Subtitle D - Miscellaneous Excise Taxes

TITLE 26 - US CODE - CHAPTER 31 - RETAIL EXCISE TAXES

Subchapter A - Luxury Passenger Automobiles

26 USC 4001 - Imposition of tax

(a) Imposition of tax 

(1) In general 
There is hereby imposed on the 1st retail sale of any passenger vehicle a tax equal to 10 percent of the price for which so sold to the extent such price exceeds the applicable amount.
(2) Applicable amount 

(A) In general 
Except as provided in subparagraphs (B) and (C), the applicable amount is $30,000.
(B) Qualified clean-fuel vehicle property 
In the case of a passenger vehicle which is propelled by a fuel which is not a clean-burning fuel and to which is installed qualified clean-fuel vehicle property (as defined in section 179A (c)(1)(A)) for purposes of permitting such vehicle to be propelled by a clean-burning fuel, the applicable amount is equal to the sum of
(i) the dollar amount in effect under subparagraph (A), plus
(ii) the increase in the price for which the passenger vehicle was sold (within the meaning of section 4002) due to the installation of such property.
(C) Purpose built passenger vehicle 

(i) In general In the case of a purpose built passenger vehicle, the applicable amount is equal to 150 percent of the dollar amount in effect under subparagraph (A).
(ii) Purpose built passenger vehicle For purposes of clause (i), the term purpose built passenger vehicle means a passenger vehicle produced by an original equipment manufacturer and designed so that the vehicle may be propelled primarily by electricity.
(b) Passenger vehicle 

(1) In general 
For purposes of this subchapter, the term passenger vehicle means any 4-wheeled vehicle
(A) which is manufactured primarily for use on public streets, roads, and highways, and
(B) which is rated at 6,000 pounds unloaded gross vehicle weight or less.
(2) Special rules 

(A) Trucks and vans 
In the case of a truck or van, paragraph (1)(B) shall be applied by substituting gross vehicle weight for unloaded gross vehicle weight.
(B) Limousines 
In the case of a limousine, paragraph (1) shall be applied without regard to subparagraph (B) thereof.
(c) Exceptions for taxicabs, etc. 
The tax imposed by this section shall not apply to the sale of any passenger vehicle for use by the purchaser exclusively in the active conduct of a trade or business of transporting persons or property for compensation or hire.
(d) Exemption for law enforcement uses, etc. 
No tax shall be imposed by this section on the sale of any passenger vehicle
(1) to the Federal Government, or a State or local government, for use exclusively in police, firefighting, search and rescue, or other law enforcement or public safety activities, or in public works activities, or
(2) to any person for use exclusively in providing emergency medical services.
(e) Inflation adjustment 

(1) In general 
The $30,000 amount in subsection (a) shall be increased by an amount equal to
(A) $30,000, multiplied by
(B) the cost-of-living adjustment under section 1 (f)(3) for the calendar year in which the vehicle is sold, determined by substituting calendar year 1990 for calendar year 1992 in subparagraph (B) thereof.
(2) Rounding 
If any amount as adjusted under paragraph (1) is not a multiple of $2,000, such amount shall be rounded to the next lowest multiple of $2,000.
(f) Phasedown 
For sales occurring in calendar years after 1995 and before 2003, subsection (a)(1) and section 4003 (a) shall be applied by substituting for 10 percent, each place it appears, the percentage determined in accordance with the following table: If the calendar year is: The percentage is: 19969 percent 19978 percent 19987 percent 19996 percent 20005 percent 20014 percent 20023 percent.
(g) Termination 
The taxes imposed by this section and section 4003 shall not apply to any sale, use, or installation after December 31, 2002.

26 USC 4002 - 1st retail sale; uses, etc. treated as sales; determination of price

(a) 1st retail sale 
For purposes of this subchapter, the term 1st retail sale means the 1st sale, for a purpose other than resale, after manufacture, production, or importation.
(b) Use treated as sale 

(1) In general 
If any person uses a passenger vehicle (including any use after importation) before the 1st retail sale of such vehicle, then such person shall be liable for tax under this subchapter in the same manner as if such vehicle were sold at retail by him.
(2) Exemption for further manufacture 
Paragraph (1) shall not apply to use of a vehicle as material in the manufacture or production of, or as a component part of, another vehicle taxable under this subchapter to be manufactured or produced by him.
(3) Exemption for demonstration use 
Paragraph (1) shall not apply to any use of a passenger vehicle as a demonstrator.
(4) Exception for use after importation of certain vehicles 
Paragraph (1) shall not apply to the use of a vehicle after importation if the user or importer establishes to the satisfaction of the Secretary that the 1st use of the vehicle occurred before January 1, 1991, outside the United States.
(5) Computation of tax 
In the case of any person made liable for tax by paragraph (1), the tax shall be computed on the price at which similar vehicles are sold at retail in the ordinary course of trade, as determined by the Secretary.
(c) Leases considered as sales 
For purposes of this subchapter
(1) In general 
Except as otherwise provided in this subsection, the lease of a vehicle (including any renewal or any extension of a lease or any subsequent lease of such vehicle) by any person shall be considered a sale of such vehicle at retail.
(2) Special rules for long-term leases 

(A) Tax not imposed on sale for leasing in a qualified lease 
The sale of a passenger vehicle to a person engaged in a passenger vehicle leasing or rental trade or business for leasing by such person in a long-term lease shall not be treated as the 1st retail sale of such vehicle.
(B) Long-term lease 
For purposes of subparagraph (A), the term long-term lease means any long-term lease (as defined in section 4052).
(C) Special rules 
In the case of a long-term lease of a vehicle which is treated as the 1st retail sale of such vehicle
(i) Determination of price The tax under this subchapter shall be computed on the lowest price for which the vehicle is sold by retailers in the ordinary course of trade.
(ii) Payment of tax Rules similar to the rules of section 4217 (e)(2) shall apply.
(iii) No tax where exempt use by lessee No tax shall be imposed on any lease payment under a long-term lease if the lessees use of the vehicle under such lease is an exempt use (as defined in section 4003(b)) of such vehicle.
(d) Determination of price 

(1) In general 
In determining price for purposes of this subchapter
(A) there shall be included any charge incident to placing the passenger vehicle in condition ready for use,
(B) there shall be excluded
(i) the amount of the tax imposed by this subchapter,
(ii) if stated as a separate charge, the amount of any retail sales tax imposed by any State or political subdivision thereof or the District of Columbia, whether the liability for such tax is imposed on the vendor or vendee, and
(iii) the value of any component of such passenger vehicle if
(I) such component is furnished by the 1st user of such passenger vehicle, and
(II) such component has been used before such furnishing, and
(C) the price shall be determined without regard to any trade-in.
(2) Other rules 
Rules similar to the rules of paragraphs (2) and (4) of section 4052 (b) shall apply for purposes of this subchapter.

26 USC 4003 - Special rules

(a) Separate purchase of vehicle and parts and accessories therefor 
Under regulations prescribed by the Secretary
(1) In general 
Except as provided in paragraph (2), if
(A) the owner, lessee, or operator of any passenger vehicle installs (or causes to be installed) any part or accessory (other than property described in section 4001 (a)(2)(B)) on such vehicle, and
(B) such installation is not later than the date 6 months after the date the vehicle was 1st placed in service,

then there is hereby imposed on such installation a tax equal to 10 percent of the price of such part or accessory and its installation.

(2) Limitation 
The tax imposed by paragraph (1) on the installation of any part or accessory shall not exceed 10 percent of the excess (if any) of
(A) the sum of
(i) the price of such part or accessory and its installation,
(ii) the aggregate price of the parts and accessories (and their installation) installed before such part or accessory, plus
(iii) the price for which the passenger vehicle was sold, over
(B) the appropriate applicable amount as determined under section 4001 (a)(2).
(3) Exceptions 
Paragraph (1) shall not apply if
(A) the part or accessory installed is a replacement part or accessory,
(B) the part or accessory is installed to enable or assist an individual with a disability to operate the vehicle, or to enter or exit the vehicle, by compensating for the effect of such disability, or
(C) the aggregate price of the parts and accessories (and their installation) described in paragraph (1) with respect to the vehicle does not exceed $1,000 (or such other amount or amounts as the Secretary may by regulation prescribe).

The price of any part or accessory (and its installation) to which paragraph (1) does not apply by reason of this paragraph shall not be taken into account under paragraph (2)(A).

(4) Installers secondarily liable for tax 
The owners of the trade or business installing the parts or accessories shall be secondarily liable for the tax imposed by this subsection.
(b) Imposition of tax on sales, etc., within 2 years of vehicles purchased tax-free 

(1) In general 
If
(A) no tax was imposed under this subchapter on the 1st retail sale of any passenger vehicle by reason of its exempt use, and
(B) within 2 years after the date of such 1st retail sale, such vehicle is resold by the purchaser or such purchaser makes a substantial nonexempt use of such vehicle,

then such sale or use of such vehicle by such purchaser shall be treated as the 1st retail sale of such vehicle for a price equal to its fair market value at the time of such sale or use.

(2) Exempt use 
For purposes of this subsection, the term exempt use means any use of a vehicle if the 1st retail sale of such vehicle is not taxable under this subchapter by reason of such use.
(c) Parts and accessories sold with taxable passenger vehicle 
Parts and accessories sold on, in connection with, or with the sale of any passenger vehicle shall be treated as part of the vehicle.
(d) Partial payments, etc. 
In the case of a contract, sale, or arrangement described in paragraph (2), (3), or (4) of section 4216 (c), rules similar to the rules of section 4217 (e)(2) shall apply for purposes of this subchapter.

Subchapter B - Special Fuels

26 USC 4041 - Imposition of tax

(a) Diesel fuel and special motor fuels 

(1) Tax on diesel fuel and kerosene in certain cases 

(A) In general 
There is hereby imposed a tax on any liquid other than gasoline (as defined in section 4083)
(i) sold by any person to an owner, lessee, or other operator of a diesel-powered highway vehicle or a diesel-powered train for use as a fuel in such vehicle or train, or
(ii) used by any person as a fuel in a diesel-powered highway vehicle or a diesel-powered train unless there was a taxable sale of such fuel under clause (i).
(B) Exemption for previously taxed fuel 
No tax shall be imposed by this paragraph on the sale or use of any liquid if tax was imposed on such liquid under section 4081 (other than such tax at the Leaking Underground Storage Tank Trust Fund financing rate) and the tax thereon was not credited or refunded.
(C) Rate of tax 

(i) In general Except as otherwise provided in this subparagraph, the rate of the tax imposed by this paragraph shall be the rate of tax specified in section 4081 (a)(2)(A) on diesel fuel which is in effect at the time of such sale or use.
(ii) Rate of tax on trains In the case of any sale for use, or use, of diesel fuel in a train, the rate of tax imposed by this paragraph shall be
(I) 3.3 cents per gallon after December 31, 2004, and before July 1, 2005,
(II) 2.3 cents per gallon after June 30, 2005, and before January 1, 2007, and
(III) 0 after December 31, 2006.
(iii) Rate of tax on certain buses
(I) In general Except as provided in subclause (II), in the case of fuel sold for use or used in a use described in section 6427 (b)(1) (after the application of section 6427 (b)(3)), the rate of tax imposed by this paragraph shall be 7.3 cents per gallon (4.3 cents per gallon after September 30, 2011).
(II) School bus and intracity transportation No tax shall be imposed by this paragraph on any sale for use, or use, described in subparagraph (B) or (C) of section 6427 (b)(2).
(2) Alternative fuels 

(A) In general 
There is hereby imposed a tax on any liquid (other than gas oil, fuel oil, or any product taxable under section 4081 (other than such tax at the Leaking Underground Storage Tank Trust Fund financing rate))
(i) sold by any person to an owner, lessee, or other operator of a motor vehicle or motorboat for use as a fuel in such motor vehicle or motorboat, or
(ii) used by any person as a fuel in a motor vehicle or motorboat unless there was a taxable sale of such liquid under clause (i).
(B) Rate of tax 
The rate of the tax imposed by this paragraph shall be
(i) except as otherwise provided in this subparagraph, the rate of tax specified in section 4081 (a)(2)(A)(i) which is in effect at the time of such sale or use, and
(ii) in the case of liquefied natural gas, any liquid fuel (other than ethanol and methanol) derived from coal (including peat), and liquid hydrocarbons derived from biomass (as defined in section 45K (c)(3)), 24.3 cents per gallon.
(3) Compressed natural gas 

(A) In general 
There is hereby imposed a tax on compressed natural gas
(i) sold by any person to an owner, lessee, or other operator of a motor vehicle or motorboat for use as a fuel in such motor vehicle or motorboat, or
(ii) used by any person as a fuel in a motor vehicle or motorboat unless there was a taxable sale of such gas under clause (i).

The rate of the tax imposed by this paragraph shall be 18.3 cents per energy equivalent of a gallon of gasoline.

(B) Bus uses 
No tax shall be imposed by this paragraph on any sale for use, or use, described in subparagraph (B) or (C) of section 6427 (b)(2) (relating to school bus and intracity transportation).
(C) Administrative provisions 
For purposes of applying this title with respect to the taxes imposed by this subsection, references to any liquid subject to tax under this subsection shall be treated as including references to compressed natural gas subject to tax under this paragraph, and references to gallons shall be treated as including references to energy equivalent of a gallon of gasoline with respect to such gas.
(b) Exemption for off-highway business use; reduction in tax for qualified methanol and ethanol fuel 

(1) Exemption for off-highway business use 

(A) In general 
No tax shall be imposed by subsection (a) on liquids sold for use or used in an off-highway business use.
(B) Tax where other use 
If a liquid on which no tax was imposed by reason of subparagraph (A) is used otherwise than in an off-highway business use, a tax shall be imposed by paragraph (1)(B), (2)(B), or (3)(A)(ii) of subsection (a) (whichever is appropriate) and by the corresponding provision of subsection (d)(1) (if any).
(C) Off-highway business use defined 
For purposes of this subsection, the term off-highway business use has the meaning given to such term by section 6421 (e)(2); except that such term shall not, for purposes of subsection (a)(1), include use in a diesel-powered train.
(2) Qualified methanol and ethanol fuel 

(A) In general 
In the case of any qualified methanol or ethanol fuel
(i) the rate applicable under subsection (a)(2) shall be the applicable blender rate per gallon less than the otherwise applicable rate (6 cents per gallon in the case of a mixture none of the alcohol in which consists of ethanol), and
(ii) subsection (d)(1) shall be applied by substituting 0.05 cent for 0.1 cent with respect to the sales and uses to which clause (i) applies.
(B) Qualified methanol and ethanol fuel produced from coal 
The term qualified methanol or ethanol fuel means any liquid at least 85 percent of which consists of methanol, ethanol, or other alcohol produced from coal (including peat).
(C) Applicable blender rate 
For purposes of subparagraph (A)(i), the applicable blender rate is
(i) except as provided in clause (ii), 5.4 cents, and
(ii) for sales or uses during calendar years 2001 through 2008, 1/10 of the blender amount applicable under section 40 (h)(2) for the calendar year in which the sale or use occurs.
(D) Termination 
On and after January 1, 2009, subparagraph (A) shall not apply.
(c) Certain liquids used as a fuel in aviation 

(1) In general 
There is hereby imposed a tax upon any liquid for use as a fuel other than aviation gasoline
(A) sold by any person to an owner, lessee, or other operator of an aircraft for use in such aircraft, or
(B) used by any person in an aircraft unless there was a taxable sale of such fuel under subparagraph (A).
(2) Exemption for previously taxed fuel 
No tax shall be imposed by this subsection on the sale or use of any liquid for use as a fuel other than aviation gasoline if tax was imposed on such liquid under section 4081 (other than such tax at the Leaking Underground Storage Tank Trust Fund financing rate) and the tax thereon was not credited or refunded.
(3) Rate of tax 
The rate of tax imposed by this subsection shall be 21.8 cents per gallon (4.3 cents per gallon with respect to any sale or use for commercial aviation).
(d) Additional taxes to fund Leaking Underground Storage Tank Trust Fund 

(1) Tax on sales and uses subject to tax under subsection (a) 
In addition to the taxes imposed by subsection (a), there is hereby imposed a tax of 0.1 cent a gallon on the sale or use of any liquid (other than liquefied petroleum gas and other than liquefied natural gas) if tax is imposed by subsection (a)(1) or (2) on such sale or use. No tax shall be imposed under the preceding sentence on the sale or use of any liquid if tax was imposed with respect to such liquid under section 4081 at the Leaking Underground Storage Tank Trust Fund financing rate.
(2) Liquids used in aviation 
In addition to the taxes imposed by subsection (c), there is hereby imposed a tax of 0.1 cent a gallon on any liquid (other than gasoline (as defined in section 4083))
(A) sold by any person to an owner, lessee, or other operator of an aircraft for use as a fuel in such aircraft, or
(B) used by any person as a fuel in an aircraft unless there was a taxable sale of such liquid under subparagraph (A).

No tax shall be imposed by this paragraph on the sale or use of any liquid if there was a taxable sale of such liquid under section 4081.

(3) Diesel fuel used in trains 
In the case of any sale for use or use after December 31, 2006, there is hereby imposed a tax of 0.1 cent per gallon on any liquid other than gasoline (as defined in section 4083)
(A) sold by any person to an owner, lessee, or other operator of a diesel-powered train for use as a fuel in such train, or
(B) used by any person as a fuel in a diesel-powered train unless there was a taxable sale of such fuel under subparagraph (A).

No tax shall be imposed by this paragraph on the sale or use of any liquid if tax was imposed on such liquid under section 4081.

(4) Termination 
The taxes imposed by this subsection shall not apply during any period during which the Leaking Underground Storage Tank Trust Fund financing rate under section 4081 does not apply.
(5) Nonapplication of exemptions other than for exports 
For purposes of this section, the tax imposed under this subsection shall be determined without regard to subsections (b)(1)(A), (f), (g), (h), and (l). The preceding sentence shall not apply with respect to subsection (g)(3) and so much of subsection (g)(1) as relates to vessels (within the meaning of section 4221 (d)(3)) employed in foreign trade or trade between the United States and any of its possessions.
[(e) Repealed. Pub. L. 108–357, title VIII, § 853(d)(2)(C), Oct. 22, 2004, 118 Stat. 1613] 
(f) Exemption for farm use 

(1) Exemption 
Under regulations prescribed by the Secretary, no tax shall be imposed under this section on any liquid sold for use or used on a farm for farming purposes.
(2) Use on a farm for farming purposes 
For purposes of paragraph (1) of this subsection, use on a farm for farming purposes shall be determined in accordance with paragraphs (1), (2), and (3) of section 6420 (c).
(g) Other exemptions 
Under regulations prescribed by the Secretary, no tax shall be imposed under this section
(1) on any liquid sold for use or used as supplies for vessels or aircraft (within the meaning of section 4221 (d)(3));
(2) with respect to the sale of any liquid for the exclusive use of any State, any political subdivision of a State, or the District of Columbia, or with respect to the use by any of the foregoing of any liquid as a fuel;
(3) upon the sale of any liquid for export, or for shipment to a possession of the United States, and in due course so exported or shipped;
(4) with respect to the sale of any liquid to a nonprofit">nonprofit educational organization for its exclusive use, or with respect to the use by a nonprofit">nonprofit educational organization of any liquid as a fuel; and
(5) with respect to the sale of any liquid to a qualified blood collector organization (as defined in section 7701 (a)(49)) for such organizations exclusive use in the collection, storage, or transportation of blood.

For purposes of paragraph (4), the term nonprofit">nonprofit educational organization means an educational organization described in section 170 (b)(1)(A)(ii) which is exempt from income tax under section 501 (a). The term also includes a school operated as an activity of an organization described in section 501 (c)(3) which is exempt from income tax under section 501 (a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.

(h) Exemption for use by certain aircraft museums 

(1) Exemption 
Under regulations prescribed by the Secretary, no tax shall be imposed under this section on any liquid sold for use or used by an aircraft museum in an aircraft or vehicle owned by such museum and used exclusively for purposes set forth in paragraph (2)(C).
(2) Definition of aircraft museum 
For purposes of this subsection, the term aircraft museum means an organization
(A) described in section 501 (c)(3) which is exempt from income tax under section 501 (a),
(B) operated as a museum under charter by a State or the District of Columbia, and
(C) operated exclusively for the procurement, care, and exhibition of aircraft of the type used for combat or transport in World War II.
[(i) Repealed. Pub. L. 108–357, title VIII, § 853(d)(2)(D), Oct. 22, 2004, 118 Stat. 1613] 
(j) Sales by United States, etc. 
The taxes imposed by this section shall apply with respect to liquids sold at retail by the United States, or by any agency or instrumentality of the United States, unless sales by such agency or instrumentality are by statute specifically exempted from such taxes.
[(k) Repealed. Pub. L. 108–357, title III, § 301(c)(6), Oct. 22, 2004, 118 Stat. 1461] 
(l) Exemption for certain uses 
No tax shall be imposed under this section on any liquid sold for use in, or used in, a helicopter or a fixed-wing aircraft for purposes of providing transportation with respect to which the requirements of subsection (f) or (g) of section 4261 are met.
(m) Certain alcohol fuels 

(1) In general 
In the case of the sale or use of any partially exempt methanol or ethanol fuel the rate of the tax imposed by subsection (a)(2) shall be
(A) after September 30, 1997, and before October 1, 2011
(i) in the case of fuel none of the alcohol in which consists of ethanol, 9.15 cents per gallon, and
(ii) in any other case, 11.3 cents per gallon, and
(B) after September 30, 2011
(i) in the case of fuel none of the alcohol in which consists of ethanol, 2.15 cents per gallon, and
(ii) in any other case, 4.3 cents per gallon.
(2) Partially exempt methanol or ethanol fuel 
The term partially exempt methanol or ethanol fuel means any liquid at least 85 percent of which consists of methanol, ethanol, or other alcohol produced from natural gas.

26 USC 4042 - Tax on fuel used in commercial transportation on inland waterways

(a) In general 
There is hereby imposed a tax on any liquid used during any calendar quarter by any person as a fuel in a vessel in commercial waterway transportation.
(b) Amount of tax 

(1) In general 
The rate of the tax imposed by subsection (a) is the sum of
(A) the Inland Waterways Trust Fund financing rate,
(B) the Leaking Underground Storage Tank Trust Fund financing rate, and
(C) the deficit reduction rate.
(2) Rates 
For purposes of paragraph (1)
(A) The Inland Waterways Trust Fund financing rate is the rate determined in accordance with the following table:
(B) The Leaking Underground Storage Tank Trust Fund financing rate is 0.1 cent per gallon.
(C) The deficit reduction rate is
(i) 3.3 cents per gallon after December 31, 2004, and before July 1, 2005,
(ii) 2.3 cents per gallon after June 30, 2005, and before January 1, 2007, and
(iii) 0 after December 31, 2006.
(3) Exception for fuel on which Leaking Underground Storage Tank Trust Fund financing rate separately imposed 
The Leaking Underground Storage Tank Trust Fund financing rate under paragraph (2)(B) shall not apply to the use of any fuel if tax was imposed with respect to such fuel under section 4041 (d) or 4081 at the Leaking Underground Storage Tank Trust Fund financing rate.
(4) Termination of Leaking Underground Storage Tank Trust Fund financing rate 
The Leaking Underground Storage Tank Trust Fund financing rate under paragraph (2)(B) shall not apply during any period during which the Leaking Underground Storage Tank Trust Fund financing rate under section 4081 does not apply.
(c) Exemptions 

(1) Deep-draft ocean-going vessels 
The tax imposed by subsection (a) shall not apply with respect to any vessel designed primarily for use on the high seas which has a draft of more than 12 feet.
(2) Passenger vessels 
The tax imposed by subsection (a) shall not apply with respect to any vessel used primarily for the transportation of persons.
(3) Use by State or local government in transporting property in a state or local business 
Subparagraph (B) of subsection (d)(1) shall not apply with respect to use by a State or political subdivision thereof.
(4) Use in moving lash and seabee ocean-going barges 
The tax imposed by subsection (a) shall not apply with respect to use for movement by tug of exclusively LASH (Lighter-aboard-ship) and SEABEE ocean-going barges released by their ocean-going carriers solely to pick up or deliver international cargoes.
(d) Definitions 
For purposes of this section
(1) Commercial waterway transportation 
The term commercial waterway transportation means any use of a vessel on any inland or intracoastal waterway of the United States
(A) in the business of transporting property for compensation or hire, or
(B) in transporting property in the business of the owner, lessee, or operator of the vessel (other than fish or other aquatic animal life caught on the voyage).
(2) Inland or intracoastal waterway of the United States 
The term inland or intracoastal waterway of the United States means any inland or intracoastal waterway of the United States which is described in section 206 of the Inland Waterways Revenue Act of 1978.
(3) Person 
The term person includes the United States, a State, a political subdivision of a State, or any agency or instrumentality of any of the foregoing.
(e) Date for filing return 
The date for filing the return of the tax imposed by this section for any calendar quarter shall be the last day of the first month following such quarter.

