— At the election of the employer, 2 or more plans of such employer may be treated as 1 plan for purposes of this subsection.’

7. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 1114(b)(16) · 100 Stat. 2085

   Substituted · 26 U.S.C. § 505(b)(5)

   Pub. L. 99–514, § 1114(b)(16), amended par. (5) generally. Prior to amendment, par. (5) read as follows: “For purposes of this subsection, the term ‘highly compensated individual’ has the meaning given such term by section 105(h)(5). For purposes of the preceding sentence, section 105(h)(5) shall be applied by substituting ‘10 percent’ for ‘25 percent’.”

   Source evidence

   Code amendment note
   Subsec. (b)(5). Pub. L. 99–514, § 1114(b)(16), amended par. (5) generally. Prior to amendment, par. (5) read as follows: “For purposes of this subsection, the term ‘highly compensated individual’ has the meaning given such term by section 105(h)(5). For purposes of the preceding sentence, section 105(h)(5) shall be applied by substituting ‘10 percent’ for ‘25 percent’.”

   Enacted provision · exact public law section
   (16) Paragraph (5) of section 505(b) is amended to read as follows: “(5) Highly compensated individual.— For purposes of this subsection, the determination as to whether an individual is a highly compensated individual shall be made under rules similar to the rules for determining whether an individual is a highly compensated employee (within the meaning of section 414(q)),”

8. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 1151(j)(3) · 100 Stat. 2085

   Added · 26 U.S.C. § 505(b)(6)

   Pub. L. 99–514, § 1151(j)(3), added par. (6)

   Source evidence

   Code amendment note
   Subsec. (b)(6). Pub. L. 99–514, § 1151(j)(3), added par. (6).

   Enacted provision · exact public law section
   (3) Section 505(b) is amended by adding at the end thereof the following new paragraph: “(6) Compensation.— For purposes of this subsection, the term ’compensation’ has the meaning given such term by section 414(s).”

9. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 1899A(16) · 100 Stat. 2085

   Substituted · 26 U.S.C. § 505(c)(2)

   Pub. L. 99–514, § 1899A(16), substituted “July 18, 1984” for “the date of the enactment of the Tax Reform Act of 1984”

   Source evidence

   Code amendment note
   Subsec. (c)(2). Pub. L. 99–514, § 1899A(16), substituted “July 18, 1984” for “the date of the enactment of the Tax Reform Act of 1984”.

   Enacted provision · exact public law section
   (16) Paragraph (2) of section 505(c) is amended by striking out “the date of the enactment of the Tax Reform Act of 1984” and inserting in lieu thereof “July 18, 1984”.

10. 1988

    Technical and Miscellaneous Revenue Act of 1988

    Pub. L. 100–647 § 1011B(a)(27)(C) · 102 Stat. 3342

    Inserted · 26 U.S.C. § 505(a)(1)

    Pub. L. 100–647, § 1011B(a)(27)(C), inserted at end “This paragraph shall not apply to any organization by reason of a failure to meet the requirements of subsection (b) with respect to a benefit to which section 89 applies.”

    Source evidence

    Code amendment note
    Subsec. (a)(1). Pub. L. 100–647, § 1011B(a)(27)(C), inserted at end “This paragraph shall not apply to any organization by reason of a failure to meet the requirements of subsection (b) with respect to a benefit to which section 89 applies.”

    Enacted provision · exact public law section
    (C) Section 505(a)(1) of the 1986 Code is amended by adding at the end thereof the following new subsection: “This paragraph shall not apply to any organization by reason of a failure to meet the requirements of subsection (b) with respect to a benefit to which section 89 applies.”

11. 1988

    Technical and Miscellaneous Revenue Act of 1988

    Pub. L. 100–647 § 1011B(a)(31)(B) · 102 Stat. 3342

    1. Substituted · 26 U.S.C. § 505(b)(2)

       Pub. L. 100–647, § 1011B(a)(31)(B), substituted “there shall be” for “there may be”

    2. Substituted · 26 U.S.C. § 505(b)(2)

       Pub. L. 100–647, § 1011B(a)(31)(B), substituted “who are” for “who may be”

    Source evidence

    Code amendment note
    Subsec. (b)(2). Pub. L. 100–647, § 1011B(a)(31)(B), substituted “there shall be” for “there may be” and “who are” for “who may be”.

    Enacted provision · exact public law section
    (B) Sections 117(d)(4), 120(c)(2), 127(b)(2), 132(h)(1), and 505(b)(2) of the 1986 Code are each amended— (i) by striking out “may” the first place it appears and inserting in lieu thereof “shall”, and (ii) by striking out “may be” the second place it appears and inserting in lieu thereof “are”.