Subchapter C - Heavy Trucks and Trailers

26 USC 4051 - Imposition of tax on heavy trucks and trailers sold at retail

(a) Imposition of tax 

(1) In general 
There is hereby imposed on the first retail sale of the following articles (including in each case parts or accessories sold on or in connection therewith or with the sale thereof) a tax of 12 percent of the amount for which the article is so sold:
(A) Automobile truck chassis.
(B) Automobile truck bodies.
(C) Truck trailer and semitrailer chassis.
(D) Truck trailer and semitrailer bodies.
(E) Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer.
(2) Exclusion for trucks weighing 33,000 pounds or less 
The tax imposed by paragraph (1) shall not apply to automobile truck chassis and automobile truck bodies, suitable for use with a vehicle which has a gross vehicle weight of 33,000 pounds or less (as determined under regulations prescribed by the Secretary).
(3) Exclusion for trailers weighing 26,000 pounds or less 
The tax imposed by paragraph (1) shall not apply to truck trailer and semitrailer chassis and bodies, suitable for use with a trailer or semitrailer which has a gross vehicle weight of 26,000 pounds or less (as determined under regulations prescribed by the Secretary.[1]
(4) Exclusion for tractors weighing 19,500 pounds or less 
The tax imposed by paragraph (1) shall not apply to tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer if
(A) such tractor has a gross vehicle weight of 19,500 pounds or less (as determined by the Secretary), and
(B) such tractor, in combination with a trailer or semitrailer, has a gross combined weight of 33,000 pounds or less (as determined by the Secretary).
(5) Sale of trucks, etc., treated as sale of chassis and body 
For purposes of this subsection, a sale of an automobile truck or truck trailer or semitrailer shall be considered to be a sale of a chassis and of a body described in paragraph (1).
(b) Separate purchase of truck or trailer and parts and accessories therefor 
Under regulations prescribed by the Secretary
(1) In general 
If
(A) the owner, lessee, or operator of any vehicle which contains an article taxable under subsection (a) installs (or causes to be installed) any part or accessory on such vehicle, and
(B) such installation is not later than the date 6 months after the date such vehicle (as it contains such article) was first placed in service,

then there is hereby imposed on such installation a tax equal to 12 percent of the price of such part or accessory and its installation.

(2) Exceptions 
Paragraph (1) shall not apply if
(A) the part or accessory installed is a replacement part or accessory, or
(B) the aggregate price of the parts and accessories (and their installation) described in paragraph (1) with respect to any vehicle does not exceed $1,000 (or such other amount or amounts as the Secretary may by regulations prescribe).
(3) Installers secondarily liable for tax 
The owners of the trade or business installing the parts or accessories shall be secondarily liable for the tax imposed by paragraph (1).
(c) Termination 
On and after October 1, 2011, the taxes imposed by this section shall not apply.
(d) Credit against tax for tire tax 
If
(1) tires are sold on or in connection with the sale of any article, and
(2) tax is imposed by this subchapter on the sale of such tires,

there shall be allowed as a credit against the tax imposed by this subchapter an amount equal to the tax (if any) imposed by section 4071 on such tires.

[1] So in original. Probably should be preceded by a closing parenthesis.

26 USC 4052 - Definitions and special rules

(a) First retail sale 
For purposes of this subchapter
(1) In general 
The term first retail sale means the first sale, for a purpose other than for resale or leasing in a long-term lease, after production, manufacture, or importation.
(2) Leases considered as sales 
Rules similar to the rules of section 4217 shall apply.
(3) Use treated as sale 

(A) In general 
If any person uses an article taxable under section 4051 before the first retail sale of such article, then such person shall be liable for tax under section 4051 in the same manner as if such article were sold at retail by him.
(B) Exemption for use in further manufacture 
Subparagraph (A) shall not apply to use of an article as material in the manufacture or production of, or as a component part of, another article to be manufactured or produced by him.
(C) Computation of tax 
In the case of any person made liable for tax by subparagraph (A), the tax shall be computed on the price at which similar articles are sold at retail in the ordinary course of trade, as determined by the Secretary.
(b) Determination of price 

(1) In general 
In determining price for purposes of this subchapter
(A) there shall be included any charge incident to placing the article in condition ready for use,
(B) there shall be excluded
(i) the amount of the tax imposed by this subchapter,
(ii) if stated as a separate charge, the amount of any retail sales tax imposed by any State or political subdivision thereof or the District of Columbia, whether the liability for such tax is imposed on the vendor or vendee, and
(iii) the value of any component of such article if
(I) such component is furnished by the first user of such article, and
(II) such component has been used before such furnishing, and
(C) the price shall be determined without regard to any trade-in.
(2) Sales not at arm’s length 
In the case of any article sold (otherwise than through an arms-length transaction) at less than the fair market price, the tax under this subchapter shall be computed on the price for which similar articles are sold at retail in the ordinary course of trade, as determined by the Secretary.
(3) Long-term lease 

(A) In general 
In the case of any long-term lease of an article which is treated as the first retail sale of such article, the tax under this subchapter shall be computed on a price equal to
(i) the sum of
(I) the price (determined under this subchapter but without regard to paragraph (4)) at which such article was sold to the lessor, and
(II) the cost of any parts and accessories installed by the lessor on such article before the first use by the lessee or leased in connection with such long-term lease, plus
(ii) an amount equal to the presumed markup percentage of the sum described in clause (i).
(B) Presumed markup percentage 
For purposes of subparagraph (A), the term presumed markup percentage means the average markup percentage of retailers of articles of the type involved, as determined by the Secretary.
(C) Exceptions under regulations 
To the extent provided in regulations prescribed by the Secretary, subparagraph (A) shall not apply to specified types of leases where its application is not necessary to carry out the purposes of this subsection.
(4) Special rule where tax paid by manufacturer, producer, or importer 

(A) In general 
In any case where the manufacturer, producer, or importer of any article (or a related person) is liable for tax imposed by this subchapter with respect to such article, the tax under this subchapter shall be computed on a price equal to the sum of
(i) the price which would (but for this paragraph) be determined under this subchapter, plus
(ii) the product of the price referred to in clause (i) and the presumed markup percentage determined under paragraph (3)(B).
(B) Related person 
For purposes of this paragraph
(i) In general Except as provided in clause (ii), the term related person means any person who is a member of the same controlled group (within the meaning of section 5061 (e)(3)) as the manufacturer, producer, or importer.
(ii) Exception for retail establishment To the extent provided in regulations prescribed by the Secretary, a person shall not be treated as a related person with respect to the sale of any article if such article is sold through a permanent retail establishment in the normal course of the trade or business of being a retailer.
(c) Certain combinations not treated as manufacture 

(1) In general 
For purposes of this subchapter (other than subsection (a)(3)(B)), a person shall not be treated as engaged in the manufacture of any article by reason of merely combining such article with any item listed in paragraph (2).
(2) Items 
The items listed in this paragraph are any coupling device (including any fifth wheel), wrecker crane, loading and unloading equipment (including any crane, hoist, winch, or power liftgate), aerial ladder or tower, snow and ice control equipment, earthmoving, excavation and construction equipment, spreader, sleeper cab, cab shield, or wood or metal floor.
(d) Certain other rules made applicable 
Under regulations prescribed by the Secretary, rules similar to the rules of subsections (c) and (d) of section 4216 (relating to partial payments) shall apply for purposes of this subchapter.
(e) Long-term lease 
For purposes of this section, the term long-term lease means any lease with a term of 1 year or more. In determining a lease term for purposes of the preceding sentence, the rules of section 168 (i)(3)(A) shall apply.
(f) Certain repairs and modifications not treated as manufacture 

(1) In general 
An article described in section 4051 (a)(1) shall not be treated as manufactured or produced solely by reason of repairs or modifications to the article (including any modification which changes the transportation function of the article or restores a wrecked article to a functional condition) if the cost of such repairs and modifications does not exceed 75 percent of the retail price of a comparable new article.
(2) Exception 
Paragraph (1) shall not apply if the article (as repaired or modified) would, if new, be taxable under section 4051 and the article when new was not taxable under such section or the corresponding provision of prior law.
(g) Regulations 
The Secretary shall prescribe regulations which permit, in lieu of any other certification, persons who are purchasing articles taxable under this subchapter for resale or leasing in a long-term lease to execute a statement (made under penalties of perjury) on the sale invoice that such sale is for resale. The Secretary shall not impose any registration requirement as a condition of using such procedure.

26 USC 4053 - Exemptions

No tax shall be imposed by section 4051 on any of the following articles:
(1) Camper coaches bodies for self-propelled mobile homes 
Any article designed
(A) to be mounted or placed on automobile trucks, automobile truck chassis, or automobile chassis, and
(B) to be used primarily as living quarters or camping accommodations.
(2) Feed, seed, and fertilizer equipment 
Any body primarily designed
(A) to process or prepare seed, feed, or fertilizer for use on farms,
(B) to haul feed, seed, or fertilizer to and on farms,
(C) to spread feed, seed, or fertilizer on farms,
(D) to load or unload feed, seed, or fertilizer on farms, or
(E) for any combination of the foregoing.
(3) House trailers 
Any house trailer.
(4) Ambulances, hearses, etc. 
Any ambulance, hearse, or combination ambulance-hearse.
(5) Concrete mixers 
Any article designed
(A) to be placed or mounted on an automobile truck chassis or truck trailer or semitrailer chassis, and
(B) to be used to process or prepare concrete.
(6) Trash containers, etc. 
Any box, container, receptacle, bin or other similar article
(A) which is designed to be used as a trash container and is not designed for the transportation of freight other than trash, and
(B) which is not designed to be permanently mounted on or permanently affixed to an automobile truck chassis or body.
(7) Rail trailers and rail vans 
Any chassis or body of a trailer or semitrailer which is designed for use both as a highway vehicle and a railroad car. For purposes of the preceding sentence, piggy-back trailer or semitrailer shall not be treated as designed for use as a railroad car.
(8) Mobile machinery 
Any vehicle which consists of a chassis
(A) to which there has been permanently mounted (by welding, bolting, riveting, or other means) machinery or equipment to perform a construction, manufacturing, processing, farming, mining, drilling, timbering, or similar operation if the operation of the machinery or equipment is unrelated to transportation on or off the public highways,
(B) which has been specially designed to serve only as a mobile carriage and mount (and a power source, where applicable) for the particular machinery or equipment involved, whether or not such machinery or equipment is in operation, and
(C) which, by reason of such special design, could not, without substantial structural modification, be used as a component of a vehicle designed to perform a function of transporting any load other than that particular machinery or equipment or similar machinery or equipment requiring such a specially designed chassis.

TITLE 26 - US CODE - CHAPTER 32 - MANUFACTURERS EXCISE TAXES

Subchapter A - Automotive and Related Items

TITLE 26 - US CODE - PART I - GAS GUZZLERS

4061 to 4063. Repealed. Pub. L. 98369, div. A, title VII, 735(a)(1), July 18, 1984, 98 Stat. 980]

Section 4061, acts Aug. 16, 1954, ch. 736, 68A Stat. 481; Mar. 30, 1955, ch. 18, 3(a)(2), 69 Stat. 14; Aug. 12, 1955, ch. 865, 1, 69 Stat. 709; Mar. 29, 1956, ch. 115, 3(a)(2), 70 Stat. 66; June 29, 1956, ch. 462, title II, 203, 70 Stat. 388; Mar. 29, 1957, Pub. L. 85–12, § 3(a)(1), 71 Stat. 9; June 30, 1958, Pub. L. 85–475, § 3(a)(1), 72 Stat. 259; June 30, 1959, Pub. L. 86–75, § 3(a)(1), 73 Stat. 157; June 30, 1960, Pub. L. 86–564, title II § 202(a)(1), 74 Stat. 290; June 29, 1961, Pub. L. 87–61, title II, § 204, 75 Stat. 126; June 30, 1961, Pub. L. 87–72, § 3(a)(1), 75 Stat. 193; June 28, 1962, Pub. L. 87–508, § 3(a)(1), 76 Stat. 114; June 29, 1963, Pub. L. 88–52, § 3(a)(1), 77 Stat. 72; June 30, 1964, Pub. L. 88–348, § 2(a)(1), 78 Stat. 237; June 21, 1965, Pub. L. 89–44, title II, § 201, 79 Stat. 136; Mar. 15, 1966, Pub. L. 89–368, title II, § 201(a), 80 Stat. 65; Apr. 12, 1968, Pub. L. 90–285, § 1(a)(1), 82 Stat. 92; June 28, 1968, Pub. L. 90–364, title I, § 105(a)(1), 82 Stat. 265; Dec. 30, 1969, Pub. L. 91–172, title VII, § 702(a)(1), 83 Stat. 660; Dec. 31, 1970, Pub. L. 91–605, title III, § 303(a)(3), (4), 84 Stat. 1743; Dec. 31, 1970, Pub. L. 91–614, title II, § 201(a)(1), 84 Stat. 1843; Dec. 10, 1971, Pub. L. 92–178, title IV, § 401(a)(1), (g) (1), 85 Stat. 530, 533; May 5, 1976, Pub. L. 94–280, title III, § 303(a)(3), (4), 90 Stat. 456; Oct. 4, 1976, Pub. L. 94–455, title XIX, § 1906(b)(13)(A), 90 Stat. 1834; Nov. 6, 1978, Pub. L. 95–599, title V, § 502(a)(2), (3), 92 Stat. 2756; Jan. 6, 1983, Pub. L. 97–424, title V, § 512(a)(1), (2), 96 Stat. 2173, 2174, related to imposition of tax on trucks, buses, tractors, etc. Section 4062, acts Aug. 16, 1954, ch. 736, 68A Stat. 482; Oct. 13, 1964, Pub. L. 88–653, § 5(b), 78 Stat. 1086; Nov. 13, 1966, Pub. L. 89–809, title II, § 212(a), 80 Stat. 1585; Dec. 10, 1971, Pub. L. 92–178, title IV, § 401(g)(2)(A)(C), 85 Stat. 533, related to articles classified as parts. Section 4063, acts Aug. 16, 1954, ch. 736, 68A Stat. 482; Aug. 11, 1955, ch. 805, 1(g), 69 Stat. 690; Oct. 13, 1964, Pub. L. 88–653, § 5(a), 78 Stat. 1086; June 21, 1965, Pub. L. 89–44, title VIII, § 801(a), 79 Stat. 157; Dec. 30, 1969, Pub. L. 91–172, title IX, § 931(a), 83 Stat. 724; Dec. 31, 1970, Pub. L. 91–614, title III, § 303(a), 84 Stat. 1845; Dec. 10, 1971, Pub. L. 92–178, title IV, § 401(a)(2), (g)(3), 85 Stat. 530, 533; Oct. 4, 1976, Pub. L. 94–455, title XIX, § 1906(b)(13)(A), title XXI, 2109(a), 90 Stat. 1834, 1904; Nov. 6, 1978, Pub. L. 95–600, title VII, § 701(ff)(1), 92 Stat. 2924; Nov. 9, 1978, Pub. L. 95–618, title II, § 231(a), 92 Stat. 3187; Jan. 6, 1983, Pub. L. 97–424, title V, § 512(a)(3), 96 Stat. 2174, related to exemptions from tax.

26 USC 4064 - Gas guzzler tax

(a) Imposition of tax 
There is hereby imposed on the sale by the manufacturer of each automobile a tax determined in accordance with the following table:
(b) Definitions 
For purposes of this section
(1) Automobile 

(A) In general 
The term automobile means any 4-wheeled vehicle propelled by fuel
(i) which is manufactured primarily for use on public streets, roads, and highways (except any vehicle operated exclusively on a rail or rails), and
(ii) which is rated at 6,000 pounds unloaded gross vehicle weight or less.
(B) Exception for certain vehicles 
The term automobile does not include any vehicle which is treated as a nonpassenger automobile under the rules which were prescribed by the Secretary of Transportation for purposes of section 32901 of title 49, United States Code, and which were in effect on the date of the enactment of this section.
(C) Exception for emergency vehicles 
The term automobile does not include any vehicle sold for use and used
(i) as an ambulance or combination ambulance-hearse,
(ii) by the United States or by a State or local government for police or other law enforcement purposes, or
(iii) for other emergency uses prescribed by the Secretary by regulations.
(2) Fuel economy 
The term fuel economy means the average number of miles traveled by an automobile per gallon of gasoline (or equivalent amount of other fuel) consumed, as determined by the EPA Administrator in accordance with procedures established under subsection (c).
(3) Model type 
The term model type means a particular class of automobile as determined by regulation by the EPA Administrator.
(4) Model year 
The term model year, with reference to any specific calendar year, means a manufacturers annual production period (as determined by the EPA Administrator) which includes January 1 of such calendar year. If a manufacturer has no annual production period, the term model year means the calendar year.
(5) Manufacturer 

(A) In general 
The term manufacturer includes a producer or importer.
(B) Lengthening treated as manufacture 
For purposes of this section, subchapter G of this chapter, and section 6416 (b)(3), the lengthening of an automobile by any person shall be treated as the manufacture of an automobile by such person.
(6) EPA Administrator 
The term EPA Administrator means the Administrator of the Environmental Protection Agency.
(7) Fuel 
The term fuel means gasoline and diesel fuel. The Secretary (after consultation with the Secretary of Transportation) may, by regulation, include any product of petroleum or natural gas within the meaning of such term if he determines that such inclusion is consistent with the need of the Nation to conserve energy.
(c) Determination of fuel economy 
For purposes of this section
(1) In general 
Fuel economy for any model type shall be measured in accordance with testing and calculation procedures established by the EPA Administrator by regulation. Procedures so established shall be the procedures utilized by the EPA Administrator for model year 1975 (weighted 55 percent urban cycle, and 45 percent highway cycle), or procedures which yield comparable results. Procedures under this subsection, to the extent practicable, shall require that fuel economy tests be conducted in conjunction with emissions tests conducted under section 206 of the Clean Air Act. The EPA Administrator shall report any measurements of fuel economy to the Secretary.
(2) Special rule for fuels other than gasoline 
The EPA Administrator shall by regulation determine that quantity of any other fuel which is the equivalent of one gallon of gasoline.
(3) Time by which regulations must be issued 
Testing and calculation procedures applicable to a model year, and any amendment to such procedures (other than a technical or clerical amendment), shall be promulgated not less than 12 months before the model year to which such procedures apply.

TITLE 26 - US CODE - PART II - TIRES

26 USC 4071 - Imposition of tax

(a) Imposition and rate of tax 
There is hereby imposed on taxable tires sold by the manufacturer, producer, or importer thereof a tax at the rate of 9.45 cents (4.725 cents in the case of a biasply tire or super single tire) for each 10 pounds so much of the maximum rated load capacity thereof as exceeds 3,500 pounds.
(b) Special rule for manufacturers who sell at retail 
Under regulations prescribed by the Secretary, if the manufacturer, producer, or importer of any tire delivers such tire to a retail store or retail outlet of such manufacturer, producer, or importer, he shall be liable for tax under subsection (a) in respect of such tire in the same manner as if it had been sold at the time it was delivered to such retail store or outlet. This subsection shall not apply to an article in respect to which tax has been imposed by subsection (a). Subsection (a) shall not apply to an article in respect of which tax has been imposed by this subsection.
(c) Tires on imported articles 
For the purposes of subsection (a), if an article imported into the United States is equipped with tires
(1) the importer of the article shall be treated as the importer of the tires with which such article is equipped, and
(2) the sale of the article by the importer thereof shall be treated as the sale of the tires with which such article is equipped.

This subsection shall not apply with respect to the sale of an automobile bus chassis or an automobile bus body.

(d) Termination 
On and after October 1, 2011, the taxes imposed by subsection (a) shall not apply.

26 USC 4072 - Definitions

(a) Taxable tire 
For purposes of this chapter, the term taxable tire means any tire of the type used on highway vehicles if wholly or in part made of rubber and if marked pursuant to Federal regulations for highway use.
(b) Rubber 
For purposes of this chapter, the term rubber includes synthetic and substitute rubber.
(c) Tires of the type used on highway vehicles 
For purposes of this part, the term tires of the type used on highway vehicles means tires of the type used on
(1) motor vehicles which are highway vehicles, or
(2) vehicles of the type used in connection with motor vehicles which are highway vehicles.

Such term shall not include tires of a type used exclusively on vehicles described in section 4053 (8).

(d) Biasply 
For purposes of this part, the term biasply tire means a pneumatic tire on which the ply cords that extend to the beads are laid at alternate angles substantially less than 90 degrees to the centerline of the tread.
(e) Super single tire 
For purposes of this part, the term super single tire means a single tire greater than 13 inches in cross section width designed to replace 2 tires in a dual fitment. Such term shall not include any tire designed for steering.

26 USC 4073 - Exemptions

The tax imposed by section 4071 shall not apply to tires sold for the exclusive use of the Department of Defense or the Coast Guard.

TITLE 26 - US CODE - PART III - PETROLEUM PRODUCTS

Subpart A - Motor and Aviation Fuels

26 USC 4081 - Imposition of tax

(a) Tax imposed 

(1) Tax on removal, entry, or sale 

(A) In general 
There is hereby imposed a tax at the rate specified in paragraph (2) on
(i) the removal of a taxable fuel from any refinery,
(ii) the removal of a taxable fuel from any terminal,
(iii) the entry into the United States of any taxable fuel for consumption, use, or warehousing, and
(iv) the sale of a taxable fuel to any person who is not registered under section 4101 unless there was a prior taxable removal or entry of such fuel under clause (i), (ii), or (iii).
(B) Exemption for bulk transfers to registered terminals or refineries 

(i) In general The tax imposed by this paragraph shall not apply to any removal or entry of a taxable fuel transferred in bulk by pipeline or vessel to a terminal or refinery if the person removing or entering the taxable fuel, the operator of such pipeline or vessel (except as provided in clause (ii)), and the operator of such terminal or refinery are registered under section 4101.
(ii) Nonapplication of registration to vessel operators entering by deep-draft vessel For purposes of clause (i), a vessel operator is not required to be registered with respect to the entry of a taxable fuel transferred in bulk by a vessel described in section 4042 (c)(1).
(2) Rates of tax 

(A) In general 
The rate of the tax imposed by this section is
(i) in the case of gasoline other than aviation gasoline, 18.3 cents per gallon,
(ii) in the case of aviation gasoline, 19.3 cents per gallon, and
(iii) in the case of diesel fuel or kerosene, 24.3 cents per gallon.
(B) Leaking Underground Storage Tank Trust Fund tax 
The rates of tax specified in subparagraph (A) shall each be increased by 0.1 cent per gallon. The increase in tax under this subparagraph shall in this title be referred to as the Leaking Underground Storage Tank Trust Fund financing rate.
(C) Taxes imposed on fuel used in aviation 
In the case of kerosene which is removed from any refinery or terminal directly into the fuel tank of an aircraft for use in aviation, the rate of tax under subparagraph (A)(iii) shall be
(i) in the case of use for commercial aviation by a person registered for such use under section 4101, 4.3 cents per gallon, and
(ii) in the case of use for aviation not described in clause (i), 21.8 cents per gallon.
(D) Diesel-water fuel emulsion 
In the case of diesel-water fuel emulsion at least 14 percent of which is water and with respect to which the emulsion additive is registered by a United States manufacturer with the Environmental Protection Agency pursuant to section 211 of the Clean Air Act (as in effect on March 31, 2003), subparagraph (A)(iii) shall be applied by substituting 19.7 cents for 24.3 cents. The preceding sentence shall not apply to the removal, sale, or use of diesel-water fuel emulsion unless the person so removing, selling, or using such fuel is registered under section 4101.
(3) Certain refueler trucks, tankers, and tank wagons treated as terminal 

(A) In general 
For purposes of paragraph (2)(C), a refueler truck, tanker, or tank wagon shall be treated as part of a terminal if
(i) such terminal is located within an airport,
(ii) any kerosene which is loaded in such truck, tanker, or wagon at such terminal is for delivery only into aircraft at the airport in which such terminal is located,
(iii) such truck, tanker, or wagon meets the requirements of subparagraph (B) with respect to such terminal, and
(iv) except in the case of exigent circumstances identified by the Secretary in regulations, no vehicle registered for highway use is loaded with kerosene at such terminal.
(B) Requirements 
A refueler truck, tanker, or tank wagon meets the requirements of this subparagraph with respect to a terminal if such truck, tanker, or wagon
(i) has storage tanks, hose, and coupling equipment designed and used for the purposes of fueling aircraft,
(ii) is not registered for highway use, and
(iii) is operated by
(I) the terminal operator of such terminal, or
(II) a person that makes a daily accounting to such terminal operator of each delivery of fuel from such truck, tanker, or wagon.
(C) Reporting 
The Secretary shall require under section 4101 (d) reporting by such terminal operator of
(i) any information obtained under subparagraph (B)(iii)(II), and
(ii) any similar information maintained by such terminal operator with respect to deliveries of fuel made by trucks, tankers, or wagons operated by such terminal operator.
(D) Applicable rate 
For purposes of paragraph (2)(C), in the case of any kerosene treated as removed from a terminal by reason of this paragraph
(i) the rate of tax specified in paragraph (2)(C)(i) in the case of use described in such paragraph shall apply if such terminal is located within a secured area of an airport, and
(ii) the rate of tax specified in paragraph (2)(C)(ii) shall apply in all other cases.
(4) Liability for tax on kerosene used in commercial aviation 
For purposes of paragraph (2)(C)(i), the person who uses the fuel for commercial aviation shall pay the tax imposed under such paragraph. For purposes of the preceding sentence, fuel shall be treated as used when such fuel is removed into the fuel tank.
(b) Treatment of removal or subsequent sale by blender 

(1) In general 
There is hereby imposed a tax at the rate determined under subsection (a) on taxable fuel removed or sold by the blender thereof.
(2) Credit for tax previously paid 
If
(A) tax is imposed on the removal or sale of a taxable fuel by reason of paragraph (1), and
(B) the blender establishes the amount of the tax paid with respect to such fuel by reason of subsection (a),

the amount of the tax so paid shall be allowed as a credit against the tax imposed by reason of paragraph (1).

(c) Later separation of fuel from diesel-water fuel emulsion 
If any person separates the taxable fuel from a diesel-water fuel emulsion on which tax was imposed under subsection (a) at a rate determined under subsection (a)(2)(D) (or with respect to which a credit or payment was allowed or made by reason of section 6427), such person shall be treated as the refiner of such taxable fuel. The amount of tax imposed on any removal of such fuel by such person shall be reduced by the amount of tax imposed (and not credited or refunded) on any prior removal or entry of such fuel.
(d) Termination 

(1) In general 
The rates of tax specified in clauses (i) and (iii) of subsection (a)(2)(A) shall be 4.3 cents per gallon after September 30, 2011.
(2) Aviation fuels 
The rates of tax specified in subsection (a)(2)(A)(ii) and (a)(2)(C)(ii) shall be 4.3 cents per gallon
(A) after December 31, 1996, and before the date which is 7 days after the date of the enactment of the Airport and Airway Trust Fund Tax Reinstatement Act of 1997, and
(B) after February 29, 2008.
(3) Leaking Underground Storage Tank Trust Fund financing rate 
The Leaking Underground Storage Tank Trust Fund financing rate under subsection (a)(2) shall apply after September 30, 1997, and before October 1, 2011.
(e) Refunds in certain cases 
Under regulations prescribed by the Secretary, if any person who paid the tax imposed by this section with respect to any taxable fuel establishes to the satisfaction of the Secretary that a prior tax was paid (and not credited or refunded) with respect to such taxable fuel, then an amount equal to the tax paid by such person shall be allowed as a refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by this section.

26 USC 4082 - Exemptions for diesel fuel and kerosene

(a) In general 
The tax imposed by section 4081 shall not apply to diesel fuel and kerosene
(1) which the Secretary determines is destined for a nontaxable use,
(2) which is indelibly dyed by mechanical injection in accordance with regulations which the Secretary shall prescribe, and
(3) which meets such marking requirements (if any) as may be prescribed by the Secretary in regulations.

Such regulations shall allow an individual choice of dye color approved by the Secretary or chosen from any list of approved dye colors that the Secretary may publish.

(b) Nontaxable use 
For purposes of this section, the term nontaxable use means
(1) any use which is exempt from the tax imposed by section 4041 (a)(1) other than by reason of a prior imposition of tax,
(2) any use in a train, and
(3) any use described in section 4041 (a)(1)(C)(iii)(II).

The term nontaxable use does not include the use of kerosene in an aircraft and such term shall not include any use described in section 6421 (e)(2)(C).

(c) Exception to dyeing requirements 
Paragraph (2) of subsection (a) shall not apply with respect to any diesel fuel and kerosene
(1) removed, entered, or sold in a State for ultimate sale or use in an area of such State during the period such area is exempted from the fuel dyeing requirements under subsection (i) of section 211 of the Clean Air Act (as in effect on the date of the enactment of this subsection) by the Administrator of the Environmental Protection Agency under paragraph (4) of such subsection (i) (as so in effect), and
(2) the use of which is certified pursuant to regulations issued by the Secretary.
(d) Additional exceptions to dyeing requirements for kerosene 

(1) Use for non-fuel feedstock purposes 
Subsection (a)(2) shall not apply to kerosene
(A) received by pipeline or vessel for use by the person receiving the kerosene in the manufacture or production of any substance (other than gasoline, diesel fuel, or special fuels referred to in section 4041), or
(B) to the extent provided in regulations, removed or entered
(i) for such a use by the person removing or entering the kerosene, or
(ii) for resale by such person for such a use by the purchaser,

but only if the person receiving, removing, or entering the kerosene and such purchaser (if any) are registered under section 4101 with respect to the tax imposed by section 4081.

(2) Wholesale distributors 
To the extent provided in regulations, subsection (a)(2) shall not apply to kerosene received by a wholesale distributor of kerosene if such distributor
(A) is registered under section 4101 with respect to the tax imposed by section 4081 on kerosene, and
(B) sells kerosene exclusively to ultimate vendors described in section 6427 (l)(5)(B) with respect to kerosene.
(e) Kerosene removed into an aircraft 
In the case of kerosene which is exempt from the tax imposed by section 4041 (c) (other than by reason of a prior imposition of tax) and which is removed from any refinery or terminal directly into the fuel tank of an aircraft
(1) the rate of tax under section 4081 (a)(2)(A)(iii) shall be zero, and
(2) if such aircraft is employed in foreign trade or trade between the United States and any of its possessions, the increase in such rate under section 4081 (a)(2)(B) shall be zero.

For purposes of this subsection, any removal described in section 4081 (a)(3)(A) shall be treated as a removal from a terminal but only if such terminal is located within a secure area of an airport.

(f) Exception for Leaking Underground Storage Tank Trust Fund financing rate 

(1) In general 
Subsection (a) shall not apply to the tax imposed under section 4081 at the Leaking Underground Storage Tank Trust Fund financing rate.
(2) Exception for export, etc. 
Paragraph (1) shall not apply with respect to any fuel if the Secretary determines that such fuel is destined for export or for use by the purchaser as supplies for vessels (within the meaning of section 4221 (d)(3)) employed in foreign trade or trade between the United States and any of its possessions.
(g) Regulations 
The Secretary shall prescribe such regulations as may be necessary to carry out this section, including regulations requiring the conspicuous labeling of retail diesel fuel and kerosene pumps and other delivery facilities to assure that persons are aware of which fuel is available only for nontaxable uses.
(h) Cross reference 
For tax on train and certain bus uses of fuel purchased tax-free, see subsections (a)(1) and (d)(3) of section 4041.

26 USC 4083 - Definitions; special rule; administrative authority

(a) Taxable fuel 
For purposes of this subpart
(1) In general 
The term taxable fuel means
(A) gasoline,
(B) diesel fuel, and
(C) kerosene.
(2) Gasoline 
The term gasoline
(A) includes any gasoline blend, other than qualified methanol or ethanol fuel (as defined in section 4041 (b)(2)(B)), partially exempt methanol or ethanol fuel (as defined in section 4041 (m)(2)), or a denatured alcohol, and
(B) includes, to the extent prescribed in regulations
(i) any gasoline blend stock, and
(ii) any product commonly used as an additive in gasoline (other than alcohol).

For purposes of subparagraph (B)(i), the term gasoline blend stock means any petroleum product component of gasoline.

(3) Diesel fuel 

(A) In general 
The term diesel fuel means
(i) any liquid (other than gasoline) which is suitable for use as a fuel in a diesel-powered highway vehicle, or a diesel-powered train,
(ii) transmix, and
(iii) diesel fuel blend stocks identified by the Secretary.
(B) Transmix 
For purposes of subparagraph (A), the term transmix means a byproduct of refined products pipeline operations created by the mixing of different specification products during pipeline transportation.
(b) Commercial aviation 
For purposes of this subpart, the term commercial aviation means any use of an aircraft in a business of transporting persons or property for compensation or hire by air, unless properly allocable to any transportation exempt from the taxes imposed by sections 4261 and 4271 by reason of section 4281 or 4282 or by reason of subsection (h) or (i) of section 4261.
(c) Certain uses defined as removal 
If any person uses taxable fuel (other than in the production of taxable fuels or special fuels referred to in section 4041), such use shall for the purposes of this chapter be considered a removal.
(d) Administrative authority 

(1) In general 
In addition to the authority otherwise granted by this title, the Secretary may in administering compliance with this subpart, section 4041, and penalties and other administrative provisions related thereto
(A) enter any place at which taxable fuel is produced or is stored (or may be stored) for purposes of
(i) examining the equipment used to determine the amount or composition of such fuel and the equipment used to store such fuel,
(ii) taking and removing samples of such fuel, and
(iii) inspecting any books and records and any shipping papers pertaining to such fuel, and
(B) detain, for the purposes referred in subparagraph (A), any container which contains or may contain any taxable fuel.
(2) Inspection sites 
The Secretary may establish inspection sites for purposes of carrying out the Secretarys authority under paragraph (1)(B).
(3) Penalty for refusal of entry 

(A) Forfeiture 
The penalty provided by section 7342 shall apply to any refusal to admit entry or other refusal to permit an action by the Secretary authorized by paragraph (1), except that section 7342 shall be applied by substituting $1,000 for $500 for each such refusal.
(B) Assessable penalty 
For additional assessable penalty for the refusal to admit entry or other refusal to permit an action by the Secretary authorized by paragraph (1), see section 6717.

26 USC 4084 - Cross references

(1) For provisions to relieve farmers from excise tax in the case of gasoline used on the farm for farming purposes, see section 6420.
(2) For provisions to relieve purchasers of gasoline from excise tax in the case of gasoline used for certain nonhighway purposes, used by local transit systems, or sold for certain exempt purposes, see section 6421.
(3) For provisions to relieve purchasers from excise tax in the case of taxable fuel not used for taxable purposes, see section 6427.

Subpart B - Special Provisions Applicable to Fuels Tax

26 USC 4101 - Registration and bond

(a) Registration 

(1) In general 
Every person required by the Secretary to register under this section with respect to the tax imposed by section 4041 (a) or 4081 and every person producing or importing biodiesel (as defined in section 40A (d)(1)) or alcohol (as defined in section 6426 (b)(4)(A)) shall register with the Secretary at such time, in such form and manner, and subject to such terms and conditions, as the Secretary may by regulations prescribe. A registration under this section may be used only in accordance with regulations prescribed under this section.
(2) Registration of persons within foreign trade zones, etc. 
The Secretary shall require registration by any person which
(A) operates a terminal or refinery within a foreign trade zone or within a customs bonded storage facility, or
(B) holds an inventory position with respect to a taxable fuel in such a terminal.
(3) Display of registration 
Every operator of a vessel required by the Secretary to register under this section shall display proof of registration through an identification device prescribed by the Secretary on each vessel used by such operator to transport any taxable fuel.
(4) Registration of persons extending credit on certain exempt sales of fuel 
The Secretary shall require registration by any person which
(A) extends credit by credit card to any ultimate purchaser described in subparagraph (C) or (D) of section 6416 (b)(2) for the purchase of taxable fuel upon which tax has been imposed under section 4041 or 4081, and
(B) does not collect the amount of such tax from such ultimate purchaser.
(5) Reregistration in event of change in ownership 
Under regulations prescribed by the Secretary, a person (other than a corporation the stock of which is regularly traded on an established securities market) shall be required to reregister under this section if after a transaction (or series of related transactions) more than 50 percent of ownership interests in, or assets of, such person are held by persons other than persons (or persons related thereto) who held more than 50 percent of such interests or assets before the transaction (or series of related transactions).
(b) Bonds and liens 

(1) In general 
Under regulations prescribed by the Secretary, the Secretary may require, as a condition of permitting any person to be registered under subsection (a), that such person
(A) give a bond in such sum as the Secretary determines appropriate, and
(B) agree to the imposition of a lien
(i) on such property (or rights to property) of such person used in the trade or business for which the registration is sought, or
(ii) with the consent of such person, on any other property (or rights to property) of such person as the Secretary determines appropriate.

Rules similar to the rules of section 6323 shall apply to the lien imposed pursuant to this paragraph.

(2) Release or discharge of lien 
If a lien is imposed pursuant to paragraph (1), the Secretary shall issue a certificate of discharge or a release of such lien in connection with a transfer of the property if there is furnished to the Secretary (and accepted by him) a bond in such sum as the Secretary determines appropriate or the transferor agrees to the imposition of a substitute lien under paragraph (1)(B) in such sum as the Secretary determines appropriate. The Secretary shall respond to any request to discharge or release a lien imposed pursuant to paragraph (1) in connection with a transfer of property not later than 90 days after the date the request for such a discharge or release is made.
(c) Denial, revocation, or suspension of registration 
Rules similar to the rules of section 4222 (c) shall apply to registration under this section.
(d) Information reporting 
The Secretary may require
(1) information reporting by any person registered under this section, and
(2) information reporting by such other persons as the Secretary deems necessary to carry out this part.

Any person who is required to report under this subsection and who has 25 or more reportable transactions in a month shall file such report in electronic format.

26 USC 4102 - Inspection of records by local officers

Under regulations prescribed by the Secretary, records required to be kept with respect to taxes under this part shall be open to inspection by such officers of a State, or a political subdivision of any such State, as shall be charged with the enforcement or collection of any tax on any taxable fuel (as defined in section 4083).

26 USC 4103 - Certain additional persons liable for tax where willful failure to pay

In any case in which there is a willful failure to pay the tax imposed by section 4041 (a)(1) or 4081, each person
(1) who is an officer, employee, or agent of the taxpayer who is under a duty to assure the payment of such tax and who willfully fails to perform such duty, or
(2) who willfully causes the taxpayer to fail to pay such tax,

shall be jointly and severally liable with the taxpayer for the tax to which such failure relates.

26 USC 4104 - Information reporting for persons claiming certain tax benefits

(a) In general 
The Secretary shall require any person claiming tax benefits
(1) under the provisions of section[1] 34, 40, and 40A, to file a return at the time such person claims such benefits (in such manner as the Secretary may prescribe), and
(2) under the provisions of section 4041 (b)(2), 6426, or 6427 (e) to file a quarterly return (in such manner as the Secretary may prescribe).
(b) Contents of return 
Any return filed under this section shall provide such information relating to such benefits and the coordination of such benefits as the Secretary may require to ensure the proper administration and use of such benefits.
(c) Enforcement 
With respect to any person described in subsection (a) and subject to registration requirements under this title, rules similar to rules of section 4222 (c) shall apply with respect to any requirement under this section.
[1] So in original. Probably should be “sections”.

26 USC 4105 - Two-party exchanges

(a) In general 
In a two-party exchange, the delivering person shall not be liable for the tax imposed under section 4081 (a)(1)(A)(ii).
(b) Two-party exchange 
The term two-party exchange means a transaction, other than a sale, in which taxable fuel is transferred from a delivering person registered under section 4101 as a taxable fuel registrant to a receiving person who is so registered where all of the following occur:
(1) The transaction includes a transfer from the delivering person, who holds the inventory position for taxable fuel in the terminal as reflected in the records of the terminal operator.
(2) The exchange transaction occurs before or contemporaneous with completion of removal across the rack from the terminal by the receiving person.
(3) The terminal operator in its books and records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction to the Secretary.
(4) The transaction is the subject of a written contract.

Subchapter B - Coal

26 USC 4121 - Imposition of tax

(a) Tax imposed 

(1) In general 
There is hereby imposed on coal from mines located in the United States sold by the producer, a tax equal to the rate per ton determined under subsection (b).
(2) Limitation on tax 
The amount of the tax imposed by paragraph (1) with respect to a ton of coal shall not exceed the applicable percentage (determined under subsection (b)) of the price at which such ton of coal is sold by the producer.
(b) Determination of rates and limitation on tax 
For purposes of subsection (a)
(1) the rate of tax on coal from underground mines shall be $1.10,
(2) the rate of tax on coal from surface mines shall be $.55, and
(3) the applicable percentage shall be 4.4 percent.
(c) Tax not to apply to lignite 
The tax imposed by subsection (a) shall not apply in the case of lignite.
(d) Definitions 
For purposes of this subchapter
(1) Coal from surface mines 
Coal shall be treated as produced from a surface mine if all of the geological matter above the coal being mined is removed before the coal is extracted from the earth. Coal extracted by auger shall be treated as coal from a surface mine.
(2) Coal from underground mines 
Coal shall be treated as produced from an underground mine if it is not produced from a surface mine.
(3) United States 
The term United States has the meaning given to it by paragraph (1) of section 638.
(4) Ton 
The term ton means 2,000 pounds.
(e) Reduction in amount of tax 

(1) In general 
Effective with respect to sales after the temporary increase termination date, subsection (b) shall be applied
(A) by substituting $.50 for $1.10,
(B) by substituting $.25 for $.55, and
(C) by substituting 2 percent for 4.4 percent.
(2) Temporary increase termination date 
For purposes of paragraph (1), the temporary increase termination date is the earlier of
(A) January 1, 2014, or
(B) the first January 1 after 1981 as of which there is
(i) no balance of repayable advances made to the Black Lung Disability Trust Fund, and
(ii) no unpaid interest on such advances.

Subchapter C - Certain Vaccines

26 USC 4131 - Imposition of tax

(a) General rule 
There is hereby imposed a tax on any taxable vaccine sold by the manufacturer, producer, or importer thereof.
(b) Amount of tax 

(1) In general 
The amount of the tax imposed by subsection (a) shall be 75 cents per dose of any taxable vaccine.
(2) Combinations of vaccines 
If any taxable vaccine is described in more than 1 subparagraph of section 4132 (a)(1), the amount of the tax imposed by subsection (a) on such vaccine shall be the sum of the amounts for the vaccines which are so included.
(c) Application of section 
The tax imposed by this section shall apply
(1) after December 31, 1987, and before January 1, 1993, and
(2) during periods after the date of the enactment of the Revenue Reconciliation Act of 1993.

26 USC 4132 - Definitions and special rules

(a) Definitions relating to taxable vaccines 
For purposes of this subchapter
(1) Taxable vaccine 
The term taxable vaccine means any of the following vaccines which are manufactured or produced in the United States or entered into the United States for consumption, use, or warehousing:
(A) Any vaccine containing diphtheria toxoid.
(B) Any vaccine containing tetanus toxoid.
(C) Any vaccine containing pertussis bacteria, extracted or partial cell bacteria, or specific pertussis antigens.
(D) Any vaccine against measles.
(E) Any vaccine against mumps.
(F) Any vaccine against rubella.
(G) Any vaccine containing polio virus.
(H) Any HIB vaccine.
(I) Any vaccine against hepatitis A.
(J) Any vaccine against hepatitis B.
(K) Any vaccine against chicken pox.
(L) Any vaccine against rotavirus gastroenteritis.
(M) Any conjugate vaccine against streptococcus pneumoniae.
(N) Any trivalent vaccine against influenza.
(O) Any meningococcal vaccine.
(P) Any vaccine against the human papillomavirus.
(2) Vaccine 
The term vaccine means any substance designed to be administered to a human being for the prevention of 1 or more diseases.
(3) United States 
The term United States has the meaning given such term by section 4612 (a)(4).
(4) Importer 
The term importer means the person entering the vaccine for consumption, use, or warehousing.
(b) Credit or refund where vaccine returned to manufacturer, etc., or destroyed 

(1) In general 
Under regulations prescribed by the Secretary, whenever any vaccine on which tax was imposed by section 4131 is
(A) returned (other than for resale) to the person who paid such tax, or
(B) destroyed,

the Secretary shall abate such tax or allow a credit, or pay a refund (without interest), to such person equal to the tax paid under section 4131 with respect to such vaccine.

(2) Claim must be filed within 6 months 
Paragraph (1) shall apply to any returned or destroyed vaccine only with respect to claims filed within 6 months after the date the vaccine is returned or destroyed.
(3) Condition of allowance of credit or refund 
No credit or refund shall be allowed or made under paragraph (1) with respect to any vaccine unless the person who paid the tax establishes that he
(A) has repaid or agreed to repay the amount of the tax to the ultimate purchaser of the vaccine, or
(B) has obtained the written consent of such purchaser to the allowance of the credit or the making of the refund.
(4) Tax imposed only once 
No tax shall be imposed by section 4131 on the sale of any vaccine if tax was imposed by section 4131 on any prior sale of such vaccine and such tax is not abated, credited, or refunded.
(c) Other special rules 

(1) Certain uses treated as sales 
Any manufacturer, producer, or importer of a vaccine which uses such vaccine before it is sold shall be liable for the tax imposed by section 4131 in the same manner as if such vaccine were sold by such manufacturer, producer, or importer.
(2) Treatment of vaccines shipped to United States possessions 
Section 4221 (a)(2) shall not apply to any vaccine shipped to a possession of the United States.
(3) Fractional part of a dose 
In the case of a fraction of a dose, the tax imposed by section 4131 shall be the same fraction of the amount of such tax imposed by a whole dose.
(4) Disposition of revenues from Puerto Rico and the Virgin Islands 
The provisions of subsections (a)(3) and (b)(3) of section 7652 shall not apply to any tax imposed by section 4131.

Subchapter D - Recreational Equipment

TITLE 26 - US CODE - PART I - SPORTING GOODS

26 USC 4161 - Imposition of tax

(a) Sport fishing equipment 

(1) Imposition of tax 

(A) In general 
There is hereby imposed on the sale of any article of sport fishing equipment by the manufacturer, producer, or importer a tax equal to 10 percent of the price for which so sold.
(B) Limitation on tax imposed on fishing rods and poles 
The tax imposed by subparagraph (A) on any fishing rod or pole shall not exceed $10.
(2) 3 percent rate of tax for electric outboard motors 
In the case of an electric outboard motor, paragraph (1) shall be applied by substituting 3 percent for 10 percent.
(3) 3 percent rate of tax for tackle boxes 
In the case of fishing tackle boxes, paragraph (1) shall be applied by substituting 3 percent for 10 percent.
(4) Parts or accessories sold in connection with taxable sale 
In the case of any sale by the manufacturer, producer, or importer of any article of sport fishing equipment, such article shall be treated as including any parts or accessories of such article sold on or in connection therewith or with the sale thereof.
(b) Bows and arrows, etc. 

(1) Bows 

(A) In general 
There is hereby imposed on the sale by the manufacturer, producer, or importer of any bow which has a peak draw weight of 30 pounds or more, a tax equal to 11 percent of the price for which so sold.
(B) Archery equipment 
There is hereby imposed on the sale by the manufacturer, producer, or importer
(i) of any part or accessory suitable for inclusion in or attachment to a bow described in subparagraph (A), and
(ii) of any quiver, broadhead, or point suitable for use with an arrow described in paragraph (2),

a tax equal to 11 percent of the price for which so sold.

(2) Arrows 

(A) In general 
There is hereby imposed on the first sale by the manufacturer, producer, or importer of any shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow which after its assembly
(i) measures 18 inches overall or more in length, or
(ii) measures less than 18 inches overall in length but is suitable for use with a bow described in paragraph (1)(A),

a tax equal to 39 cents per shaft.

(B) Adjustment for inflation 

(i) In general In the case of any calendar year beginning after 2005, the 39-cent amount specified in subparagraph (A) shall be increased by an amount equal to the product of
(I) such amount, multiplied by
(II) the cost-of-living adjustment determined under section 1 (f)(3) for such calendar year, determined by substituting 2004 for 1992 in subparagraph (B) thereof.
(ii) Rounding If any increase determined under clause (i) is not a multiple of 1 cent, such increase shall be rounded to the nearest multiple of 1 cent.
(3) Coordination with subsection (a) 
No tax shall be imposed under this subsection with respect to any article taxable under subsection (a).

26 USC 4162 - Definitions; treatment of certain resales

(a) Sport fishing equipment defined 
For purposes of this part, the term sport fishing equipment means
(1) fishing rods and poles (and component parts therefor),
(2) fishing reels,
(3) fly fishing lines, and other fishing lines not over 130 pounds test,
(4) fishing spears, spear guns, and spear tips,
(5) items of terminal tackle, including
(A) leaders,
(B) artificial lures,
(C) artificial baits,
(D) artificial flies,
(E) fishing hooks,
(F) bobbers,
(G) sinkers,
(H) snaps,
(I) drayles, and
(J) swivels,

but not including natural bait or any item of terminal tackle designed for use and ordinarily used on fishing lines not described in paragraph (3), and

(6) the following items of fishing supplies and accessories
(A) fish stringers,
(B) creels,
(C) tackle boxes,
(D) bags, baskets, and other containers designed to hold fish,
(E) portable bait containers,
(F) fishing vests,
(G) landing nets,
(H) gaff hooks,
(I) fishing hook disgorgers, and
(J) dressing for fishing lines and artificial flies,
(7) fishing tip-ups and tilts,
(8) fishing rod belts, fishing rodholders, fishing harnesses, fish fighting chairs, fishing outriggers, and fishing downriggers, and
(9) electric outboard boat motors.
(b) Treatment of certain resales 

(1) In general 
If
(A) the manufacturer, producer, or importer sells any article taxable under section 4161 (a) to any person,
(B) the constructive sale price rules of section 4216 (b) do not apply to such sale, and
(C) such person (or any other person) sells such article to a related person with respect to the manufacturer, producer, or importer,

then such related person shall be liable for tax under section 4161 in the same manner as if such related person were the manufacturer of the article.

(2) Credit for tax previously paid 
If
(A) tax is imposed on the sale of any article by reason of paragraph (1), and
(B) the related person establishes the amount of the tax which was paid on the sale described in paragraph (1)(A),

the amount of the tax so paid shall be allowed as a credit against the tax imposed by reason of paragraph (1).

(3) Related person 
For purposes of this subsection, the term related person has the meaning given such term by section 465 (b)(3)(C).
(4) Regulations 
Except to the extent provided in regulations, rules similar to the rules of this subsection shall also apply in cases (not described in paragraph (1)) in which intermediaries or other devices are used for purposes of reducing the amount of the tax imposed by section 4161 (a).

[PART II - REPEALED]

4171 to 4173. Repealed. Pub. L. 8944, title II, 205(b), June 21, 1965, 79 Stat. 140]

Section 4171, act Aug. 16, 1954, ch. 736, 68A Stat. 489, imposed a 10 percent tax on cameras, camera lenses, and unexposed photographic film on rolls and a 5 percent tax on electric motion or still picture projectors of the household type. Section 4172, act Aug. 16, 1954, ch. 736, 68A Stat. 490, defined certain vendees of unexposed films as manufacturers for purposes of payment of the tax imposed by section 4171. Section 4173, act Aug. 16, 1954, ch. 736, 68A Stat. 490, granted exemptions for specified types of cameras, lenses of specified focal lengths, and certain types of film.