12. 1988

    Technical and Miscellaneous Revenue Act of 1988

    Pub. L. 100–647 § 1011B(a)(32) · 102 Stat. 3342

    Added · 26 U.S.C. § 505(b)(7)

    Pub. L. 100–647, § 1011B(a)(32), added par. (7)

    Source evidence

    Code amendment note
    Subsec. (b)(7). Pub. L. 100–647, § 1011B(a)(32), added par. (7).

    Enacted provision · exact public law section
    (32) Section 505(b) of the 1986 Code is amended by adding at the end thereof the following new paragraph: “(7) $200,000 compensation limit.— A plan shall not be treat-ed as meeting the requirements of this subsection unless under the plan the annual compensation of each employee taken into account for any year does not exceed $200,000. The Secretary shall adjust the $200,000 amount at the same time and in the same manner as under section 415(d).”

13. 1989

    Pub. L. 101–140 § 203(a)(2) · 103 Stat. 830

    Amended · 26 U.S.C. § 505(a)(1)

    Pub. L. 101–140, § 203(a)(2), amended par. (1) to read as if amendments by Pub. L. 100–647, § 1011B(a)(27)(C), had not been enacted, see 1988 Amendment note below

    Source evidence

    Code amendment note
    Subsec. (a)(1). Pub. L. 101–140, § 203(a)(2), amended par. (1) to read as if amendments by Pub. L. 100–647, § 1011B(a)(27)(C), had not been enacted, see 1988 Amendment note below.

    Enacted provision · exact public law section
    (2) Each provision of law amended by paragraph (22), (27), or (31) of section 1011B(a) of the Technical and Miscellaneous 26 USC 3121, 3231, 3306, 3401, 4976, 505, 129, 117, 120, 127, 132; 42 USC 409. Revenue Act of 1988 is amended to read as if the amendments made by such paragraph had not been enacted.

14. 1989

    Pub. L. 101–140 § 203(a)(2) · 103 Stat. 830

    Amended · 26 U.S.C. § 505(b)(2)

    Pub. L. 101–140, § 203(a)(2), amended par. (2) to read as if amendments by Pub. L. 100–647, § 1011B(a)(31)(B), had not been enacted, see 1988 Amendment note below

    Source evidence

    Code amendment note
    Subsec. (b)(2). Pub. L. 101–140, § 203(a)(2), amended par. (2) to read as if amendments by Pub. L. 100–647, § 1011B(a)(31)(B), had not been enacted, see 1988 Amendment note below.

    Enacted provision · exact public law section
    (2) Each provision of law amended by paragraph (22), (27), or (31) of section 1011B(a) of the Technical and Miscellaneous 26 USC 3121, 3231, 3306, 3401, 4976, 505, 129, 117, 120, 127, 132; 42 USC 409. Revenue Act of 1988 is amended to read as if the amendments made by such paragraph had not been enacted.

15. 1989

    Pub. L. 101–140 § 203(a)(1) · 103 Stat. 830

    Amended · 26 U.S.C. § 505(b)(2)

    Pub. L. 101–140, § 203(a)(1), amended par. (2) to read as if amendments by Pub. L. 99–514, § 1151(g)(6), had not been enacted, see 1986 Amendment note below

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 101–140, § 203(a)(1), amended par. (2) to read as if amendments by Pub. L. 99–514, § 1151(g)(6), had not been enacted, see 1986 Amendment note below.

    Enacted provision · exact public law section
    (1) Each provision of law amended by subsection (b), (c), (d)(1), or (g) of section 1151 of the Tax Reform Act of 1986 is amended to read as if the amendments made by such subsection had not been enacted.

16. 1989

    Pub. L. 101–140 § 204(c) · 103 Stat. 830

    Inserted · 26 U.S.C. § 505(b)(7)

    Pub. L. 101–140, § 204(c), inserted at end “This paragraph shall not apply in determining whether the requirements of section 79(d) are met.”

    Source evidence

    Code amendment note
    Subsec. (b)(7). Pub. L. 101–140, § 204(c), inserted at end “This paragraph shall not apply in determining whether the requirements of section 79(d) are met.”

    Enacted provision · exact public law section
    (c) Group-Term Life Insurance.— Paragraph (7) of section 505(b) (relating to $200,000 compensation limit) is amended by adding at the end thereof the following new sentence: “This paragraph shall not apply in determining whether the requirements of section 79(d) are met.”