TITLE 26 - US CODE - PART III - FIREARMS

26 USC 4181 - Imposition of tax

There is hereby imposed upon the sale by the manufacturer, producer, or importer of the following articles a tax equivalent to the specified percent of the price for which so sold: Pistols. Revolvers. Firearms (other than pistols and revolvers). Shells, and cartridges.

26 USC 4182 - Exemptions

(a) Machine guns and short barrelled firearms 
The tax imposed by section 4181 shall not apply to any firearm on which the tax provided by section 5811 has been paid.
(b) Sales to defense department 
No firearms, pistols, revolvers, shells, and cartridges purchased with funds appropriated for the military department shall be subject to any tax imposed on the sale or transfer of such articles.
(c) Small manufacturers, etc. 

(1) In general 
The tax imposed by section 4181 shall not apply to any pistol, revolver, or firearm described in such section if manufactured, produced, or imported by a person who manufactures, produces, and imports less than an aggregate of 50 of such articles during the calendar year.
(2) Controlled groups 
All persons treated as a single employer for purposes of subsection (a) or (b) of section 52 shall be treated as one person for purposes of paragraph (1).
(d) Records 
Notwithstanding the provisions of sections 922 (b)(5) and 923 (g) of title 18, United States Code, no person holding a Federal license under chapter 44 of title 18, United States Code, shall be required to record the name, address, or other information about the purchaser of shotgun ammunition, ammunition suitable for use only in rifles generally available in commerce, or component parts for the aforesaid types of ammunition.

[Subchapter E - Repealed]

4191, 4192. Repealed. Pub. L. 8944, title II, 206, June 21, 1965, 79 Stat. 140]

Section 4191, act Aug. 16, 1954, ch. 736, 68A Stat. 491, imposed a tax equivalent to 10 percent of the selling price upon over fifty specified office and business machines including adding machines, bookkeeping machines, cash registers, punch card and computing machines, typewriters, and tabulating machines. Section 4192, acts Aug. 16, 1954, ch. 736, 68A Stat. 491; Sept. 2, 1958, Pub. L. 85–859, title I, § 114(a), 72 Stat. 1278, granted an exemption for cash registers used in registering over-the-counter retail sales and for stencil cutting machines.

26 USC 4201 - Repealed. Pub. L. 8944, title II, 206, June 21, 1965, 79 Stat. 140]

Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 492; Sept. 14, 1960, Pub. L. 86–779, § 9(a), 74 Stat. 1003, imposed a tax equivalent to 10 percent of the selling price on mechanical pencils, fountain pens, and ball point pens and 10 cents on mechanical cigarette lighters.

26 USC 4211 - Repealed. Pub. L. 8944, title II, 206, June 21, 1965, 79 Stat. 140]

Section, act Aug. 16, 1954, ch. 736, 68A Stat. 492, imposed a tax of 2 cents per 1,000 for matches, except fancy wooden matches, and a tax of 51/2 cents per 1,000 on fancy wooden matches.

Subchapter F - Special Provisions Applicable to Manufacturers Tax

26 USC 4216 - Definition of price

(a) Containers, packing and transportation charges. 
In determining, for the purposes of this chapter, the price for which an article is sold, there shall be included any charge for coverings and containers of whatever nature, and any charge incident to placing the article in condition packed ready for shipment, but there shall be excluded the amount of tax imposed by this chapter, whether or not stated as a separate charge. A transportation, delivery, insurance, installation, or other charge (not required by the foregoing sentence to be included) shall be excluded from the price only if the amount thereof is established to the satisfaction of the Secretary in accordance with the regulations.
(b) Constructive sale price 

(1) In general 
If an article is
(A) sold at retail,
(B) sold on consignment, or
(C) sold (otherwise than through an arms length transaction) at less than the fair market price,

the tax under this chapter shall (if based on the price for which the article is sold) be computed on the price for which such articles are sold, in the ordinary course of trade, by manufacturers or producers thereof, as determined by the Secretary. In the case of an article sold at retail, the computation under the preceding sentence shall be on whichever of the following prices is the lower: (i) the price for which such article is sold, or (ii) the highest price for which such articles are sold to wholesale distributors, in the ordinary course of trade, by manufacturers or producers thereof, as determined by the Secretary. This paragraph shall not apply if paragraph (2) applies.

(2) Special rule 
If an article is sold at retail or to a retailer, and if
(A) the manufacturer, producer, or importer of such article regularly sells such articles at retail or to retailers, as the case may be,
(B) the manufacturer, producer, or importer of such article regularly sells such articles to one or more wholesale distributors in arms length transactions and he establishes that his prices in such cases are determined without regard to any tax benefit under this paragraph, and
(C) the transaction is an arms length transaction,

the tax under this chapter shall (if based on the price for which the article is sold) be computed on whichever of the following prices is the lower: (i) the price for which such article is sold, or (ii) the highest price for which such articles are sold by such manufacturer, producer, or importer to wholesale distributors (other than special dealers).

(3) Constructive sale price in case of certain articles 
Except as provided in paragraph (4), for purposes of paragraph (1), if
(A) the manufacturer, producer, or importer of an article regularly sells such article to a distributor which is a member of the same affiliated group of corporations (as defined in section 1504 (a)) as the manufacturer, producer, or importer, and
(B) such distributor regularly sells such article to one or more independent retailers, but does not regularly sell to wholesale distributors,

the constructive sale price of such article shall be 90 percent of the lowest price for which such distributor regularly sells such article in arms-length transactions to such independent retailers. The price determined under this paragraph shall not be adjusted for any exclusion (except for the tax imposed on such article) or readjustments under subsections (a) and (e) and under section 6416 (b)(1). If both this paragraph and paragraph (4) apply with respect to an article, the constructive sale price for such article shall be the lower of the constructive sale price determined under this paragraph or paragraph (4).

(4) Constructive sale price in case of certain other articles 
For purposes of paragraph (1), if
(A) the manufacturer, producer, or importer of an article regularly sells (except for tax-free sales) only to a distributor which is a member of the same affiliated group of corporations (as defined in section 1504 (a)) as the manufacturer, producer, or importer,
(B) the distributor regularly sells (except for tax-free sales) such article only to retailers, and
(C) the normal method of sales for such articles within the industry by manufacturers, producers, or importers is to sell such articles in arms-length transactions to distributors,

the constructive sale price for such article shall be the price at which such article is sold to retailers by the distributor, reduced by a percentage of such price equal to the percentage which (i) the difference between the price for which comparable articles are sold to wholesale distributors, in the ordinary course of trade, by manufacturers or producers thereof, and the price at which such wholesale distributors in arms-length transactions sell such comparable articles to retailers, is of (ii) the price at which such wholesale distributors in arms-length transactions sell such comparable articles to retailers. The price determined under this paragraph shall not be adjusted for any exclusion (except for the tax imposed on such article) or readjustment under subsections (a) and (e) and under section 6416 (b)(1).

(5) Definition of lowest price 
For purposes of paragraphs (1) and (3), the lowest price shall be determined
(A) without requiring that any given percentage of sales be made at that price, and
(B) without including any fixed amount to which the purchaser has a right as a result of contractual arrangements existing at the time of the sale.
(c) Partial payments 
In the case of
(1) a lease (other than a lease to which section 4217 (b) applies),
(2) a contract for the sale of an article wherein it is provided that the price shall be paid by installments and title to the article sold does not pass until a future date notwithstanding partial payment by installments,
(3) a conditional sale, or
(4) a chattel mortgage arrangement wherein it is provided that the sales price shall be paid in installments,

there shall be paid upon each payment with respect to the article a percentage of such payment equal to the rate of tax in effect on the date such payment is due.

(d) Sales of installment accounts 
If installment accounts, with respect to payments on which tax is being computed as provided in subsection (c), are sold or otherwise disposed of, then subsection (c) shall not apply with respect to any subsequent payments on such accounts (other than subsequent payments on returned accounts with respect to which credit or refund is allowable by reason of section 6416 (b)(5)), but instead
(1) there shall be paid an amount equal to the difference between
(A)  the tax previously paid on the payments on such installment accounts, and
(B)  the total tax which would be payable if such installment accounts had not been sold or otherwise disposed of (computed as provided in subsection (c)); except that
(2) if any such sale is pursuant to the order of, or subject to the approval of, a court of competent jurisdiction in a bankruptcy or insolvency proceeding, the amount computed under paragraph (1) shall not exceed the sum of the amounts computed by multiplying
(A)  the proportionate share of the amount for which such accounts are sold which is allocable to each unpaid installment payment by
(B)  the rate of tax under this chapter in effect on the date such unpaid installment payment is or was due.

The sum of the amounts payable under this subsection and subsection (c) in respect of the sale of any article shall not exceed the total tax.

(e) Exclusion of local advertising charge from sale price 

(1) Exclusion 
In determining, for purposes of this chapter, the price for which an article is sold, there shall be excluded a charge for local advertising (as defined in paragraph (4)) to the extent that such charge
(A) does not exceed 5 percent of the price for which the article is sold (as determined under this section by excluding any charge for local advertising),
(B) is a separate charge made when the article is sold, and
(C) is intended to be refunded to the purchaser or any subsequent vendee in reimbursement of costs incurred for local advertising.

In the case of any such charge (or portion thereof) which is not so refunded before the first day of the fifth calendar month following the calendar year during which the article was sold, the exclusion provided by the preceding sentence shall cease to apply as of such first day.

(2) Aggregate amount which may be excluded 
In the case of articles upon the sale of which tax was imposed under the same section of this chapter
(A) The sum of
(i)  the aggregate of the charges for local advertising excluded under paragraph (1), plus
(ii)  the aggregate of the readjustments for local advertising under section 6416 (b)(1) (relating to credits or refunds for price readjustments), shall not exceed
(B) 5 percent of the aggregate of the prices (determined under this section by excluding all charges for local advertising) at which such articles were sold in sales on which tax was imposed by such section of this chapter.

The preceding sentence shall be applied to each manufacturer, producer, and importer as of the close of each calendar quarter, taking into account the items specified in subparagraphs (A) and (B) for such calendar quarter and preceding calendar quarters in the same calendar year.

(3) No adjustment for other advertising charges 
Except to the extent provided by paragraphs (1) and (2), no charge or expenditure for advertising shall serve, for purposes of this section or section 6416 (b)(1), as the basis for an exclusion from, or as a readjustment of, the price of any article.
(4) Local advertising defined 
For purposes of this section and section 6416 (b)(1), the term local advertising means only advertising which
(A) is initiated or obtained by the purchaser or any subsequent vendee,
(B) names the article for which the price is determinable under this section and states the location at which such article may be purchased at retail, and
(C) is broadcast over a radio station or television station, appears in a newspaper or magazine, or is displayed by means of an outdoor advertising sign or poster.

26 USC 4217 - Leases

(a) Lease considered as sale 
For purposes of this chapter, the lease of an article (including any renewal or any extension of a lease or any subsequent lease of such article) by the manufacturer, producer, or importer shall be considered a sale of such article.
(b) Limitation on tax 
In the case of any lease described in subsection (a) of an article taxable under this chapter, if the tax under this chapter is based on the price for which such articles are sold, there shall be paid on each lease payment with respect to such article a percentage of such payment equal to the rate of tax in effect on the date of such payment, until the total of the tax payments under such lease and any prior lease to which this subsection applies equals the total tax.
(c) Definition of total tax 
For purposes of this section, the term total tax means
(1) except as provided in paragraph (2), the tax computed on the constructive sale price for such article which would be determined under section 4216 (b) if such article were sold at retail on the date of the first lease to which subsection (b) applies; or
(2) if the first lease to which subsection (b) applies is not the first lease of the article, the tax computed on the fair market value of such article on the date of the first lease to which subsection (b) applies.

Any such computation of tax shall be made at the applicable rate specified in this chapter in effect on the date of the first lease to which subsection (b) applies.

(d) Special rules 

(1) Lessor must also be engaged in selling 
Subsection (b) shall not apply to any lease of an article unless at the time of making the lease, or any prior lease of such article to which subsection (b) applies, the person making the lease or prior lease was also engaged in the business of selling in arms length transactions the same type and model of article.
(2) Sale before total tax becomes payable 
If the taxpayer sells an article before the total tax has become payable, then the tax payable on such sale shall be whichever of the following is the smaller:
(A) the difference between
(i)  the tax imposed on lease payments under leases of such article to which subsection (b) applies, and
(ii)  the total tax, or
(B) a tax computed, at the rate in effect on the date of the sale, on the price for which the article is sold.

For purposes of subparagraph (B), if the sale is at arms length, section 4216 (b) shall not apply.

(3) Sale after total tax has become payable 
If the taxpayer sells an article after the total tax has become payable, no tax shall be imposed under this chapter on such sale.
(e) Leases of automobiles subject to gas guzzler tax 

(1) In general 
In the case of the lease of an automobile the sale of which by the manufacturer would be taxable under section 4064, the foregoing provisions of this section shall not apply, but, for purposes of this chapter
(A) the first lease of such automobile by the manufacturer shall be considered to be a sale, and
(B) any lease of such automobile by the manufacturer after the first lease of such automobile shall not be considered to be a sale.
(2) Payment of tax 
In the case of a lease described in paragraph (1)(A)
(A) there shall be paid by the manufacturer on each lease payment that portion of the total gas guzzler tax which bears the same ratio to such total gas guzzler tax as such payment bears to the total amount to be paid under such lease,
(B) if such lease is canceled, or the automobile is sold or otherwise disposed of, before the total gas guzzler tax is payable, there shall be paid by the manufacturer on such cancellation, sale, or disposition the difference between the tax imposed under subparagraph (A) on the lease payments and the total gas guzzler tax, and
(C) if the automobile is sold or otherwise disposed of after the total gas guzzler tax is payable, no tax shall be imposed under section 4064 on such sale or disposition.
(3) Definitions 
For purposes of this subsection
(A) Manufacturer 
The term manufacturer includes a producer or importer.
(B) Total gas guzzler tax 
The term total gas guzzler tax means the tax imposed by section 4064, computed at the rate in effect on the date of the first lease.

26 USC 4218 - Use by manufacturer or importer considered sale

(a) General rule 
If any person manufactures, produces, or imports an article (other than a tire taxable under section 4071) and uses it (otherwise than as material in the manufacture or production of, or as a component part of, another article taxable under this chapter to be manufactured or produced by him), then he shall be liable for tax under this chapter in the same manner as if such article were sold by him. This subsection shall not apply in the case of gasoline used by any person, for nonfuel purposes, as a material in the manufacture or production of another article to be manufactured or produced by him. For the purpose of applying the first sentence of this subsection to coal taxable under section 4121, the words (otherwise than as material in the manufacture or production of, or as a component part of, another article taxable under this chapter to be manufactured or produced by him) shall be disregarded.
(b) Tires 
If any person manufactures, produces, or imports a tire taxable under section 4071, and sells it on or in connection with the sale of any article, or uses it, then he shall be liable for tax under this chapter in the same manner as if such article were sold by him.
(c) Computation of tax 
Except as provided in section 4223 (b), in any case in which a person is made liable for tax by the preceding provisions of this section, the tax (if based on the price for which the article is sold) shall be computed on the price at which such or similar articles are sold, in the ordinary course of trade, by manufacturers, producers, or importers, thereof, as determined by the Secretary.

26 USC 4219 - Application of tax in case of sales by other than manufacturer or importer

In case any person acquires from the manufacturer, producer, or importer of an article, by operation of law or as a result of any transaction not taxable under this chapter, the right to sell such article, the sale of such article by such person shall be taxable under this chapter as if made by the manufacturer, producer, or importer, and such person shall be liable for the tax.

4220 to 4225. Repealed. Pub. L. 85859, title I, 119(a), Sept. 2, 1958, 72 Stat. 1282]

Section 4220, acts Aug. 16, 1954, ch. 736, 68A Stat. 494; Aug. 11, 1955, ch. 805, 1(c), 69 Stat. 689, related to exemption for sales or resales to manufacturers. See section 4221 et seq. of this title. For sections 4221 to 4225, see Prior Provisions notes set out under sections 4221 to 4225 of this title.

Subchapter G - Exemptions, Registration, Etc.

26 USC 4221 - Certain tax-free sales

(a) General rule 
Under regulations prescribed by the Secretary, no tax shall be imposed under this chapter (other than under section 4121 or 4081) on the sale by the manufacturer (or under subchapter A or C of chapter 31 on the first retail sale) of an article
(1) for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by such second purchaser in further manufacture,
(2) for export, or for resale by the purchaser to a second purchaser for export,
(3) for use by the purchaser as supplies for vessels or aircraft,
(4) to a State or local government for the exclusive use of a State or local government,
(5) to a nonprofit">nonprofit educational organization for its exclusive use, or
(6) to a qualified blood collector organization (as defined in section 7701 (a)(49)) for such organizations exclusive use in the collection, storage, or transportation of blood, but only if such exportation or use is to occur before any other use. Paragraphs (4), (5), and (6) shall not apply to the tax imposed by section 4064. In the case of taxes imposed by section 4051,1 or 4071, paragraphs (4) and (5) shall not apply on and after October 1, 2011. In the case of the tax imposed by section 4131, paragraphs (3), (4), and (5) shall not apply and paragraph (2) shall apply only if the use of the exported vaccine meets such requirements as the Secretary may by regulations prescribe. In the case of taxes imposed by subchapter A of chapter 31, paragraphs (1), (3), (4), and (5) shall not apply. In the case of taxes imposed by subchapter C or D, paragraph (6) shall not apply.
(b) Proof of resale for further manufacture; proof of export 
Where an article has been sold free of tax under subsection (a)
(1) for resale by the purchaser to a second purchaser for use by such second purchaser in further manufacture, or
(2) for export, or for resale by the purchaser to a second purchaser for export,

subsection (a) shall cease to apply in respect of such sale of such article unless, within the 6-month period which begins on the date of the sale by the manufacturer (or, if earlier, on the date of shipment by the manufacturer), the manufacturer receives proof that the article has been exported or resold for use in further manufacture.

(c) Manufacturer relieved from liability in certain cases 
In the case of any article sold free of tax under this section (other than a sale to which subsection (b) applies), and in the case of any article sold free of tax under section 4001 (c), 4001 (d), or 4053 (6), if the manufacturer in good faith accepts a certification by the purchaser that the article will be used in accordance with the applicable provisions of law, no tax shall thereafter be imposed under this chapter in respect of such sale by such manufacturer.
(d) Definitions 
For purposes of this section
(1) Manufacturer 
The term manufacturer includes a producer or importer of an article, and, in the case of taxes imposed by subchapter A or C of chapter 31, includes the retailer with respect to the first retail sale.
(2) Export 
The term export includes shipment to a possession of the United States; and the term exported includes shipped to a possession of the United States.
(3) Supplies for vessels or aircraft 
The term supplies for vessels or aircraft means fuel supplies, ships stores, sea stores, or legitimate equipment on vessels of war of the United States or of any foreign nation, vessels employed in the fisheries or in the whaling business, or vessels actually engaged in foreign trade or trade between the Atlantic and Pacific ports of the United States or between the United States and any of its possessions. For purposes of the preceding sentence, the term vessels includes civil aircraft employed in foreign trade or trade between the United States and any of its possessions, and the term vessels of war of the United States or of any foreign nation includes aircraft owned by the United States or by any foreign nation and constituting a part of the armed forces thereof.
(4) State or local government 
The term State or local government means any State, any political subdivision thereof, or the District of Columbia.
(5) Nonprofit educational organization 
The term nonprofit">nonprofit educational organization means an educational organization described in section 170 (b)(1)(A)(ii) which is exempt from income tax under section 501 (a). The term also includes a school operated as an activity of an organization described in section 501 (c)(3) which is exempt from income tax under section 501 (a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.
(6) Use in further manufacture 
An article shall be treated as sold for use in further manufacture if
(A) such article is sold for use by the purchaser as material in the manufacture or production of, or as a component part of, another article taxable under this chapter to be manufactured or produced by him; or
(B) in the case of gasoline taxable under section 4081, such gasoline is sold for use by the purchaser, for nonfuel purposes, as a material in the manufacture or production of another article to be manufactured or produced by him.
(7) Qualified bus 

(A) In general 
The term qualified bus means
(i) an intercity or local bus, and
(ii) a school bus.
(B) Intercity or local bus 
The term intercity or local bus means any automobile bus which is used predominantly in furnishing (for compensation) passenger land transportation available to the general public if
(i) such transportation is scheduled and along regular routes, or
(ii) the seating capacity of such bus is at least 20 adults (not including the driver).
(C) School bus 
The term school bus means any automobile bus substantially all the use of which is in transporting students and employees of schools. For purposes of the preceding sentence, the term school means an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are carried on.
(e) Special rules 

(1) Reciprocity required in case of civil aircraft 
In the case of articles sold for use as supplies for aircraft, the privileges granted under subsection (a)(3) in respect of civil aircraft employed in foreign trade or trade between the United States and any of its possessions, in respect of aircraft registered in a foreign country, shall be allowed only if the Secretary of the Treasury has been advised by the Secretary of Commerce that he has found that such foreign country allows, or will allow, substantially reciprocal privileges in respect of aircraft registered in the United States. If the Secretary of the Treasury is advised by the Secretary of Commerce that he has found that a foreign country has discontinued or will discontinue the allowance of such privileges, the privileges granted under subsection (a)(3) shall not apply thereafter in respect of civil aircraft registered in that foreign country and employed in foreign trade or trade between the United States and any of its possessions.
(2) Tires 

(A) Tax-free sales 
Under regulations prescribed by the Secretary, no tax shall be imposed under section 4071 on the sale by the manufacturer of a tire if
(i) such tire is sold for use by the purchaser for sale on or in connection with the sale of another article manufactured or produced by such purchaser; and
(ii) such other article is to be sold by such purchaser in a sale which either will satisfy the requirements of paragraph (2), (3), (4), or (5) of subsection (a) for a tax-free sale, or would satisfy such requirements but for the fact that such other article is not subject to tax under this chapter.
(B) Proof 
Where a tire has been sold free of tax under this paragraph, this paragraph shall cease to apply unless, within the 6-moth period which begins on the date of the sale by him (or, if earlier on the date of the shipment by him), the manufacturer of such tire receives proof that the other article referred to in clause (ii) of subparagraph (A) has been sold in a manner which satisfies the requirements of such clause (ii) (including in the case of a sale for export, proof of export of such other article).
(C) Subsection (a)(1) does not apply 
Paragraph (1) of subsection (a) shall not apply with respect to the tax imposed under section 4071 on the sale of a tire.
(3) Tires used on intercity, local, and school buses 
Under regulations prescribed by the Secretary, the tax imposed by section 4071 shall not apply in the case of tires sold for use by the purchaser on or in connection with a qualified bus.
[1] So in original. The comma probably should not appear.

26 USC 4222 - Registration

(a) General rule 
Except as provided in subsection (b), section 4221 shall not apply with respect to the sale of any article unless the manufacturer, the first purchaser, and the second purchaser (if any) are all registered under this section. Registration under this section shall be made at such time, in such manner and form, and subject to such terms and conditions, as the Secretary may by regulations prescribe. A registration under this section may be used only in accordance with regulations prescribed under this section.
(b) Exceptions 

(1) Purchases by State and local governments 
Subsection (a) shall not apply to any State or local government in connection with the purchase by it of any article if such State or local government complies with such regulations relating to the use of exemption certificates in lieu of registration as the Secretary shall prescribe to carry out the purpose of this paragraph.
(2) Under regulations 
Subject to such regulations as the Secretary may prescribe for the purpose of this paragraph, the Secretary may relieve the purchaser or the second purchaser, or both, from the requirement of registering under this section.
(3) Certain purchases and sales by the United States 
Subsection (a) shall apply to purchases and sales by the United States only to the extent provided by regulations prescribed by the Secretary.
[(4) Repealed. Pub. L. 89–44, title II, § 208(e), June 21, 1965, 79 Stat. 141] 
(5) Supplies for vessels or aircraft 
Subsection (a) shall not apply to a sale of an article for use by the purchaser as supplies for any vessel or aircraft if such purchaser complies with such regulations relating to the use of exemption certificates in lieu of registration as the Secretary shall prescribe to carry out the purpose of this paragraph.
(c) Denial, revocation, or suspension of registration 
Under regulations prescribed by the Secretary, the registration of any person under this section may be denied, revoked, or suspended if the Secretary determines
(1) that such person has used such registration to avoid the payment of any tax imposed by this chapter, or to postpone or in any manner to interfere with the collection of any such tax, or
(2) that such denial, revocation, or suspension is necessary to protect the revenue.

The denial, revocation, or suspension under this subsection shall be in addition to any penalty provided by law for any act or failure to act.

(d) Registration in the case of certain other exemptions 
The provisions of this section may be extended to, and made applicable with respect to, the exemptions provided by sections 4001 (c), 4001 (d), 4053 (6), 4064 (b)(1)(C), 4101, and 4182 (b), and the exemptions authorized under section 4293 in respect of the taxes imposed by this chapter, to the extent provided by regulations prescribed by the Secretary.
(e) Definitions 
Terms used in this section which are defined in section 4221 (d) shall have the meaning given to them by section 4221 (d).

26 USC 4223 - Special rules relating to further manufacture

(a) Purchasing manufacturer to be treated as the manufacturer 
For purposes of this chapter, a manufacturer or producer to whom an article is sold or resold free of tax under section 4221 (a)(1) for use by him in further manufacture shall be treated as the manufacturer or producer of such article.
(b) Computation of tax 
If the manufacturer or producer referred to in subsection (a) incurs liability for tax under this chapter on his sale or use of an article referred to in subsection (a) and the tax is based on the price for which the article is sold, the article shall be treated as having been sold by him
(1) at the price for which the article was sold by him (or, where the tax is on his use of the article, at the price referred to in section 4218 (c)); or
(2) if he so elects and establishes such price to the satisfaction of the Secretary
(A) at the price for which the article was sold to him; or
(B) at the price for which the article was sold by the person who (without regard to subsection (a)) is the manufacturer, producer, or importer of such article.

For purposes of this subsection, the price for which the article was sold shall be determined as provided in section 4216. For purposes of paragraph (2) no adjustment or readjustment shall be made in such price by reason of any discount, rebate, allowance, return or repossession of a container or covering, or otherwise. An election under paragraph (2) shall be made in the return reporting the tax applicable to the sale or use of the article, and may not be revoked.

26 USC 4224 - Repealed. Pub. L. 8944, title I, 101(b)(5), June 21, 1965, 79 Stat. 136]

Section, Pub. L. 85–859, title I, § 119(a), Sept. 2, 1958, 72 Stat. 1286, exempted, with specified exemptions, articles taxable under section 4001 from the imposition of the manufacturers excise tax. A prior section 4224, act Aug. 16, 1954, ch. 736, 68A Stat. 495, exempted articles for the exclusive use of any State, Territory, or political subdivision of either, or the District of Columbia, prior to repeal by Pub. L. 85–859, title I, § 119(a), Sept. 2, 1958, 72 Stat. 1282.

26 USC 4225 - Exemption of articles manufactured or produced by Indians

No tax shall be imposed under this chapter on any article of native Indian handicraft manufactured or produced by Indians on Indian reservations, or in Indian schools, or by Indians under the jurisdiction of the United States Government in Alaska.

26 USC 4226 - Repealed. Pub. L. 94455, title XIX, 1904(a)(4), Oct. 4, 1976, 90 Stat. 1811]

Section, added June 29, 1956, ch. 462, title II, 207(a), 70 Stat. 391; amended Sept. 21, 1959, Pub. L. 86–342, title II, § 201(c)(1)(3), 73 Stat. 614; June 29, 1961, Pub. L. 87–61, title II, § 206(a), (b), 75 Stat. 127; Aug. 1, 1966, Pub. L. 89–523, § 2, 80 Stat. 331, related to floor stocks taxes for 1956 on tires of the type used on highway vehicles, on tread rubber, on gasoline, for 1959 on gasoline, for 1961 on certain tires and inner tubes and tread rubber, provisions relating to overpayment of floor stocks taxes, due date for taxes, taxes on certain tires and tubes, and definitions of dealer and held by a dealer. A prior section 4226 of this title was renumbered section 4227.

26 USC 4227 - Cross reference

For exception for a sale to an Indian tribal government (or its subdivision) for the exclusive use of an Indian tribal government (or its subdivision), see section 7871.

TITLE 26 - US CODE - CHAPTER 33 - FACILITIES AND SERVICES

[Subchapter A - Repealed]

4231 to 4234. Repealed. Pub. L. 8944, title III, 301, June 21, 1965, 79 Stat. 145]

Section 4231, acts Aug. 16, 1954, ch. 736, 68A Stat. 497; Aug. 6, 1956, ch. 1019, 1, 70 Stat. 1074; Sept. 2, 1958, Pub. L. 85–859, title I, § 131(a)(c), 72 Stat. 1286, 1287; Apr. 8, 1960, Pub. L. 86–422, § 1, 74 Stat. 41, imposed a tax on admissions, permanent use or lease of boxes or seats, sales outside of box office in excess of established price, sales by proprietors in excess of established price, and cabarets. Section 4232, acts Aug. 16, 1954, ch. 736, 68A Stat. 498; Sept. 2, 1958, Pub. L. 85–859, title I, § 131(d), 72 Stat. 1287, defined admission, roof garden, cabaret, or other similar place, and performance for profit as used in section 4231. Section 4233, acts Aug. 16, 1954, ch. 736, 68A Stat. 498; Aug. 11, 1955, ch. 792, 1, 69 Stat. 675; Apr. 16, 1958, Pub. L. 85–380, §§ 1–3, 72 Stat. 88; Sept. 2, 1958, Pub. L. 85–859, title I, § 131(e), (f), 72 Stat. 1287; June 25, 1959, Pub. L. 86–70, § 22(a), 73 Stat. 146; Sept. 21, 1959, Pub. L. 86–319, § 1, 73 Stat. 590; Sept. 21, 1959, Pub. L. 86–344, § 2(c), 73 Stat. 617; July 12, 1960, Pub. L. 86–624, § 18(d), 74 Stat. 416, granted certain exemptions to certain charitable, educational, or religious entertainments, agricultural fairs, certain musical or dramatic performances, swimming pools, etc., home and garden tours, historic sites, certain amateur theatricals, certain amateur baseball games, rodeos, pageants, and certain benefit performances. Section 4234, act Aug. 16, 1954, ch. 736, 68A Stat. 501, required that price of tickets be printed on face or back of such tickets and provided a penalty for selling tickets not so stamped.

4241 to 4243. Repealed. Pub. L. 8944, title III, 301, June 21, 1965, 79 Stat. 145]

Section 4241, acts Aug. 16, 1954, ch. 736, 68A Stat. 501; Sept. 2, 1958, Pub. L. 85–859, title I, § 132(a), 72 Stat. 1288; Sept. 21, 1959, Pub. L. 86–344, § 3(b), 73 Stat. 618, imposed a tax on dues or membership fees, initiation, fees, and life memberships in social, athletic, or sporting clubs or organizations. Section 4242, act Aug. 16, 1954, ch. 736, 68A Stat. 501, defined dues and initiation fees as used in section 4241. Section 4243, acts Aug. 16, 1954, ch. 736, 68A Stat. 502; Sept. 2, 1958, Pub. L. 85–859, title I, § 132(b), 72 Stat. 1288; Sept. 21, 1959, Pub. L. 86–344, § 3(a), 73 Stat. 618, granted exemptions to fraternal organizations, payments for capital improvements, and nonprofit">nonprofit swimming or skating facilities.

Subchapter B - Communications

26 USC 4251 - Imposition of tax

(a) Tax imposed 

(1) In general 
There is hereby imposed on amounts paid for communications services a tax equal to the applicable percentage of amounts so paid.
(2) Payment of tax 
The tax imposed by this section shall be paid by the person paying for such services.
(b) Definitions 
For purposes of subsection (a)
(1) Communications services 
The term communications services means
(A) local telephone service;
(B) toll telephone service; and
(C) teletypewriter exchange service.
(2) Applicable percentage 
The term applicable percentage means 3 percent.
(c) Special rule 
For purposes of subsections (a) and (b), in the case of communications services rendered before November 1 of a calendar year for which a bill has not been rendered before the close of such year, a bill shall be treated as having been first rendered on December 31 of such year.
(d) Treatment of prepaid telephone cards 

(1) In general 
For purposes of this subchapter, in the case of communications services acquired by means of a prepaid telephone card
(A) the face amount of such card shall be treated as the amount paid for such communications services, and
(B) that amount shall be treated as paid when the card is transferred by any telecommunications carrier to any person who is not such a carrier.
(2) Determination of face amount in absence of specified dollar amount 
In the case of any prepaid telephone card which entitles the user other than to a specified dollar amount of use, the face amount shall be determined under regulations prescribed by the Secretary.
(3) Prepaid telephone card 
For purposes of this subsection, the term prepaid telephone card means any card or any other similar arrangement which permits its holder to obtain communications services and pay for such services in advance.

26 USC 4252 - Definitions

(a) Local telephone service 
For purposes of this subchapter, the term local telephone service means
(1) the access to a local telephone system, and the privilege of telephonic quality communication with substantially all persons having telephone or radio telephone stations constituting a part of such local telephone system, and
(2) any facility or service provided in connection with a service described in paragraph (1).

The term local telephone service does not include any service which is a toll telephone service or a private communication service as defined in subsections (b) and (d).

(b) Toll telephone service 
For purposes of this subchapter, the term toll telephone service means
(1) a telephonic quality communication for which
(A)  there is a toll charge which varies in amount with the distance and elapsed transmission time of each individual communication and
(B)  the charge is paid within the United States, and
(2) a service which entitles the subscriber, upon payment of a periodic charge (determined as a flat amount or upon the basis of total elapsed transmission time), to the privilege of an unlimited number of telephonic communications to or from all or a substantial portion of the persons having telephone or radio telephone stations in a specified area which is outside the local telephone system area in which the station provided with this service is located.
(c) Teletypewriter exchange service 
For purposes of this subchapter, the term teletypewriter exchange service means the access from a teletypewriter or other data station to the teletypewriter exchange system of which such station is a part, and the privilege of intercommunication by such station with substantially all persons having teletypewriter or other data stations constituting a part of the same teletypewriter exchange system, to which the subscriber is entitled upon payment of a charge or charges (whether such charge or charges are determined as a flat periodic amount, on the basis of distance and elapsed transmission time, or in some other manner). The term teletypewriter exchange service does not include any service which is local telephone service as defined in subsection (a).
(d) Private communication service 
For purposes of this subchapter, the term private communication service means
(1) the communication service furnished to a subscriber which entitles the subscriber
(A) to exclusive or priority use of any communication channel or groups of channels, or
(B) to the use of an intercommunication system for the subscribers stations,

regardless of whether such channel, groups of channels, or intercommunication system may be connected through switching with a service described in subsection (a), (b), or (c),

(2) switching capacity, extension lines and stations, or other associated services which are provided in connection with, and are necessary or unique to the use of, channels or systems described in paragraph (1), and
(3) the channel mileage which connects a telephone station located outside a local telephone system area with a central office in such local telephone system,

except that such term does not include any communication service unless a separate charge is made for such service.

26 USC 4253 - Exemptions

(a) Certain coin-operated service 
Service paid for by inserting coins in coin-operated telephones available to the public shall not be subject to the tax imposed by section 4251 with respect to local telephone service, or with respect to toll telephone service if the charge for such toll telephone service is less than 25 cents; except that where such coin-operated telephone service is furnished for a guaranteed amount, the amounts paid under such guarantee plus any fixed monthly or other periodic charge shall be subject to the tax.
(b) News services 
No tax shall be imposed under section 4251, except with respect to local telephone service, on any payment received from any person for services used in the collection of news for the public press, or a news ticker service furnishing a general news service similar to that of the public press, or radio broadcasting, or in the dissemination of news through the public press, or a news ticker service furnishing a general news service similar to that of the public press, or by means of radio broadcasting, if the charge for such service is billed in writing to such person.
(c) International, etc., organizations 
No tax shall be imposed under section 4251 on any payment received for services furnished to an international organization, or to the American National Red Cross.
(d) Servicemen in combat zone 
No tax shall be imposed under section 4251 on any payment received for any toll telephone service which originates within a combat zone, as defined in section 112, from a member of the Armed Forces of the United States performing service in such combat zone, as determined under such section, provided a certificate, setting forth such facts as the Secretary may by regulations prescribe, is furnished to the person receiving such payment.
(e) Items otherwise taxed 
Only one payment of tax under section 4251 shall be required with respect to the tax on any service, notwithstanding the lines or stations of one or more persons are used in furnishing such service.
(f) Common carriers and communications companies 
No tax shall be imposed under section 4251 on the amount paid for any toll telephone service described in section 4252 (b)(2) to the extent that the amount so paid is for use by a common carrier, telephone or telegraph company, or radio broadcasting station or network in the conduct of its business as such.
(g) Installation charges 
No tax shall be imposed under section 4251 on so much of any amount paid for the installation of any instrument, wire, pole, switchboard, apparatus, or equipment as is properly attributable to such installation.
(h) Nonprofit hospitals 
No tax shall be imposed under section 4251 on any amount paid by a nonprofit">nonprofit hospital for services furnished to such organization. For purposes of this subsection, the term nonprofit">nonprofit hospital means a hospital referred to in section 170 (b)(1)(A)(iii) which is exempt from income tax under section 501 (a).
(i) State and local governmental exemption 
Under regulations prescribed by the Secretary, no tax shall be imposed under section 4251 upon any payment received for services or facilities furnished to the government of any State, or any political subdivision thereof, or the District of Columbia.
(j) Exception for nonprofit">nonprofit educational organizations 
Under regulations prescribed by the Secretary, no tax shall be imposed under section 4251 on any amount paid by a nonprofit">nonprofit educational organization for services or facilities furnished to such organization. For purposes of this subsection, the term nonprofit">nonprofit educational organization means an educational organization described in section 170 (b)(1)(A)(ii) which is exempt from income tax under section 501 (a). The term also includes a school operated as an activity of an organization described in section 501 (c)(3) which is exempt from income tax under section 501 (a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.
(k) Exemption for qualified blood collector organizations 
Under regulations provided by the Secretary, no tax shall be imposed under section 4251 on any amount paid by a qualified blood collector organization (as defined in section 7701 (a)(49)) for services or facilities furnished to such organization.
(l) Filing of exemption certificates 

(1) In general 
In order to claim an exemption under subsection (c), (h), (i), (j), or (k), a person shall provide to the provider of communications services a statement (in such form and manner as the Secretary may provide) certifying that such person is entitled to such exemption.
(2) Duration of certificate 
Any statement provided under paragraph (1) shall remain in effect until
(A) the provider of communications services has actual knowledge that the information provided in such statement is false, or
(B) such provider is notified by the Secretary that the provider of the statement is no longer entitled to an exemption described in paragraph (1).

If any information provided in such statement is no longer accurate, the person providing such statement shall inform the provider of communications services within 30 days of any change of information.

26 USC 4254 - Computation of tax

(a) General rule 
If a bill is rendered the taxpayer for local telephone service or toll telephone service
(1) the amount on which the tax with respect to such services shall be based shall be the sum of all charges for such services included in the bill; except that
(2) if the person who renders the bill groups individual items for purposes of rendering the bill and computing the tax, then
(A)  the amount on which the tax with respect to each such group shall be based shall be the sum of all items within that group, and
(B)  the tax on the remaining items not included in any such group shall be based on the charge for each item separately.
(b) Where payment is made for toll telephone service in coin-operated telephones 
If the tax imposed by section 4251 with respect to toll telephone service is paid by inserting coins in coin-operated telephones, tax shall be computed to the nearest multiple of 5 cents, except that, where the tax is midway between multiples of 5 cents, the next higher multiple shall apply.
(c) Certain State and local taxes not included 
For purposes of this subchapter, in determining the amounts paid for communications services, there shall not be included the amount of any State or local tax imposed on the furnishing or sale of such services, if the amount of such tax is separately stated in the bill.

Subchapter C - Transportation by Air

TITLE 26 - US CODE - PART I - PERSONS

26 USC 4261 - Imposition of tax

(a) In general 
There is hereby imposed on the amount paid for taxable transportation of any person a tax equal to 7.5 percent of the amount so paid.
(b) Domestic segments of taxable transportation 

(1) In general 
There is hereby imposed on the amount paid for each domestic segment of taxable transportation by air a tax in the amount determined in accordance with the following table for the period in which the segment begins:
(2) Domestic segment 
For purposes of this section, the term domestic segment means any segment consisting of 1 takeoff and 1 landing and which is taxable transportation described in section 4262 (a)(1).
(3) Changes in segments by reason of rerouting 
If
(A) transportation is purchased between 2 locations on specified flights, and
(B) there is a change in the route taken between such 2 locations which changes the number of domestic segments, but there is no change in the amount charged for such transportation,

the tax imposed by paragraph (1) shall be determined without regard to such change in route.

(c) Use of international travel facilities 

(1) In general 
There is hereby imposed a tax of $12.00 on any amount paid (whether within or without the United States) for any transportation of any person by air, if such transportation begins or ends in the United States.
(2) Exception for transportation entirely taxable under subsection (a) 
This subsection shall not apply to any transportation all of which is taxable under subsection (a) (determined without regard to sections 4281 and 4282).
(3) Special rule for Alaska and Hawaii 
In any case in which the tax imposed by paragraph (1) applies to a domestic segment beginning or ending in Alaska or Hawaii, such tax shall apply only to departures and shall be at the rate of $6.
(d) By whom paid 
Except as provided in section 4263 (a), the taxes imposed by this section shall be paid by the person making the payment subject to the tax.
(e) Special rules 

(1) Segments to and from rural airports 

(A) Exception from segment tax 
The tax imposed by subsection (b)(1) shall not apply to any domestic segment beginning or ending at an airport which is a rural airport for the calendar year in which such segment begins or ends (as the case may be).
(B) Rural airport 
For purposes of this paragraph, the term rural airport means, with respect to any calendar year, any airport if
(i) there were fewer than 100,000 commercial passengers departing by air (in the case of any airport described in clause (ii)(III), on flight segments of at least 100 miles) during the second preceding calendar year from such airport, and
(ii) such airport
(I) is not located within 75 miles of another airport which is not described in clause (i),
(II) is receiving essential air service subsidies as of the date of the enactment of this paragraph, or
(III) is not connected by paved roads to another airport.
(C) No phasein of reduced ticket tax 
In the case of transportation beginning before October 1, 1999
(i) In general Paragraph (5) shall not apply to any domestic segment beginning or ending at an airport which is a rural airport for the calendar year in which such segment begins or ends (as the case may be).
(ii) Transportation involving multiple segments In the case of transportation involving more than 1 domestic segment at least 1 of which does not begin or end at a rural airport, the 7.5 percent rate applicable by reason of clause (i) shall be applied by taking into account only an amount which bears the same ratio to the amount paid for such transportation as the number of specified miles in domestic segments which begin or end at a rural airport bears to the total number of specified miles in such transportation.
(2) Amounts paid outside the United States 
In the case of amounts paid outside the United States for taxable transportation, the taxes imposed by subsections (a) and (b) shall apply only if such transportation begins and ends in the United States.
(3) Amounts paid for right to award free or reduced rate air transportation 

(A) In general 
Any amount paid (and the value of any other benefit provided) to an air carrier (or any related person) for the right to provide mileage awards for (or other reductions in the cost of) any transportation of persons by air shall be treated for purposes of subsection (a) as an amount paid for taxable transportation, and such amount shall be taxable under subsection (a) without regard to any other provision of this subchapter.
(B) Controlled group 
For purposes of subparagraph (A), a corporation and all wholly owned subsidiaries of such corporation shall be treated as 1 corporation.
(C) Regulations 
The Secretary shall prescribe rules which reallocate items of income, deduction, credit, exclusion, or other allowance to the extent necessary to prevent the avoidance of tax imposed by reason of this paragraph. The Secretary may prescribe rules which exclude from the tax imposed by subsection (a) amounts attributable to mileage awards which are used other than for transportation of persons by air.
(4) Inflation adjustment of dollar rates of tax 

(A) In general 
In the case of taxable events in a calendar year after the last nonindexed year, the $3.00 amount contained in subsection (b) and each dollar amount contained in subsection (c) shall be increased by an amount equal to
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment determined under section 1 (f)(3) for such calendar year by substituting the year before the last nonindexed year for calendar year 1992 in subparagraph (B) thereof.

If any increase determined under the preceding sentence is not a multiple of 10 cents, such increase shall be rounded to the nearest multiple of 10 cents.

(B) Last nonindexed year 
For purposes of subparagraph (A), the last nonindexed year is
(i) 2002 in the case of the $3.00 amount contained in subsection (b), and
(ii) 1998 in the case of the dollar amounts contained in subsection (c).
(C) Taxable event 
For purposes of subparagraph (A), in the case of the tax imposed by subsection (b), the beginning of the domestic segment shall be treated as the taxable event.
(D) Special rule for amounts paid for domestic segments beginning after 2002 
If an amount is paid during a calendar year for a domestic segment beginning in a later calendar year, then the rate of tax under subsection (b) on such amount shall be the rate in effect for the calendar year in which such amount is paid.
(5) Rates of ticket tax for transportation beginning before October 1, 1999 
Subsection (a) shall be applied by substituting for 7.5 percent
(A) 9 percent in the case of transportation beginning after September 30, 1997, and before October 1, 1998, and
(B) 8 percent in the case of transportation beginning after September 30, 1998, and before October 1, 1999.
(f) Exemption for certain uses 
No tax shall be imposed under subsection (a) or (b) on air transportation
(1) by helicopter for the purpose of transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas, or
(2) by helicopter or by fixed-wing aircraft for the purpose of the planting, cultivation, cutting, or transportation of, or caring for, trees (including logging operations),

but only if the helicopter or fixed-wing aircraft does not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913 (b) or subchapter I of chapter 471 of title 49, United States Code, during such use. In the case of helicopter transportation described in paragraph (1), this subsection shall be applied by treating each flight segment as a distinct flight.

(g) Exemption for air ambulances providing certain emergency medical transportation 
No tax shall be imposed under this section or section 4271 on any air transportation for the purpose of providing emergency medical services
(1) by helicopter, or
(2) by a fixed-wing aircraft equipped for and exclusively dedicated on that flight to acute care emergency medical services.
(h) Exemption for skydiving uses 
No tax shall be imposed by this section or section 4271 on any air transportation exclusively for the purpose of skydiving.
(i) Exemption for seaplanes 
No tax shall be imposed by this section or section 4271 on any air transportation by a seaplane with respect to any segment consisting of a takeoff from, and a landing on, water, but only if the places at which such takeoff and landing occur have not received and are not receiving financial assistance from the Airport and Airways Trust Fund.
(j) Application of taxes 

(1) In general 
The taxes imposed by this section shall apply to
(A) transportation beginning during the period
(i) beginning on the 7th day after the date of the enactment of the Airport and Airway Trust Fund Tax Reinstatement Act of 1997, and
(ii) ending on February 29, 2008, and
(B) amounts paid during such period for transportation beginning after such period.
(2) Refunds 
If, as of the date any transportation begins, the taxes imposed by this section would not have applied to such transportation if paid for on such date, any tax paid under paragraph (1)(B) with respect to such transportation shall be treated as an overpayment.

26 USC 4262 - Definition of taxable transportation

(a) Taxable transportation; in general 
For purposes of this part, except as provided in subsection (b), the term taxable transportation means
(1) transportation by air which begins in the United States or in the 225mile zone and ends in the United States or in the 225mile zone; and
(2) in the case of transportation by air other than transportation described in paragraph (1), that portion of such transportation which is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if such portion is not a part of uninterrupted international air transportation (within the meaning of subsection (c)(3)).
(b) Exclusion of certain travel 
For purposes of this part, the term taxable transportation does not include that portion of any transportation by air which meets all 4 of the following requirements:
(1) such portion is outside the United States;
(2) neither such portion nor any segment thereof is directly or indirectly
(A) between
(i)  a point where the route of the transportation leaves or enters the continental United States, or
(ii)  a port or station in the 225-mile zone, and
(B) a port or station in the 225-mile zone;
(3) such portion
(A) begins at either
(i)  the point where the route of the transportation leaves the United States, or
(ii)  a port or station in the 225-mile zone, and
(B) ends at either
(i)  the point where the route of the transportation enters the United States, or
(ii)  a port or station in the 225-mile zone; and
(4) a direct line from the point (or the port or station) specified in paragraph (3)(A), to the point (or the port or station) specified in paragraph (3)(B), passes through or over a point which is not within 225 miles of the United States.
(c) Definitions 
For purposes of this section
(1) Continental United States 
The term continental United States means the District of Columbia and the States other than Alaska and Hawaii.
(2) 225-mile zone 
The term 225-mile zone means that portion of Canada and Mexico which is not more than 225 miles from the nearest point in the continental United States.
(3) Uninterrupted international air transportation 
The term uninterrupted international air transportation means any transportation by air which is not transportation described in subsection (a)(1) and in which
(A) the scheduled interval between
(i)  the beginning or end of the portion of such transportation which is directly or indirectly from one port or station in the United States to another port or station in the United States and
(ii)  the end or beginning of the other portion of such transportation is not more than 12 hours, and
(B) the scheduled interval between the beginning or end and the end or beginning of any two segments of the portion of such transportation referred to in subparagraph (A)(i) is not more than 12 hours.

For purposes of this paragraph, in the case of personnel of the United States Army, Air Force, Navy, Marine Corps, and Coast Guard traveling in uniform at their own expense when on official leave, furlough, or pass, the scheduled interval described in subparagraph (A) shall be deemed to be not more than 12 hours if a ticket for the subsequent portion of such transportation is purchased within 12 hours after the end of the earlier portion of such transportation and the purchaser accepts and utilizes the first accommodations actually available to him for such subsequent portion.

(d) Transportation 
For purposes of this part, the term transportation includes layover or waiting time and movement of the aircraft in deadhead service.
(e) Authority to waive 225-mile zone provisions 

(1) In general 
If the Secretary of the Treasury determines that Canada or Mexico has entered into a qualified agreement
(A) the Secretary shall publish a notice of such determination in the Federal Register, and
(B) effective with respect to transportation beginning after the date specified in such notice, to the extent provided in the agreement, the term 225-mile zone shall not include part or all of the country with respect to which such determination is made.
(2) Termination of waiver 
If a determination was made under paragraph (1) with respect to any country and the Secretary of the Treasury subsequently determines that the agreement is no longer in effect or that the agreement is no longer a qualified agreement
(A) the Secretary shall publish a notice of such determination in the Federal Register, and
(B) subparagraph (B) of paragraph (1) shall cease to apply with respect to transportation beginning after the date specified in such notice.
(3) Qualified agreement 
For purposes of this subsection, the term qualified agreement means an agreement between the United States and Canada or Mexico (as the case may be)
(A) setting forth that portion of such country which is not to be treated as within the 225-mile zone, and
(B) providing that the tax imposed by such country on transportation described in subparagraph (A) will be at a level which the Secretary of the Treasury determines to be appropriate.
(4) Requirement that agreement be submitted to Congress 
No notice may be published under paragraph (1)(A) with respect to any qualified agreement before the date 90 days after the date on which a copy of such agreement was furnished to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.