17. 1993

    Revenue Reconciliation Act of 1993

    Pub. L. 103–66 title XIII § 13212(c) · 107 Stat. 312

    1. Substituted · 26 U.S.C. § 505(b)(7)

       Pub. L. 103–66 substituted “Compensation limit” for “$200,000 compensation limit” in text

    2. Substituted · 26 U.S.C. § 505(b)(7)

       Pub. L. 103–66 substituted “exceed $150,000. The Secretary shall adjust the $150,000 amount at the same time, and by the same amount, as any adjustment under section 401(a)(17)(B).” for “exceed $200,000. The Secretary shall adjust the $200,000 amount at the same time and in the same manner as under section 415(d).” in text

    Source evidence

    Code amendment note
    Subsec. (b)(7). Pub. L. 103–66 substituted “Compensation limit” for “$200,000 compensation limit” in heading and “exceed $150,000. The Secretary shall adjust the $150,000 amount at the same time, and by the same amount, as any adjustment under section 401(a)(17)(B).” for “exceed $200,000. The Secretary shall adjust the $200,000 amount at the same time and in the same manner as under section 415(d).” in text.

    Enacted provision · exact public law section
    (c) Other Related Provisions.— (1) In general.— Sections 404(l) and 505(b)(7) are each amended— (A) by striking “$200,000” in the first sentence and inserting “$150,000”, and (B) by striking the second sentence and inserting “The Secretary shall adjust the $150,000 amount at the same time, and by the same amount, as any adjustment under section 401(a)(17)(B).” (2) Conforming amendment.— The heading for section 505(b)(7) is amended by striking “$200,000”.

18. 2001

    Pub. L. 107–16 title VI § 611(c)(1) · 115 Stat. 38

    Substituted · 26 U.S.C. § 505(b)(7)

    Pub. L. 107–16 substituted “$200,000” for “$150,000” in two places

    Source evidence

    Code amendment note
    Subsec. (b)(7). Pub. L. 107–16 substituted “$200,000” for “$150,000” in two places.

    Enacted provision · exact public law section
    (1) Compensation limit.— Sections 401(a)(17), 404(1), 408(k), and 505(b)(7) are each amended by striking “$150,000” each place it appears and inserting “$200,000”.

    Effective date note
    Amendment by Pub. L. 107–16 applicable to years beginning after Dec. 31, 2001, see section 611(i)(1) of Pub. L. 107–16, set out as a note under section 415 of this title.

19. 2018

    Energy and Water Development and Related Agencies Appropriations Act, 2018

    Pub. L. 115–141 § 401(b)(21)(D)(i) · 132 Stat. 348

    Substituted · 26 U.S.C. § 505

    Pub. L. 115–141, § 401(b)(21)(D)(i), substituted “paragraph (9) or (17)” for “paragraph (9), (17), or (20)” in section catchline

    Source evidence

    Code amendment note
    Pub. L. 115–141, § 401(b)(21)(D)(i), substituted “paragraph (9) or (17)” for “paragraph (9), (17), or (20)” in section catchline.

    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.

20. 2018

    Energy and Water Development and Related Agencies Appropriations Act, 2018

    Pub. L. 115–141 § 401(b)(21)(D)(ii) · 132 Stat. 348

    Substituted · 26 U.S.C. § 505(a)

    Pub. L. 115–141, § 401(b)(21)(D)(ii), substituted “section 501(c)(9)” for “paragraph (9) or (20) of section 501(c)” in heading

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 115–141, § 401(b)(21)(D)(ii), substituted “section 501(c)(9)” for “paragraph (9) or (20) of section 501(c)” in heading.

    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.

21. 2018

    Energy and Water Development and Related Agencies Appropriations Act, 2018

    Pub. L. 115–141 § 401(b)(21)(D)(iii) · 132 Stat. 348

    Substituted · 26 U.S.C. § 505(a)(1)

    Pub. L. 115–141, § 401(b)(21)(D)(iii), substituted “section 501(c)(9)” for “paragraph (9) or (20) of subsection (c) of section 501”

    Source evidence

    Code amendment note
    Subsec. (a)(1). Pub. L. 115–141, § 401(b)(21)(D)(iii), substituted “section 501(c)(9)” for “paragraph (9) or (20) of subsection (c) of section 501”.

    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.

22. 2018

    Energy and Water Development and Related Agencies Appropriations Act, 2018

    Pub. L. 115–141 § 401(b)(21)(D)(iv) · 132 Stat. 348

    Substituted · 26 U.S.C. § 505(c)(1)

    Pub. L. 115–141, § 401(b)(21)(D)(iv), substituted “paragraph (9) or (17)” for “paragraph (9), (17), or (20)” in introductory provisions

    Source evidence

    Code amendment note
    Subsec. (c)(1). Pub. L. 115–141, § 401(b)(21)(D)(iv), substituted “paragraph (9) or (17)” for “paragraph (9), (17), or (20)” in introductory provisions.

    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.

25 of 25 references resolved to an enrolled provision