26 USC 4263 - Special rules

(a) Payments made outside the United States for prepaid orders 
If the payment upon which tax is imposed by section 4261 is made outside the United States for a prepaid order, exchange order, or similar order, the person furnishing the initial transportation pursuant to such order shall collect the amount of the tax.
(b) Tax deducted upon refunds 
Every person who refunds any amount with respect to a ticket or order which was purchased without payment of the tax imposed by section 4261 shall deduct from the amount refundable, to the extent available, any tax due under such section as a result of the use of a portion of the transportation purchased in connection with such ticket or order, and shall report to the Secretary the amount of any such tax remaining uncollected.
(c) Payment of tax 
Where any tax imposed by section 4261 is not paid at the time payment for transportation is made, then, under regulations prescribed by the Secretary, to the extent that such tax is not collected under any other provision of this subchapter, such tax shall be paid by the carrier providing the initial segment of such transportation which begins or ends in the United States.
(d) Application of tax 
The tax imposed by section 4261 shall apply to any amount paid within the United States for transportation of any person by air unless the taxpayer establishes, pursuant to regulations prescribed by the Secretary at the time of payment for the transportation, that the transportation is not transportation in respect of which tax is imposed by section 4261.
(e) Round trips 
In applying this subchapter to a round trip, such round trip shall be considered to consist of transportation from the point of departure to the destination, and of separate transportation thereafter.
(f) Transportation outside the northern portion of the Western Hemisphere 
In applying this subchapter to transportation any part of which is outside the northern portion of the Western Hemisphere, if the route of such transportation leaves and reenters the northern portion of the Western Hemisphere, such transportation shall be considered to consist of transportation to a point outside such northern portion, and of separate transportation thereafter. For purposes of this subsection, the term northern portion of the Western Hemisphere means the area lying west of the 30th meridian west of Greenwich, east of the international dateline, and north of the Equator, but not including any country of South America.

TITLE 26 - US CODE - PART II - PROPERTY

26 USC 4271 - Imposition of tax

(a) In general 
There is hereby imposed upon the amount paid within or without the United States for the taxable transportation (as defined in section 4272) of property a tax equal to 6.25 percent of the amount so paid for such transportation. The tax imposed by this subsection shall apply only to amounts paid to a person engaged in the business of transporting property by air for hire.
(b) By whom paid 

(1) In general 
Except as provided by paragraph (2), the tax imposed by subsection (a) shall be paid by the person making the payment subject to tax.
(2) Payments made outside the United States 
If a payment subject to tax under subsection (a) is made outside the United States and the person making such payment does not pay such tax, such tax
(A) shall be paid by the person to whom the property is delivered in the United States by the person furnishing the last segment of the taxable transportation in respect of which such tax is imposed, and
(B) shall be collected by the person furnishing the last segment of such taxable transportation.
(c) Determination of amounts paid in certain cases 
For purposes of this section, in any case in which a person engaged in the business of transporting property by air for hire and one or more other persons not so engaged jointly provide services which include taxable transportation of property, and the person so engaged receives, for the furnishing of such taxable transportation, a portion of the receipts from the joint providing of such services, the amount paid for the taxable transportation shall be treated as being the sum of
(1)  the portion of the receipts so received, and
(2)  any expenses incurred by any of the persons not so engaged which are properly attributable to such taxable transportation and which are taken into account in determining the portion of the receipts so received.
(d) Application of tax 

(1) In general 
The tax imposed by subsection (a) shall apply to
(A) transportation beginning during the period
(i) beginning on the 7th day after the date of the enactment of the Airport and Airway Trust Fund Tax Reinstatement Act of 1997, and
(ii) ending on February 29, 2008, and
(B) amounts paid during such period for transportation beginning after such period.
(2) Refunds 
If, as of the date any transportation begins, the taxes imposed by this section would not have applied to such transportation if paid for on such date, any tax paid under paragraph (1)(B) with respect to such transportation shall be treated as an overpayment.

26 USC 4272 - Definition of taxable transportation, etc.

(a) In general 
For purposes of this part, except as provided in subsection (b), the term taxable transportation means transportation by air which begins and ends in the United States.
(b) Exceptions 
For purposes of this part, the term taxable transportation does not include
(1) that portion of any transportation which meets the requirements of paragraphs (1), (2), (3), and (4) of section 4262 (b), or
(2) under regulations prescribed by the Secretary, transportation of property in the course of exportation (including shipment to a possession of the United States) by continuous movement, and in due course so exported.
(c) Excess baggage of passengers 
For purposes of this part, the term property does not include excess baggage accompanying a passenger traveling on an aircraft operated on an established line.
(d) Transportation 
For purposes of this part, the term transportation includes layover or waiting time and movement of the aircraft in deadhead service.

TITLE 26 - US CODE - PART III - SPECIAL PROVISIONS APPLICABLE TO TAXES ON TRANSPORTATION BY AIR

26 USC 4281 - Small aircraft on nonestablished lines

The taxes imposed by sections 4261 and 4271 shall not apply to transportation by an aircraft having a maximum certificated takeoff weight of 6,000 pounds or less, except when such aircraft is operated on an established line. For purposes of the preceding sentence, the term maximum certificated takeoff weight means the maximum such weight contained in the type certificate or airworthiness certificate. For purposes of this section, an aircraft shall not be considered as operated on an established line at any time during which such aircraft is being operated on a flight the sole purpose of which is sightseeing.

26 USC 4282 - Transportation by air for other members of affiliated group

(a) General rule 
Under regulations prescribed by the Secretary, if
(1) one member of an affiliated group is the owner or lessee of an aircraft, and
(2) such aircraft is not available for hire by persons who are not members of such group,

no tax shall be imposed under section 4261 or 4271 upon any payment received by one member of the affiliated group from another member of such group for services furnished to such other member in connection with the use of such aircraft.

(b) Availability for hire 
For purposes of subsection (a), the determination of whether an aircraft is available for hire by persons who are not members of an affiliated group shall be made on a flight-by-flight basis.
(c) Affiliated group 
For purposes of subsection (a), the term affiliated group has the meaning assigned to such term by section 1504 (a), except that all corporations shall be treated as includible corporations (without any exclusion under section 1504 (b)).

26 USC 4283 - Repealed. Pub. L. 101508, title XI, 11213(e)(1), Nov. 5, 1990, 104 Stat. 1388436]

Section, added Pub. L. 100–223, title IV, § 405(a), Dec. 30, 1987, 101 Stat. 1533; amended Pub. L. 101–239, title VII, § 7501(a)(b)(2), Dec. 19, 1989, 103 Stat. 2361, provided for reduction in aviation-related taxes in certain cases.

[Subchapter D - Repealed]

4286, 4287. Repealed. Pub. L. 8944, title III, 304, June 21, 1965, 79 Stat. 148]

Section 4286, act Aug. 16, 1954, ch. 736, 68A Stat. 510, imposed a tax equivalent to 10 percent of the amount collected for the use of safety deposit boxes. Section 4287, act Aug. 16, 1954, ch. 736, 68A Stat. 510, defined safety deposit box.

Subchapter E - Special Provisions Applicable to Services and Facilities Taxes

26 USC 4291 - Cases where persons receiving payment must collect tax

Except as otherwise provided in section 4263 (a), every person receiving any payment for facilities or services on which a tax is imposed upon the payor thereof under this chapter shall collect the amount of the tax from the person making such payment.

26 USC 4292 - Repealed. Pub. L. 94455, title XIX, 1904(a)(9), Oct. 4, 1976, 90 Stat. 1812]

Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 511; June 30, 1958, Pub. L. 85–475, § 4(b)(3), 72 Stat. 260; May 21, 1970, Pub. L. 91–258, title II, § 205(a)(2), 84 Stat. 241, provided tax exemption for any payment received for services or facilities furnished to any State, Territory, or political subdivision of such, or the District of Columbia.

26 USC 4293 - Exemption for United States and possessions

The Secretary of the Treasury may authorize exemption from the taxes imposed by subchapter A of chapter 31, section 4041, section 4051, chapter 32section 4051, chapter 32 (other than the taxes imposed by sections 4064 and 4121) and subchapter B of chapter 33, as to any particular article, or service or class of articles or services, to be purchased for the exclusive use of the United States, if he determines that the imposition of such taxes with respect to such articles or services, or class of articles or services will cause substantial burden or expense which can be avoided by granting tax exemption and that full benefit of such exemption, if granted, will accrue to the United States.

4294, 4295. Repealed. Pub. L. 94455, title XIX, 1904(a)(10), (11), Oct. 4, 1976, 90 Stat. 1812]

Section 4294, added Pub. L. 85–859, title I, § 135(a), Sept. 2, 1958, 72 Stat. 1292; amended Pub. L. 86–344, § 2(d), Sept. 21, 1959, 73 Stat. 618; Pub. L. 91–72, title I, § 101(j)(28), Dec. 30, 1969, 83 Stat. 529; Pub. L. 91–258, title II, § 205(a)(4), May 21, 1970, 84 Stat. 241, provided an exemption from tax for services and facilities furnished to a nonprofit">nonprofit educational organization and defined nonprofit">nonprofit educational organization. Section 4295, act Aug. 16, 1954, ch. 736, 68A Stat. 511, 4295, formerly 4294, renumbered Sept. 2, 1958, Pub. L. 85–859, title I, § 135(a), 72 Stat. 1292, related to a cross reference to general administrative provisions.

TITLE 26 - US CODE - CHAPTER 34 - POLICIES ISSUED BY FOREIGN INSURERS

26 USC 4371 - Imposition of tax

There is hereby imposed, on each policy of insurance, indemnity bond, annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer, a tax at the following rates:
(1) Casualty insurance and indemnity bonds 
4 cents on each dollar, or fractional part thereof, of the premium paid on the policy of casualty insurance or the indemnity bond, if issued to or for, or in the name of, an insured as defined in section 4372 (d);
(2) Life insurance, sickness, and accident policies, and annuity contracts 
1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of life, sickness, or accident insurance, or annuity contract; and
(3) Reinsurance 
1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of reinsurance covering any of the contracts taxable under paragraph (1) or (2).

26 USC 4372 - Definitions

(a) Foreign insurer or reinsurer 
For purposes of section 4371, the term foreign insurer or reinsurer means an insurer or reinsurer who is a nonresident alien individual, or a foreign partnership, or a foreign corporation. The term includes a nonresident alien individual, foreign partnership, or foreign corporation which shall become bound by an obligation of the nature of an indemnity bond. The term does not include a foreign government, or municipal or other corporation exercising the taxing power.
(b) Policy of casualty insurance 
For purposes of section 4371 (1), the term policy of casualty insurance means any policy (other than life) or other instrument by whatever name called whereby a contract of insurance is made, continued, or renewed.
(c) Indemnity bond 
For purposes of this chapter the term indemnity bond means any instrument by whatever name called whereby an obligation of the nature of an indemnity, fidelity, or surety bond is made, continued, or renewed. The term includes any bond for indemnifying any person who shall have become bound or engaged as surety, and any bond for the due execution or performance of any contract, obligation, or requirement, or the duties of any office or position, and to account for money received by virtue thereof, where a premium is charged for the execution of such bond.
(d) Insured 
For purposes of section 4371 (1), the term insured means
(1) a domestic corporation or partnership, or an individual resident of the United States, against, or with respect to, hazards, risks, losses, or liabilities wholly or partly within the United States, or
(2) a foreign corporation, foreign partnership, or nonresident individual, engaged in a trade or business within the United States, against, or with respect to hazards, risks, or liabilities within the United States.
(e) Policy of life, sickness, or accident insurance, or annuity contract 
For the purpose of section 4371 (2), the term policy of life, sickness, or accident insurance, or annuity contract means any policy or other instrument by whatever name called whereby a contract of insurance or an annuity contract is made, continued, or renewed with respect to the life or hazards to the person of a citizen or resident of the United States.
(f) Policy of reinsurance 
For the purpose of section 4371 (3), the term policy of reinsurance means any policy or other instrument by whatever name called whereby a contract of reinsurance is made, continued, or renewed against, or with respect to, any of the hazards, risks, losses, or liabilities covered by contracts taxable under paragraph (1) or (2) of section 4371.

26 USC 4373 - Exemptions

The tax imposed by section 4371 shall not apply to
(1) Effectively connected items 
Any amount which is effectively connected with the conduct of a trade or business within the United States unless such amount is exempt from the application of section 882 (a) pursuant to a treaty obligation of the United States.
(2) Indemnity bond 
Any indemnity bond required to be filed by any person to secure payment of any pension, allowance, allotment, relief, or insurance by the United States, or to secure a duplicate for, or the payment of, any bond, note, certificate of indebtedness, war-saving certificate, warrant or check, issued by the United States.

26 USC 4374 - Liability for tax

The tax imposed by this chapter shall be paid, on the basis of a return, by any person who makes, signs, issues, or sells any of the documents and instruments subject to the tax, or for whose use or benefit the same are made, signed, issued, or sold. The United States or any agency or instrumentality thereof shall not be liable for the tax.

TITLE 26 - US CODE - CHAPTER 35 - TAXES ON WAGERING

Subchapter A - Tax on Wagers

26 USC 4401 - Imposition of tax

(a) Wagers 

(1) State authorized wagers 
There shall be imposed on any wager authorized under the law of the State in which accepted an excise tax equal to 0.25 percent of the amount of such wager.
(2) Unauthorized wagers 
There shall be imposed on any wager not described in paragraph (1) an excise tax equal to 2 percent of the amount of such wager.
(b) Amount of wager 
In determining the amount of any wager for the purposes of this subchapter, all charges incident to the placing of such wager shall be included; except that if the taxpayer establishes, in accordance with regulations prescribed by the Secretary, that an amount equal to the tax imposed by this subchapter has been collected as a separate charge from the person placing such wager, the amount so collected shall be excluded.
(c) Persons liable for tax 
Each person who is engaged in the business of accepting wagers shall be liable for and shall pay the tax under this subchapter on all wagers placed with him. Each person who conducts any wagering pool or lottery shall be liable for and shall pay the tax under this subchapter on all wagers placed in such pool or lottery. Any person required to register under section 4412 who receives wagers for or on behalf of another person without having registered under section 4412 the name and place of residence of such other person shall be liable for and shall pay the tax under this subchapter on all such wagers received by him.

26 USC 4402 - Exemptions

No tax shall be imposed by this subchapter
(1) Parimutuels 
On any wager placed with, or on any wager placed in a wagering pool conducted by, a parimutuel wagering enterprise licensed under State law,
(2) Coin-operated devices 
On any wager placed in a coin-operated device (as defined in section 4462 as in effect for years beginning before July 1, 1980), or on any amount paid, in lieu of inserting a coin, token, or similar object, to operate a device described in section 4462 (a)(2) (as so in effect), or
(3) State-conducted lotteries, etc. 
On any wager placed in a sweepstakes, wagering pool, or lottery which is conducted by an agency of a State acting under authority of State law, but only if such wager is placed with the State agency conducting such sweepstakes, wagering pool, or lottery, or with its authorized employees or agents.

26 USC 4403 - Record requirements

Each person liable for tax under this subchapter shall keep a daily record showing the gross amount of all wagers on which he is so liable, in addition to all other records required pursuant to section 6001 (a).

26 USC 4404 - Territorial extent

The tax imposed by this subchapter shall apply only to wagers
(1) accepted in the United States, or
(2) placed by a person who is in the United States
(A) with a person who is a citizen or resident of the United States, or
(B) in a wagering pool or lottery conducted by a person who is a citizen or resident of the United States.

26 USC 4405 - Cross references

For penalties and other administrative provisions applicable to this subchapter, see sections 4421 to 4423, inclusive; and subtitle F.

Subchapter B - Occupational Tax

26 USC 4411 - Imposition of tax

(a) In general 
There shall be imposed a special tax of $500 per year to be paid by each person who is liable for the tax imposed under section 4401 or who is engaged in receiving wagers for or on behalf of any person so liable.
(b) Authorized persons 
Subsection (a) shall be applied by substituting $50 for $500 in the case of
(1) any person whose liability for tax under section 4401 is determined only under paragraph (1) of section 4401 (a), and
(2) any person who is engaged in receiving wagers only for or on behalf of persons described in paragraph (1).

26 USC 4412 - Registration

(a) Requirement 
Each person required to pay a special tax under this subchapter shall register with the official in charge of the internal revenue district
(1) his name and place of residence;
(2) if he is liable for tax under subchapter A, each place of business where the activity which makes him so liable is carried on, and the name and place of residence of each person who is engaged in receiving wagers for him or on his behalf; and
(3) if he is engaged in receiving wagers for or on behalf of any person liable for tax under subchapter A, the name and place of residence of each such person.
(b) Firm or company 
Where subsection (a) requires the name and place of residence of a firm or company to be registered, the names and places of residence of the several persons constituting the firm or company shall be registered.
(c) Supplemental information 
In accordance with regulations prescribed by the Secretary, the Secretary may require from time to time such supplemental information from any person required to register under this section as may be needful to the enforcement of this chapter.

26 USC 4413 - Certain provisions made applicable

Sections 4901, 4902, 4904, 4905, and 4906 shall extend to and apply to the special tax imposed by this subchapter and to the persons upon whom it is imposed, and for that purpose any activity which makes a person liable for special tax under this subchapter shall be considered to be a business or occupation referred to in such sections. No other provision of sections 4901 to 4907, inclusive, shall so extend or apply.

26 USC 4414 - Cross references

For penalties and other general and administrative provisions applicable to this subchapter, see sections 4421 to 4423, inclusive; and subtitle F.

Subchapter C - Miscellaneous Provisions

26 USC 4421 - Definitions

For purposes of this chapter
(1) Wager 
The term wager means
(A) any wager with respect to a sports event or a contest placed with a person engaged in the business of accepting such wagers,
(B) any wager placed in a wagering pool with respect to a sports event or a contest, if such pool is conducted for profit, and
(C) any wager placed in a lottery conducted for profit.
(2) Lottery 
The term lottery includes the numbers game, policy, and similar types of wagering. The term does not include
(A) any game of a type in which usually
(i) the wagers are placed,
(ii) the winners are determined, and
(iii) the distribution of prizes or other property is made, in the presence of all persons placing wagers in such game, and
(B) any drawing conducted by an organization exempt from tax under sections 501 and 521, if no part of the net proceeds derived from such drawing inures to the benefit of any private shareholder or individual.

26 USC 4422 - Applicability of Federal and State laws

The payment of any tax imposed by this chapter with respect to any activity shall not exempt any person from any penalty provided by a law of the United States or of any State for engaging in the same activity, nor shall the payment of any such tax prohibit any State from placing a tax on the same activity for State or other purposes.

26 USC 4423 - Inspection of books

Notwithstanding section 7605 (b), the books of account of any person liable for tax under this chapter may be examined and inspected as frequently as may be needful to the enforcement of this chapter.

26 USC 4424 - Disclosure of wagering tax information

(a) General rule 
Except as otherwise provided in this section, neither the Secretary nor any other officer or employee of the Treasury Department may divulge or make known in any manner whatever to any person
(1) any original, copy, or abstract of any return, payment, or registration made pursuant to this chapter,
(2) any record required for making any such return, payment, or registration, which the Secretary is permitted by the taxpayer to examine or which is produced pursuant to section 7602, or
(3) any information come at by the exploitation of any such return, payment, registration, or record.
(b) Permissible disclosure 
A disclosure otherwise prohibited by subsection (a) may be made in connection with the administration or civil or criminal enforcement of any tax imposed by this title. However, any document or information so disclosed may not be
(1) divulged or made known in any manner whatever by any officer or employee of the United States to any person except in connection with the administration or civil or criminal enforcement of this title, nor
(2) used, directly or indirectly, in any criminal prosecution for any offense occurring before the date of enactment of this section.
(c) Use of documents possessed by taxpayer 
Except in connection with the administration or civil or criminal enforcement of any tax imposed by this title
(1) any stamp denoting payment of the special tax under this chapter,
(2) any original, copy, or abstract possessed by a taxpayer of any return, payment, or registration made by such taxpayer pursuant to this chapter, and
(3) any information come at by the exploitation of any such document,

shall not be used against such taxpayer in any criminal proceeding.

(d) Inspection by committees of Congress 
Section 6103 (f) shall apply with respect to any return, payment, or registration made pursuant to this chapter.

TITLE 26 - US CODE - CHAPTER 36 - CERTAIN OTHER EXCISE TAXES

Subchapter A - Harbor Maintenance Tax

26 USC 4461 - Imposition of tax

(a) General rule 
There is hereby imposed a tax on any port use.
(b) Amount of tax 
The amount of the tax imposed by subsection (a) on any port use shall be an amount equal to 0.125 percent of the value of the commercial cargo involved.
(c) Liability and time of imposition of tax 

(1) Liability 
The tax imposed by subsection (a) shall be paid by
(A) in the case of cargo entering the United States, the importer, or
(B) in any other case, the shipper.
(2) Time of imposition 
Except as provided by regulations, the tax imposed by subsection (a) shall be imposed at the time of unloading.

26 USC 4462 - Definitions and special rules

(a) Definitions 
For purposes of this subchapter
(1) Port use 
The term port use means
(A) the loading of commercial cargo on, or
(B) the unloading of commercial cargo from,

a commercial vessel at a port.

(2) Port 

(A) In general 
The term port means any channel or harbor (or component thereof) in the United States, which
(i) is not an inland waterway, and
(ii) is open to public navigation.
(B) Exception for certain facilities 
The term port does not include any channel or harbor with respect to which no Federal funds have been used since 1977 for construction, maintenance, or operation, or which was deauthorized by Federal law before 1985.
(C) Special rule for Columbia River 
The term port shall include the channels of the Columbia River in the States of Oregon and Washington only up to the downstream side of Bonneville lock and dam.
(3) Commercial cargo 

(A) In general 
The term commercial cargo means any cargo transported on a commercial vessel, including passengers transported for compensation or hire.
(B) Certain items not included 
The term commercial cargo does not include
(i) bunker fuel, ships stores, sea stores, or the legitimate equipment necessary to the operation of a vessel, or
(ii) fish or other aquatic animal life caught and not previously landed on shore.
(4) Commercial vessel 

(A) In general 
The term commercial vessel means any vessel used
(i) in transporting cargo by water for compensation or hire, or
(ii) in transporting cargo by water in the business of the owner, lessee, or operator of the vessel.
(B) Exclusion of ferries 

(i) In general The term commercial vessel does not include any ferry engaged primarily in the ferrying of passengers (including their vehicles) between points within the United States, or between the United States and contiguous countries.
(ii) Ferry The term ferry means any vessel which arrives in the United States on a regular schedule during its operating season at intervals of at least once each business day.
(5) Value 

(A) In general 
The term value means, except as provided in regulations, the value of any commercial cargo as determined by standard commercial documentation.
(B) Transportation of passengers 
In the case of the transportation of passengers for hire, the term value means the actual charge paid for such service or the prevailing charge for comparable service if no actual charge is paid.
(b) Special rule for Alaska, Hawaii, and possessions 

(1) In general 
No tax shall be imposed under section 4461 (a) with respect to
(A) cargo loaded on a vessel in a port in the United States mainland for transportation to Alaska, Hawaii, or any possession of the United States for ultimate use or consumption in Alaska, Hawaii, or any possession of the United States,
(B) cargo loaded on a vessel in Alaska, Hawaii, or any possession of the United States for transportation to the United States mainland, Alaska, Hawaii, or such a possession for ultimate use or consumption in the United States mainland, Alaska, Hawaii, or such a possession,
(C) the unloading of cargo described in subparagraph (A) or (B) in Alaska, Hawaii, or any possession of the United States, or in the United States mainland, respectively, or
(D) cargo loaded on a vessel in Alaska, Hawaii, or a possession of the United States and unloaded in the State or possession in which loaded, or passengers transported on United States flag vessels operating solely within the State waters of Alaska or Hawaii and adjacent international waters.
(2) Cargo does not include crude oil with respect to Alaska 
For purposes of this subsection, the term cargo does not include crude oil with respect to Alaska.
(3) United States mainland 
For purposes of this subsection, the term United States mainland means the continental United States (not including Alaska).
(c) Coordination of tax where transportation subject to tax imposed by section 4042 
No tax shall be imposed under this subchapter with respect to the loading or unloading of any cargo on or from a vessel if any fuel of such vessel has been (or will be) subject to the tax imposed by section 4042 (relating to tax on fuel used in commercial transportation on inland waterways).
(d) Nonapplicability of tax to exports 
The tax imposed by section 4461 (a) shall not apply to any port use with respect to any commercial cargo to be exported from the United States.
(e) Exemption for United States 
No tax shall be imposed under this subchapter on the United States or any agency or instrumentality thereof.
(f) Extension of provisions of law applicable to customs duty 

(1) In general 
Except to the extent otherwise provided in regulations, all administrative and enforcement provisions of customs laws and regulations shall apply in respect of the tax imposed by this subchapter (and in respect of persons liable therefor) as if such tax were a customs duty. For purposes of the preceding sentence, any penalty expressed in terms of a relationship to the amount of the duty shall be treated as not less than the amount which bears a similar relationship to the value of the cargo.
(2) Jurisdiction of courts and agencies 
For purposes of determining the jurisdiction of any court of the United States or any agency of the United States, the tax imposed by this subchapter shall be treated as if such tax were a customs duty.
(3) Administrative provisions applicable to tax law not to apply 
The tax imposed by this subchapter shall not be treated as a tax for purposes of subtitle F or any other provision of law relating to the administration and enforcement of internal revenue taxes.
(g) Special rules 
Except as provided by regulations
(1) Tax imposed only once 
Only 1 tax shall be imposed under section 4461 (a) with respect to the loading on and unloading from, or the unloading from and the loading on, the same vessel of the same cargo.
(2) Exception for intraport movements 
Under regulations, no tax shall be imposed under section 4461 (a) on the mere movement of cargo within a port.
(3) Relay cargo 
Only 1 tax shall be imposed under section 4461 (a) on cargo (moving under a single bill of lading) which is unloaded from one vessel and loaded onto another vessel at any port in the United States for relay to or from any port in Alaska, Hawaii, or any possession of the United States. For purposes of this paragraph, the term cargo does not include any item not treated as cargo under subsection (b)(2).
(h) Exemption for humanitarian and development ­assistance cargos 
No tax shall be imposed under this subchapter on any nonprofit">nonprofit organization or cooperative for cargo which is owned or financed by such nonprofit">nonprofit organization or cooperative and which is certified by the United States Customs Service as intended for use in humanitarian or development assistance overseas.
(i) Regulations 
The Secretary may prescribe such additional regulations as may be necessary to carry out the purposes of this subchapter including, but not limited to, regulations
(1) providing for the manner and method of payment and collection of the tax imposed by this subchapter,
(2) providing for the posting of bonds to secure payment of such tax,
(3) exempting any transaction or class of transactions from such tax where the collection of such tax is not administratively practical, and
(4) providing for the remittance or mitigation of penalties and the settlement or compromise of claims.

Subchapter B - Transportation by Water

26 USC 4471 - Imposition of tax

(a) In general 
There is hereby imposed a tax of $3 per passenger on a covered voyage.
(b) By whom paid 
The tax imposed by this section shall be paid by the person providing the covered voyage.
(c) Time of imposition 
The tax imposed by this section shall be imposed only once for each passenger on a covered voyage, either at the time of first embarkation or disembarkation in the United States.

26 USC 4472 - Definitions

For purposes of this subchapter
(1) Covered voyage 

(A) In general 
The term covered voyage means a voyage of
(i) a commercial passenger vessel which extends over 1 or more nights, or
(ii) a commercial vessel transporting passengers engaged in gambling aboard the vessel beyond the territorial waters of the United States,

during which passengers embark or disembark the vessel in the United States. Such term shall not include any voyage on any vessel owned or operated by the United States, a State, or any agency or subdivision thereof.

(B) Exception for certain voyages on passenger vessels 
The term covered voyage shall not include a voyage of a passenger vessel of less than 12 hours between 2 ports in the United States.
(2) Passenger vessel 
The term passenger vessel means any vessel having berth or stateroom accommodations for more than 16 passengers.

[Subchapter C - Repealed]

4471 to 4474. Repealed. Pub. L. 8944, title IV, 404, June 21, 1965, 79 Stat. 149]

Section 4471, act Aug. 16, 1954, ch. 736, 68A Stat. 532, imposed a $20 annual tax upon bowling alleys, billiard tables, and pool tables to be paid by operators of bowling alleys, billiard rooms, and pool rooms. Section 4472, act Aug. 16, 1954, ch. 736, 68A Stat. 532, defined bowling alley, billiard room, and pool room. Section 4473, acts Aug. 16, 1954, ch. 736, 68A Stat. 532; Sept. 2, 1958, Pub. L. 85–859, title I, § 153(a), 72 Stat. 1305, granted exemptions for hospitals, the armed forces, and certain non-profit and governmental organizations. Section 4474, act Aug. 16, 1954, ch. 736, 68A Stat. 532, made cross references to chapter 40 and subtitle F for penalties and administrative provisions.

Subchapter D - Tax on Use of Certain Vehicles

26 USC 4481 - Imposition of tax

(a) Imposition of tax 
A tax is hereby imposed on the use of any highway motor vehicle which (together with the semitrailers and trailers customarily used in connection with highway motor vehicles of the same type as such highway motor vehicle) has a taxable gross weight of at least 55,000 pounds at the rate specified in the following table:
(b) By whom paid 
The tax imposed by this section shall be paid by the person in whose name the highway motor vehicle is, or is required to be, registered under the law of the State or contiguous foreign country in which such vehicle is, or is required to be, registered, or, in case the highway motor vehicle is owned by the United States, by the agency or instrumentality of the United States operating such vehicle.
(c) Proration of tax 

(1) Where first use occurs after first month 
If in any taxable period the first use of the highway motor vehicle is after the first month in such period, the tax shall be reckoned proportionately from the first day of the month in which such use occurs to and including the last day in such taxable period.
(2) Where vehicle sold, destroyed, or stolen 

(A) In general 
If in any taxable period a highway motor vehicle is sold, destroyed, or stolen before the first day of the last month in such period and not subsequently used during such taxable period, the tax shall be reckoned proportionately from the first day of the month in such period in which the first use of such highway motor vehicle occurs to and including the last day of the month in which such highway motor vehicle was sold, destroyed, or stolen.
(B) Destroyed 
For purposes of subparagraph (A), a highway motor vehicle is destroyed if such vehicle is damaged by reason of an accident or other casualty to such an extent that it is not economic to rebuild.
(d) One tax liability per period 

(1) In general 
To the extent that the tax imposed by this section is paid with respect to any highway motor vehicle for any taxable period, no further tax shall be imposed by this section for such taxable period with respect to such vehicle.
(2) Cross reference 
For privilege of paying tax imposed by this section in installments, see section 6156.[1]
(e) Electronic filing 
Any taxpayer who files a return under this section with respect to 25 or more vehicles for any taxable period shall file such return electronically.
(f) Period tax in effect 
The tax imposed by this section shall apply only to use before October 1, 2011.
[1] See References in Text note below.

26 USC 4482 - Definitions

(a) Highway motor vehicle 
For purposes of this subchapter, the term highway motor vehicle means any motor vehicle which is a highway vehicle.
(b) Taxable gross weight 
For purposes of this subchapter, the term taxable gross weight when used with respect to any highway motor vehicle, means the sum of
(1) the actual unloaded weight of
(A) such highway motor vehicle fully equipped for service, and
(B) the semitrailers and trailers (fully equipped for service) customarily used in connection with highway motor vehicles of the same type as such highway motor vehicle, and
(2) the weight of the maximum load customarily carried on highway motor vehicles of the same type as such highway motor vehicle and on the semitrailers and trailers referred to in paragraph (1)(B).

Taxable gross weight shall be determined under regulations prescribed by the Secretary (which regulations may include formulas or other methods for determining the taxable gross weight of vehicles by classes, specifications, or otherwise).

(c) Other definitions and special rule 
For purposes of this subchapter
(1) State 
The term State means a State and the District of Columbia.
(2) Year 
The term year means the one-year period beginning on July 1.
(3) Use 
The term use means use in the United States on the public highways.
(4) Taxable period 
The term taxable period means any year beginning before July 1, 2011, and the period which begins on July 1, 2011, and ends at the close of September 30, 2011.
(5) Customary use 
A semitrailer or trailer shall be treated as customarily used in connection with a highway motor vehicle if such vehicle is equipped to tow such semitrailer or trailer.
(d) Special rule for taxable period in which termination date occurs 
In the case of the taxable period which ends on September 30, 2011, the amount of the tax imposed by section 4481 with respect to any highway motor vehicle shall be determined by reducing each dollar amount in the table contained in section 4481 (a) by 75 percent.

26 USC 4483 - Exemptions

(a) State and local governmental exemption 
Under regulations prescribed by the Secretary, no tax shall be imposed by section 4481 on the use of any highway motor vehicle by any State or any political subdivision of a State.
(b) Exemption for United States 
The Secretary of the Treasury may authorize exemption from the tax imposed by section 4481 as to the use by the United States of any particular highway motor vehicle, or class of highway motor vehicles, if he determines that the imposition of such tax with respect to such use will cause substantial burden or expense which can be avoided by granting tax exemption and that full benefit of such exemption, if granted, will accrue to the United States.
(c) Certain transit-type buses 
Under regulations prescribed by the Secretary, no tax shall be imposed by section 4481 on the use of any bus which is of the transit type (rather than of the intercity type) by a person who, for the last 3 months of the preceding year (or for such other period as the Secretary may by regulations prescribe for purposes of this subsection), met the 60-percent passenger fare revenue test set forth in section 6421 (b)(2) (as in effect on the day before the date of the enactment of the Energy Tax Act of 1978) as applied to the period prescribed for purposes of this subsection.
(d) Exemption for trucks used for less than 5,000 miles on public highways 

(1) Suspension of tax 

(A) In general 
If
(i) it is reasonable to expect that the use of any highway motor vehicle on public highways during any taxable period will be less than 5,000 miles, and
(ii) the owner of such vehicle furnishes such information as the Secretary may by forms or regulations require with respect to the expected use of such vehicle,

then the collection of the tax imposed by section 4481 with respect to the use of such vehicle shall be suspended during the taxable period.

(B) Suspension ceases to apply where use exceeds 5,000 miles 
Subparagraph (A) shall cease to apply with respect to any highway motor vehicle whenever the use of such vehicle on public highways during the taxable period exceeds 5,000 miles.
(2) Exemption 
If
(A) the collection of the tax imposed by section 4481 with respect to any highway motor vehicle is suspended under paragraph (1),
(B) such vehicle is not used during the taxable period on public highways for more than 5,000 miles, and
(C) except as otherwise provided in regulations, the owner of such vehicle furnishes such information as the Secretary may require with respect to the use of such vehicle during the taxable period,

then no tax shall be imposed by section 4481 on the use of such vehicle for the taxable period.

(3) Refund where tax paid and vehicle not used for more than 5,000 miles 
If
(A) the tax imposed by section 4481 is paid with respect to any highway motor vehicle for any taxable period, and
(B) the requirements of subparagraphs (B) and (C) of paragraph (2) are met with respect to such taxable period,

the amount of such tax shall be credited or refunded (without interest) to the person who paid such tax.

(4) Relief from liability for tax under certain circumstances where truck is transferred 
Under regulations prescribed by the Secretary, the owner of a highway motor vehicle with respect to which the collection of the tax imposed by section 4481 is suspended under paragraph (1) shall not be liable for the tax imposed by section 4481 (and the new owner shall be liable for such tax) with respect to such vehicle if
(A) such vehicle is transferred to a new owner,
(B) such suspension is in effect at the time of such transfer, and
(C) the old owner furnishes such information as the Secretary by forms and regulations requires with respect to the transfer of such vehicle.
(5) 7,500-miles exemption for agricultural vehicles 

(A) In general 
In the case of an agricultural vehicle, paragraphs (1) and (2) shall be applied by substituting 7,500 for 5,000 each place it appears.
(B) Definitions 
For purposes of this paragraph
(i) Agricultural vehicle The term agricultural vehicle means any highway motor vehicle
(I) used primarily for farming purposes, and
(II) registered (under the laws of the State in which such vehicle is required to be registered) as a highway motor vehicle used for farming purposes.
(ii) Farming purposes The term farming purposes means the transporting of any farm commodity to or from a farm or the use directly in agricultural production.
(iii) Farm commodity The term farm commodity means any agricultural or horticultural commodity, feed, seed, fertilizer, livestock, bees, poultry, fur-bearing animals, or wildlife.
(6) Owner defined 
For purposes of this subsection, the term owner means, with respect to any highway motor vehicle, the person described in section 4481 (b).
(e) Reduction in tax for trucks used in logging 
The tax imposed by section 4481 shall be reduced by 25 percent with respect to any highway motor vehicle if
(1) the exclusive use of such vehicle during any taxable period is the transportation, to and from a point located on a forested site, of products harvested from such forested site, and
(2) such vehicle is registered (under the laws of the State in which such vehicle is required to be registered) as a highway motor vehicle used in the transportation of harvested forest products.
[(f) Repealed. Pub. L. 108–357, title VIII, § 867(d), Oct. 22, 2004, 118 Stat. 1622] 
(g) Exemption for mobile machinery 
No tax shall be imposed by section 4481 on the use of any vehicle described in section 4053 (8).
(h) Exemption for vehicles used in blood collection 

(1) In general 
No tax shall be imposed by section 4481 on the use of any qualified blood collector vehicle by a qualified blood collector organization.
(2) Qualified blood collector vehicle 
For purposes of this subsection, the term qualified blood collector vehicle means a vehicle at least 80 percent of the use of which during the prior taxable period was by a qualified blood collector organization in the collection, storage, or transportation of blood.
(3) Special rule for vehicles first placed in service in a taxable period 
In the case of a vehicle first placed in service in a taxable period, a vehicle shall be treated as a qualified blood collector vehicle for such taxable period if such qualified blood collector organization certifies to the Secretary that the organization reasonably expects at least 80 percent of the use of such vehicle by the organization during such taxable period will be in the collection, storage, or transportation of blood.
(4) Qualified blood collector organization 
The term qualified blood collector organization has the meaning given such term by section 7701 (a)(49).
(i) Termination of exemptions 
Subsections (a) and (c) shall not apply on and after October 1, 2011.

26 USC 4484 - Cross references

(1) For penalties and administrative provisions applicable to this subchapter, see subtitle F.
(2) For exemption for uses by Indian tribal governments (or their subdivisions), see section 7871.

[Subchapter E - Repealed]

4491 to 4494. Repealed. Pub. L. 97248, title II, 280(c)(1), Sept. 3, 1982, 96 Stat. 564]

Section 4491, added Pub. L. 91–258, title II, § 206(a), May 21, 1970, 84 Stat. 243; amended Pub. L. 91–614, title III, § 305(a), Dec. 31, 1970, 84 Stat. 1846; Pub. L. 96–298, § 1(c)(1), July 1, 1980, 94 Stat. 829, provided for imposition of a tax on use of civil aircraft. Section 4492, added Pub. L. 91–258, title II, § 206(a), May 21, 1970, 84 Stat. 243; amended Pub. L. 94–530, § 2(a), Oct. 17, 1976, 90 Stat. 2488; Pub. L. 95–163, § 17(b)(1), Nov. 9, 1977, 91 Stat. 1286; Pub. L. 95–504, § 2(b), Oct. 24, 1978, 92 Stat. 1705, provided definitions to be used for purposes of this subchapter. Section 4493, added Pub. L. 91–258, title II, § 206(a), May 21, 1970, 84 Stat. 244; amended Pub. L. 94–455, title XIX, §§ 1904(a)(13), 1906 (b)(13)(A), Oct. 4, 1976, 90 Stat. 1814, 1834, enumerated special rules for payment of tax by lessees and certain persons engaged in foreign air commerce. Section 4494, added Pub. L. 91–258, title II, § 206(a), May 21, 1970, 84 Stat. 245, provided a cross reference to subtitle F of this title for penalties and administrative provisions applicable to this subchapter.

[Subchapter F - Repealed]

4495 to 4498. Repealed. Pub. L. 10534, title XIV, 1432(b)(1), Aug. 5, 1997, 111 Stat. 1050]

Section 4495, added Pub. L. 96–283, title IV, § 402(a), June 28, 1980, 94 Stat. 582, provided for imposition of tax on removal of hard mineral resource from deep seabed. Section 4496, added Pub. L. 96–283, title IV, § 402(a), June 28, 1980, 94 Stat. 583, defined terms for purposes of this subchapter. Section 4497, added Pub. L. 96–283, title IV, § 402(a), June 28, 1980, 94 Stat. 583; amended Pub. L. 99–514, title XV, § 1511(c)(7), Oct. 22, 1986, 100 Stat. 2745, related to imputed values for commercially recoverable metals and minerals and provided for suspension of tax on minerals held for later processing. Section 4498, added Pub. L. 96–283, title IV, § 402(a), June 28, 1980, 94 Stat. 584, provided for termination of tax imposed by section 4495.

[CHAPTER 37 - REPEALED]

4501 to 4503. Repealed. Pub. L. 101508, title XI, 11801(a)(48), Nov. 5, 1990, 104 Stat. 1388522]

Section 4501, acts Aug. 16, 1954, ch. 736, 68A Stat. 533; May 29, 1956, ch. 342, 19, 70 Stat. 221; Sept. 2, 1958, Pub. L. 85–859, title I, § 162(b), 72 Stat. 1306; July 6, 1960, Pub. L. 86–592, § 2, 74 Stat. 330; Mar. 31, 1961, Pub. L. 87–15, § 2(a), 75 Stat. 40; May 24, 1962, Pub. L. 87–456, title III, § 302(a), (b), 76 Stat. 77; July 13, 1962, Pub. L. 87–535, § 18(a), 76 Stat. 166; Nov. 8, 1965, Pub. L. 89–331, § 13, 79 Stat. 1280; Oct. 14, 1971, Pub. L. 92–138, § 18(b), 85 Stat. 390, related to imposition of tax upon sugar manufactured in United States. Section 4502, acts Aug. 16, 1954, ch. 736, 68A Stat. 534; May 29, 1956, ch. 342, 20, 70 Stat. 221; June 25, 1959, Pub. L. 86–70, § 22(c), 73 Stat. 146; July 12, 1960, Pub. L. 86–624, § 18(f), 74 Stat. 416, provided for applicable definitions. Section 4503, act Aug. 16, 1954, ch. 736, 68A Stat. 534, related to exemption for sugar manufactured for home consumption. Prior sections 4504 and 4511 to 4514 were repealed by Pub. L. 87–456, title III, § 302(d), May 24, 1962, 76 Stat. 77, effective with respect to articles entered or withdrawn from warehouse, for consumption on or after Aug. 31, 1963, as provided by section 501(a) of Pub. L. 87–456. Section 4504, acts Aug. 16, 1954, ch. 736, 68A Stat. 535; May 29, 1956, ch. 342, 21(a), 70 Stat. 221, required the tax imposed by section 4501 (b) to be levied, assessed, collected and paid in the same manner as a duty imposed by the Tariff Act of 1930. Section 4511, act Aug. 16, 1954, ch. 736, 68A Stat. 536, imposed a tax upon the processing of coconut oil, etc. Section 4512, act Aug. 16, 1954, ch. 736, 68A Stat. 536, defined first domestic processing. Section 4513, act Aug. 16, 1954, ch. 736, 68A Stat. 536, related to exemptions from the tax imposed. Section 4514, act Aug. 16, 1954, ch. 736, 68A Stat. 536, set forth a cross-reference to subtitle F for administrative provisions.

[CHAPTER 38 - REPEALED]1

26 USC 4521 - Repealed. Pub. L. 87456, title III, 302(d), May 24, 1962, 76 Stat. 77]

Section, act Aug. 16, 1954, ch. 736, 68A Stat. 539, imposed a tax on petroleum products imported into the United States.

4531, 4532. Repealed. Pub. L. 87456, title III, 302(d), May 24, 1962, 76 Stat. 77]

Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 540, imposed a tax on coal imported into the United States.

4541, 4542. Repealed. Pub. L. 87456, title III, 302(d), May 24, 1962, 76 Stat. 77]

Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 541, imposed a tax on copper imported into the United States.

4551 to 4553. Repealed. Pub. L. 87456, title III, 302(d), May 24, 1962, 76 Stat. 77]

Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 542, imposed a tax on lumber imported into the United States.

4561, 4562. Repealed. Pub. L. 87456, title III, 302(d), May 24, 1962, 76 Stat. 77]

Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 543, imposed a tax on animal oils imported into the United States.

4571, 4572. Repealed. Pub. L. 87456, title III, 302(d), May 24, 1962, 76 Stat. 77]

Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 543, 544, imposed a tax on seeds and seed oil imported into the United States.

4581, 4582. Repealed. Pub. L. 87456, title III, 302(d), May 24, 1962, 76 Stat. 77]

Sections, act Aug. 16, 1954, ch. 736, 68A Stat. 544, imposed a tax on imports of any article, merchandise, or combination (except oils specified in section 4511), 10 percent or more of the quantity by weight of which consists of, or is derived directly or indirectly from, one or more of the products specified in sections 4561 and 4571, or of the oils, fatty acids, or salts specified in section 4511.

4591 to 4597. Repealed. Pub. L. 94455, title XIX, 1904(a)(15), Oct. 4, 1976, 90 Stat. 1814]

Sections, comprising subchapter F, Oleomargarine, were struck out in the repeal of this chapter by Pub. L. 94–455. Section 4591, act Aug. 16, 1954, ch. 736, 68A Stat. 545, related to imposition of a tax on all oleomargarine imported from foreign countries. Section 4592, act Aug. 16, 1954, ch. 736, 68A Stat. 545, related to definitions of oleomargarine, manufacturer, wholesale dealer, and retail sales. Section 4593, act Aug. 16, 1954, ch. 736, 68A Stat. 546, related to exemptions to tax imposed by section 4591. Section 4594, act Aug. 16, 1954, ch. 736, 68A Stat. 546, related to packing requirements for manufacturers of oleomargarine. Section 4595, act Aug. 16, 1954, ch. 736, 68A Stat. 546, related to wholesale and retail selling requirements for oleomargarine. Section 4596, act Aug. 16, 1954, ch. 736, 68A Stat. 547, related to filing of bonds by manufacturers of oleomargarine. Section 4597, act Aug. 16, 1954, ch. 736, 68A Stat. 547, related to books and returns of wholesale dealers and manufacturers.

4601 to 4603. Repealed. Pub. L. 87456, title III, 302(d), May 24, 1962, 76 Stat. 77]

Section 4601, acts Aug. 16, 1954, ch. 736, 68A Stat. 548; Sept. 2, 1958, Pub. L. 85–859, title I, § 119(b)(4), 72 Stat. 1286, related to applicability of certain tariff provisions. Sections 4602, 4603, act Aug. 16, 1954, ch. 736, 68A Stat. 548, related to contravention of trade agreements by certain taxes.

TITLE 26 - US CODE - CHAPTER 38 - ENVIRONMENTAL TAXES

Subchapter A - Tax on Petroleum

26 USC 4611 - Imposition of tax

(a) General Rule 
There is hereby imposed a tax at the rate specified in subsection (c) on
(1) crude oil received at a United States refinery, and
(2) petroleum products entered into the United States for consumption, use, or warehousing.
(b) Tax on certain uses and exportation 

(1) In general 
If
(A) any domestic crude oil is used in or exported from the United States, and
(B) before such use or exportation, no tax was imposed on such crude oil under subsection (a),

then a tax at the rate specified in subsection (c) is hereby imposed on such crude oil.

(2) Exception for use on premises where produced 
Paragraph (1) shall not apply to any use of crude oil for extracting oil or natural gas on the premises where such crude oil was produced.
(c) Rate of tax 

(1) In general 
The rate of the taxes imposed by this section is the sum of
(A) the Hazardous Substance Superfund financing rate, and
(B) the Oil Spill Liability Trust Fund financing rate.
(2) Rates 
For purposes of paragraph (1)
(A) the Hazardous Substance Superfund financing rate is 9.7 cents a barrel, and
(B) the Oil Spill Liability Trust Fund financing rate is 5 cents a barrel.
(d) Persons liable for tax 

(1) Crude oil received at refinery 
The tax imposed by subsection (a)(1) shall be paid by the operator of the United States refinery.
(2) Imported petroleum product 
The tax imposed by subsection (a)(2) shall be paid by the person entering the product for consumption, use, or warehousing.
(3) Tax on certain uses or exports 
The tax imposed by subsection (b) shall be paid by the person using or exporting the crude oil, as the case may be.
(e) Application of Hazardous Substance Superfund financing rate 

(1) In general 
Except as provided in paragraphs (2) and (3), the Hazardous Substance Superfund financing rate under this section shall apply after December 31, 1986, and before January 1, 1996.
(2) No tax if unobligated balance in Fund exceeds $3,500,000,000 
If on December 31, 1993, or December 31, 1994
(A) the unobligated balance in the Hazardous Substance Superfund exceeds $3,500,000,000, and
(B) the Secretary, after consultation with the Administrator of the Environmental Protection Agency, determines that the unobligated balance in the Hazardous Substance Superfund will exceed $3,500,000,000 on December 31 of 1994 or 1995, respectively, if no tax is imposed under section 59A, this section, and sections 4661 and 4671,

then no tax shall be imposed under this section (to the extent attributable to the Hazardous Substance Superfund financing rate) during 1994 or 1995, as the case may be.

(3) No tax if amounts collected exceed $11,970,000,000 

(A) Estimates by Secretary 
The Secretary as of the close of each calendar quarter (and at such other times as the Secretary determines appropriate) shall make an estimate of the amount of taxes which will be collected under section 59A, this section (to the extent attributable to the Hazardous Substance Superfund financing rate), and sections 4661 and 4671 and credited to the Hazardous Substance Superfund during the period beginning January 1, 1987, and ending December 31, 1995.
(B) Termination if $11,970,000,000 credited before January 1, 1996 
If the Secretary estimates under subparagraph (A) that more than $11,970,000,000 will be credited to the Fund before January 1, 1996, the Hazardous Substance Superfund financing rate under this section shall not apply after the date on which (as estimated by the Secretary) $11,970,000,000 will be so credited to the Fund.
(f) Application of Oil Spill Liability Trust Fund financing rate 

(1) In general 
Except as provided in paragraphs (2) and (3), the Oil Spill Liability Trust Fund financing rate under subsection (c) shall apply on and after April 1, 2006, or if later, the date which is 30 days after the last day of any calendar quarter for which the Secretary estimates that, as of the close of that quarter, the unobligated balance in the Oil Spill Liability Trust Fund is less than $2,000,000,000.
(2) Fund balance 
The Oil Spill Liability Trust Fund financing rate shall not apply during a calendar quarter if the Secretary estimates that, as of the close of the preceding calendar quarter, the unobligated balance in the Oil Spill Liability Trust Fund exceeds $2,700,000,000.
(3) Termination 
The Oil Spill Liability Trust Fund financing rate shall not apply after December 31, 2014.

26 USC 4612 - Definitions and special rules

(a) Definitions 
For purposes of this subchapter
(1) Crude oil 
The term crude oil includes crude oil condensates and natural gasoline.
(2) Domestic crude oil 
The term domestic crude oil means any crude oil produced from a well located in the United States.
(3) Petroleum product 
The term petroleum product includes crude oil.
(4) United States 

(A) In general 
The term United States means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands.
(B) United States includes continental shelf areas 
The principles of section 638 shall apply for purposes of the term United States.
(C) United States includes foreign trade zones 
The term United States includes any foreign trade zone of the United States.
(5) United States refinery 
The term United States refinery means any facility in the United States at which crude oil is refined.
(6) Refineries which produce natural gasoline 
In the case of any United States refinery which produces natural gasoline from natural gas, the gasoline so produced shall be treated as received at such refinery at the time so produced.
(7) Premises 
The term premises has the same meaning as when used for purposes of determining gross income from the property under section 613.
(8) Barrel 
The term barrel means 42 United States gallons.
(9) Fractional part of barrel 
In the case of a fraction of a barrel, the tax imposed by section 4611 shall be the same fraction of the amount of such tax imposed on a whole barrel.
(b) Only 1 tax imposed with respect to any product 
No tax shall be imposed by section 4611 with respect to any petroleum product if the person who would be liable for such tax establishes that a prior tax imposed by such section has been imposed with respect to such product.
(c) Credit where crude oil returned to pipeline 
Under regulations prescribed by the Secretary, if an operator of a United States refinery
(1) removes crude oil from a pipeline, and
(2) returns a portion of such crude oil into a stream of other crude oil in the same pipeline,

there shall be allowed as a credit against the tax imposed by section 4611 to such operator an amount equal to the product of the rate of tax imposed by section 4611 on the crude oil so removed by such operator and the number of barrels of crude oil returned by such operator to such pipeline. Any crude oil so returned shall be treated for purposes of this subchapter as crude oil on which no tax has been imposed by section 4611.

(d) Credit against portion of tax attributable to oil spill rate 
There shall be allowed as a credit against so much of the tax imposed by section 4611 as is attributable to the Oil Spill Liability Trust Fund financing rate for any period an amount equal to the excess of
(1) the sum of
(A) the aggregate amounts paid by the taxpayer before January 1, 1987, into the Deepwater Port Liability Trust Fund and the Offshore Oil Pollution Compensation Fund, and
(B) the interest accrued on such amounts before such date, over
(2) the amount of such payments taken into account under this subsection for all prior periods.

The preceding sentence shall also apply to amounts paid by the taxpayer into the Trans-Alaska Pipeline Liability Fund to the extent of amounts transferred from such Fund into the Oil Spill Liability Trust Fund. For purposes of this subsection, all taxpayers which would be members of the same affiliated group (as defined in section 1504 (a)) if section 1504 (a)(2) were applied by substituting 100 percent for 80 percent shall be treated as 1 taxpayer.

(e) Income tax credit for unused payments into Trans-Alaska Pipeline Liability Fund 

(1) In general 
For purposes of section 38, the current year business credit shall include the credit determined under this subsection.
(2) Determination of credit 

(A) In general 
The credit determined under this subsection for any taxable year is an amount equal to the aggregate credit which would be allowed to the taxpayer under subsection (d) for amounts paid into the Trans-Alaska Pipeline Liability Fund had the Oil Spill Liability Trust Fund financing rate not ceased to apply.
(B) Limitation 

(i) In general The amount of the credit determined under this subsection for any taxable year with respect to any taxpayer shall not exceed the excess of
(I) the amount determined under clause (ii), over
(II) the aggregate amount of the credit determined under this subsection for prior taxable years with respect to such taxpayer.
(ii) Overall limitation The amount determined under this clause with respect to any taxpayer is the excess of
(I) the aggregate amount of credit which would have been allowed under subsection (d) to the taxpayer for periods before the termination date specified in section 4611 (f)(1), if amounts in the Trans-Alaska Pipeline Liability Fund which are actually transferred into the Oil Spill Liability Fund were tranferred[1] on January 1, 1990, and the Oil Spill Liability Trust Fund financing rate did not terminate before such termination date, over
(II) the aggregate amount of the credit allowed under subsection (d) to the taxpayer.
(3) Cost of income tax credit borne by Trust Fund 

(A) In general 
The Secretary shall from time to time transfer from the Oil Spill Liability Trust Fund to the general fund of the Treasury amounts equal to the credits allowed by reason of this subsection.
(B) Trust Fund balance may not be reduced below $1,000,000,000 
Transfers may be made under subparagraph (A) only to the extent that the unobligated balance of the Oil Spill Liability Trust Fund exceeds $1,000,000,000. If any transfer is not made by reason of the preceding sentence, such transfer shall be made as soon as permitted under such sentence.
(4) No carryback 
No portion of the unused business credit for any taxable year which is attributable to the credit determined under this subsection may be carried to a taxable year beginning on or before the date of the enactment of this paragraph.
(f) Disposition of revenues from Puerto Rico and the Virgin Islands 
The provisions of subsections (a)(3) and (b)(3) of section 7652 shall not apply to any tax imposed by section 4611.
[1] So in original. Probably should be “transferred”.

Subchapter B - Tax on Certain Chemicals

26 USC 4661 - Imposition of tax

(a) General rule 
There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof.
(b) Amount of tax 
The amount of the tax imposed by subsection (a) shall be determined in accordance with the following table: The tax is the following In the case of: amount per ton Acetylene $4.87 Benzene 4.87 Butane 4.87 Butylene 4.87 Butadiene 4.87 Ethylene 4.87 Methane 3.44 Naphthalene 4.87 Propylene 4.87 Toluene 4.87 Xylene 4.87 Ammonia 2.64 Antimony 4.45 Antimony trioxide 3.75 Arsenic 4.45 Arsenic trioxide 3.41 Barium sulfide 2.30 Bromine 4.45 Cadmium 4.45 Chlorine 2.70 Chromium 4.45 Chromite 1.52 Potassium dichromate 1.69 Sodium dichromate 1.87 Cobalt 4.45 Cupric sulfate 1.87 Cupric oxide 3.59 Cuprous oxide 3.97 Hydrochloric acid 0.29 Hydrogen fluoride 4.23 Lead oxide 4.14 Mercury 4.45 Nickel 4.45 Phosphorus 4.45 Stannous chloride 2.85 Stannic chloride 2.12 Zinc chloride 2.22 Zinc sulfate 1.90 Potassium hydroxide 0.22 Sodium hydroxide 0.28 Sulfuric acid 0.26 Nitric acid 0.24 For periods before 1992, the item relating to xylene in the preceding table shall be applied by substituting 10.13 for 4.87.
(c) Termination 
No tax shall be imposed under this section during any period during which the Hazardous Substance Superfund financing rate under section 4611 does not apply.

26 USC 4662 - Definitions and special rules

(a) Definitions 
For purposes of this subchapter
(1) Taxable chemical 
Except as provided in subsection (b), the term taxable chemical means any substance
(A) which is listed in the table under section 4661 (b), and
(B) which is manufactured or produced in the United States or entered into the United States for consumption, use, or warehousing.
(2) United States 
The term United States has the meaning given such term by section 4612 (a)(4).
(3) Importer 
The term importer means the person entering the taxable chemical for consumption, use, or warehousing.
(4) Ton 
The term ton means 2,000 pounds. In the case of any taxable chemical which is a gas, the term ton means the amount of such gas in cubic feet which is the equivalent of 2,000 pounds on a molecular weight basis.
(5) Fractional part of ton 
In the case of a fraction of a ton, the tax imposed by section 4661 shall be the same fraction of the amount of such tax imposed on a whole ton.
(b) Exceptions; other special rules 
For purposes of this subchapter
(1) Methane or butane used as a fuel 
Under regulations prescribed by the Secretary, methane or butane shall be treated as a taxable chemical only if it is used otherwise than as a fuel or in the manufacture or production of any motor fuel, diesel fuel, aviation fuel, or jet fuel (and, for purposes of section 4661 (a), the person so using it shall be treated as the manufacturer thereof).
(2) Substances used in the production of fertilizer 

(A) In general 
In the case of nitric acid, sulfuric acid, ammonia, or methane used to produce ammonia which is a qualified fertilizer substance, no tax shall be imposed under section 4661 (a).
(B) Qualified fertilizer substance 
For purposes of this section, the term qualified fertilizer substance means any substance
(i) used in a qualified fertilizer use by the manufacturer, producer, or importer,
(ii) sold for use by any purchaser in a qualified fertilizer use, or
(iii) sold for resale by any purchaser for use, or resale for ultimate use, in a qualified fertilizer use.
(C) Qualified fertilizer use 
The term qualified fertilizer use means any use in the manufacture or production of fertilizer or for direct application as a fertilizer.
(D) Taxation of nonqualified sale or use 
For purposes of section 4661 (a), if no tax was imposed by such section on the sale or use of any chemical by reason of subparagraph (A), the first person who sells or uses such chemical other than in a sale or use described in subparagraph (A) shall be treated as the manufacturer of such chemical.
(3) Sulfuric acid produced as a byproduct of air pollution control 
In the case of sulfuric acid produced solely as a byproduct of and on the same site as air pollution control equipment, no tax shall be imposed under section 4661.
(4) Substances derived from coal 
For purposes of this subchapter, the term taxable chemical shall not include any substance to the extent derived from coal.
(5) Substances used in the production of motor fuel, etc. 

(A) In general 
In the case of any chemical described in subparagraph (D) which is a qualified fuel substance, no tax shall be imposed under section 4661 (a).
(B) Qualified fuel substance 
For purposes of this section, the term qualified fuel substance means any substance
(i) used in a qualified fuel use by the manufacturer, producer, or importer,
(ii) sold for use by any purchaser in a qualified fuel use, or
(iii) sold for resale by any purchaser for use, or resale for ultimate use, in a qualified fuel use.
(C) Qualified fuel use 
For purposes of this subsection, the term qualified fuel use means
(i) any use in the manufacture or production of any motor fuel, diesel fuel, aviation fuel, or jet fuel, or
(ii) any use as such a fuel.
(D) Chemicals to which paragraph applies 
For purposes of this subsection, the chemicals described in this subparagraph are acetylene, benzene, butylene, butadiene, ethylene, naphthalene, propylene, toluene, and xylene.
(E) Taxation of nonqualified sale or use 
For purposes of section 4661 (a), if no tax was imposed by such section on the sale or use of any chemical by reason of subparagraph (A), the first person who sells or uses such chemical other than in a sale or use described in subparagraph (A) shall be treated as the manufacturer of such chemical.
(6) Substance having transitory presence during refining process, etc. 

(A) In general 
No tax shall be imposed under section 4661 (a) on any taxable chemical described in subparagraph (B) by reason of the transitory presence of such chemical during any process of smelting, refining, or otherwise extracting any substance not subject to tax under section 4661 (a).
(B) Chemicals to which subparagraph (A) applies 
The chemicals described in this subparagraph are
(i) barium sulfide, cupric sulfate, cupric oxide, cuprous oxide, lead oxide, zinc chloride, and zinc sulfate, and
(ii) any solution or mixture containing any chemical described in clause (i).
(C) Removal treated as use 
Nothing in subparagraph (A) shall be construed to apply to any chemical which is removed from or ceases to be part of any smelting, refining, or other extraction process.
(7) Special rule for xylene 
Except in the case of any substance imported into the United States or exported from the United States, the term xylene does not include any separated isomer of xylene.
(8) Recycled chromium, cobalt, and nickel 

(A) In general 
No tax shall be imposed under section 4661 (a) on any chromium, cobalt, or nickel which is diverted or recovered in the United States from any solid waste as part of a recycling process (and not as part of the original manufacturing or production process).
(B) Exemption not to apply while corrective action uncompleted 
Subparagraph (A) shall not apply during any period that required corrective action by the taxpayer at the unit at which the recycling occurs is uncompleted.
(C) Required corrective action 
For purposes of subparagraph (B), required corrective action shall be treated as uncompleted during the period
(i) beginning on the date that the corrective action is required by the Administrator or an authorized State pursuant to
(I) a final permit under section 3005 of the Solid Waste Disposal Act or a final order under section 3004 or 3008 of such Act, or
(II) a final order under section 106 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, and
(ii) ending on the date the Administrator or such State (as the case may be) certifies to the Secretary that such corrective action has been completed.
(D) Special rule for groundwater treatment 
In the case of corrective action requiring groundwater treatment, such action shall be treated as completed as of the close of the 10-year period beginning on the date such action is required if such treatment complies with the permit or order applicable under subparagraph (C)(i) throughout such period. The preceding sentence shall cease to apply beginning on the date such treatment ceases to comply with such permit or order.
(E) Solid waste 
For purposes of this paragraph, the term solid waste has the meaning given such term by section 1004 of the Solid Waste Disposal Act, except that such term shall not include any byproduct, coproduct, or other waste from any process of smelting, refining, or otherwise extracting any metal.
(9) Substances used in the production of animal feed 

(A) In general 
In the case of
(i) nitric acid,
(ii) sulfuric acid,
(iii) ammonia, or
(iv) methane used to produce ammonia,

which is a qualified animal feed substance, no tax shall be imposed under section 4661 (a).

(B) Qualified animal feed substance 
For purposes of this section, the term qualified animal feed substance means any substance
(i) used in a qualified animal feed use by the manufacturer, producer, or importer,
(ii) sold for use by any purchaser in a qualified animal feed use, or
(iii) sold for resale by any purchaser for use, or resale for ultimate use, in a qualified animal feed use.
(C) Qualified animal feed use 
The term qualified animal feed use means any use in the manufacture or production of animal feed or animal feed supplements, or of ingredients used in animal feed or animal feed supplements.
(D) Taxation of nonqualified sale or use 
For purposes of section 4661 (a), if no tax was imposed by such section on the sale or use of any chemical by reason of subparagraph (A), the 1st person who sells or uses such chemical other than in a sale or use described in subparagraph (A) shall be treated as the manufacturer of such chemical.
(10) Hydrocarbon streams containing mixtures of organic taxable chemicals 

(A) In general 
No tax shall be imposed under section 4661 (a) on any organic taxable chemical while such chemical is part of an intermediate hydrocarbon stream containing one or more organic taxable chemicals.
(B) Removal, etc., treated as use 
For purposes of this part, if any organic taxable chemical on which no tax was imposed by reason of subparagraph (A) is isolated, extracted, or otherwise removed from, or ceases to be part of, an intermediate hydrocarbon stream
(i) such isolation, extraction, removal, or cessation shall be treated as use by the person causing such event, and
(ii) such person shall be treated as the manufacturer of such chemical.
(C) Registration requirement 
Subparagraph (A) shall not apply to any sale of any intermediate hydrocarbon stream unless the registration requirements of clauses (i) and (ii) of subsection (c)(2)(B) are satisfied.
(D) Organic taxable chemical 
For purposes of this paragraph, the term organic taxable chemical means any taxable chemical which is an organic substance.
(c) Use and certain exchanges by manufacturer, etc. 

(1) Use treated as sale 
Except as provided in subsections (b) and (e), if any person manufactures, produces, or imports any taxable chemical and uses such chemical, then such person shall be liable for tax under section 4661 in the same manner as if such chemical were sold by such person.
(2) Special rules for inventory exchanges 

(A) In general 
Except as provided in this paragraph, in any case in which a manufacturer, producer, or importer of a taxable chemical exchanges such chemical as part of an inventory exchange with another person
(i) such exchange shall not be treated as a sale, and
(ii) such other person shall, for purposes of section 4661, be treated as the manufacturer, producer, or importer of such chemical.
(B) Registration requirement 
Subparagraph (A) shall not apply to any inventory exchange unless
(i) both parties are registered with the Secretary as manufacturers, producers, or importers of taxable chemicals, and
(ii) the person receiving the taxable chemical has, at such time as the Secretary may prescribe, notified the manufacturer, producer, or importer of such persons registration number and the internal revenue district in which such person is registered.
(C) Inventory exchange 
For purposes of this paragraph, the term inventory exchange means any exchange in which 2 persons exchange property which is, in the hands of each person, property described in section 1221 (a)(1).
(d) Refund or credit for certain uses 

(1) In general 
Under regulations prescribed by the Secretary, if
(A) a tax under section 4661 was paid with respect to any taxable chemical, and
(B) such chemical was used by any person in the manufacture or production of any other substance which is a taxable chemical,

then an amount equal to the tax so paid shall be allowed as a credit or refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by such section. In any case to which this paragraph applies, the amount of any such credit or refund shall not exceed the amount of tax imposed by such section on the other substance manufactured or produced (or which would have been imposed by such section on such other substance but for subsection (b) or (e) of this section).

(2) Use as fertilizer 
Under regulations prescribed by the Secretary, if
(A) a tax under section 4661 was paid with respect to nitric acid, sulfuric acid, ammonia, or methane used to make ammonia without regard to subsection (b)(2), and
(B) any person uses such substance as a qualified fertilizer substance,

then an amount equal to the excess of the tax so paid over the tax determined with regard to subsection (b)(2) shall be allowed as a credit or refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by this section.

(3) Use as qualified fuel 
Under regulations prescribed by the Secretary, if
(A) a tax under section 4661 was paid with respect to any chemical described in subparagraph (D) of subsection (b)(5) without regard to subsection (b)(5), and
(B) any person uses such chemical as a qualified fuel substance,

then an amount equal to the excess of the tax so paid over the tax determined with regard to subsection (b)(5) shall be allowed as a credit or refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by this section.

(4) Use in the production of animal feed 
Under regulations prescribed by the Secretary, if
(A) a tax under section 4661 was paid with respect to nitric acid, sulfuric acid, ammonia, or methane used to produce ammonia, without regard to subsection (b)(9), and
(B) any person uses such substance as a qualified animal feed substance,

then an amount equal to the excess of the tax so paid over the tax determined with regard to subsection (b)(9) shall be allowed as a credit or refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by this section.

(e) Exemption for exports of taxable chemicals 

(1) Tax-free sales 

(A) In general 
No tax shall be imposed under section 4661 on the sale by the manufacturer or producer of any taxable chemical for export, or for resale by the purchaser to a second purchaser for export.
(B) Proof of export required 
Rules similar to the rules of section 4221 (b) shall apply for purposes of subparagraph (A).
(2) Credit or refund where tax paid 

(A) In general 
Except as provided in subparagraph (B), if
(i) tax under section 4661 was paid with respect to any taxable chemical, and
(ii) 
(I) such chemical was exported by any person, or
(II) such chemical was used as a material in the manufacture or production of a substance which was exported by any person and which, at the time of export, was a taxable substance (as defined in section 4672 (a)),

credit or refund (without interest) of such tax shall be allowed or made to the person who paid such tax.

(B) Condition to allowance 
No credit or refund shall be allowed or made under subparagraph (A) unless the person who paid the tax establishes that he
(i) has repaid or agreed to repay the amount of the tax to the person who exported the taxable chemical or taxable substance (as so defined), or
(ii) has obtained the written consent of such exporter to the allowance of the credit or the making of the refund.
(3) Refunds directly to exporter 
The Secretary shall provide, in regulations, the circumstances under which a credit or refund (without interest) of the tax under section 4661 shall be allowed or made to the person who exported the taxable chemical or taxable substance, where
(A) the person who paid the tax waives his claim to the amount of such credit or refund, and
(B) the person exporting the taxable chemical or taxable substance provides such information as the Secretary may require in such regulations.
(4) Regulations 
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection.
(f) Disposition of revenues from Puerto Rico and the Virgin Islands 
The provisions of subsections (a)(3) and (b)(3) of section 7652 shall not apply to any tax imposed by section 4661.

Subchapter C - Tax on Certain Imported Substances

26 USC 4671 - Imposition of tax

(a) General rule 
There is hereby imposed a tax on any taxable substance sold or used by the importer thereof.
(b) Amount of tax 

(1) In general 
Except as provided in paragraph (2), the amount of the tax imposed by subsection (a) with respect to any taxable substance shall be the amount of the tax which would have been imposed by section 4661 on the taxable chemicals used as materials in the manufacture or production of such substance if such taxable chemicals had been sold in the United States for use in the manufacture or production of such taxable substance.
(2) Rate where importer does not furnish information to Secretary 
If the importer does not furnish to the Secretary (at such time and in such manner as the Secretary shall prescribe) sufficient information to determine under paragraph (1) the amount of the tax imposed by subsection (a) on any taxable substance, the amount of the tax imposed on such taxable substance shall be 5 percent of the appraised value of such substance as of the time such substance was entered into the United States for consumption, use, or warehousing.
(3) Authority to prescribe rate in lieu of paragraph (2) rate 
The Secretary may prescribe for each taxable substance a tax which, if prescribed, shall apply in lieu of the tax specified in paragraph (2) with respect to such substance. The tax prescribed by the Secretary shall be equal to the amount of tax which would be imposed by subsection (a) with respect to the taxable substance if such substance were produced using the predominant method of production of such substance.
(c) Exemptions for substances taxed under sections 4611 and 4661 
No tax shall be imposed by this section on the sale or use of any substance if tax is imposed on such sale or use under section 4611 or 4661.
(d) Tax-free sales, etc. for substances used as certain fuels or in the production of fertilizer or animal feed 
Rules similar to the following rules shall apply for purposes of applying this section with respect to taxable substances used or sold for use as described in such rules:
(1) Paragraphs (2), (5), and (9) of section 4662 (b) (relating to tax-free sales of chemicals used as fuel or in the production of fertilizer or animal feed).
(2) Paragraphs (2), (3), and (4) of section 4662 (d) (relating to refund or credit of tax on certain chemicals used as fuel or in the production of fertilizer or animal feed).
(e) Termination 
No tax shall be imposed under this section during any period during which the Hazardous Substance Superfund financing rate under section 4611 does not apply.

26 USC 4672 - Definitions and special rules

(a) Taxable substance 
For purposes of this subchapter
(1) In general 
The term taxable substance means any substance which, at the time of sale or use by the importer, is listed as a taxable substance by the Secretary for purposes of this subchapter.
(2) Determination of substances on list 
A substance shall be listed under paragraph (1) if
(A) the substance is contained in the list under paragraph (3), or
(B) the Secretary determines, in consultation with the Administrator of the Environmental Protection Agency and the Commissioner of Customs, that taxable chemicals constitute more than 50 percent of the weight (or more than 50 percent of the value) of the materials used to produce such substance (determined on the basis of the predominant method of production).

If an importer or exporter of any substance requests that the Secretary determine whether such substance be listed as a taxable substance under paragraph (1) or be removed from such listing, the Secretary shall make such determination within 180 days after the date the request was filed.

(3) Initial list of taxable substances 
(4) Modifications to list 
The Secretary shall add to the list under paragraph (3) substances which meet either the weight or value tests of paragraph (2)(B) and may remove from such list only substances which meet neither of such tests.
(b) Other definitions 
For purposes of this subchapter
(1) Importer 
The term importer means the person entering the taxable substance for consumption, use, or warehousing.
(2) Taxable chemicals; United States 
The terms taxable chemical and United States have the respective meanings given such terms by section 4662 (a).
(c) Disposition of revenues from Puerto Rico and the Virgin Islands 
The provisions of subsections (a)(3) and (b)(3) of section 7652 shall not apply to any tax imposed by section 4671.

Subchapter D - Ozone-Depleting Chemicals, Etc.

26 USC 4681 - Imposition of tax

(a) General rule 
There is hereby imposed a tax on
(1) any ozone-depleting chemical sold or used by the manufacturer, producer, or importer thereof, and
(2) any imported taxable product sold or used by the importer thereof.
(b) Amount of tax 

(1) Ozone-depleting chemicals 

(A) In general 
The amount of the tax imposed by subsection (a) on each pound of ozone-depleting chemical shall be an amount equal to
(i) the base tax amount, multiplied by
(ii) the ozone-depletion factor for such chemical.
(B) Base tax amount 
The base tax amount for purposes of subparagraph (A) with respect to any sale or use during any calendar year after 1995 shall be $5.35 increased by 45 cents for each year after 1995.
(2) Imported taxable product 

(A) In general 
The amount of the tax imposed by subsection (a) on any imported taxable product shall be the amount of tax which would have been imposed by subsection (a) on the ozone-depleting chemicals used as materials in the manufacture or production of such product if such ozone-depleting chemicals had been sold in the United States on the date of the sale of such imported taxable product.
(B) Certain rules to apply 
Rules similar to the rules of paragraphs (2) and (3) of section 4671 (b) shall apply.

26 USC 4682 - Definitions and special rules

(a) Ozone-depleting chemical 
For purposes of this subchapter
(1) In general 
The term ozone-depleting chemical means any substance
(A) which, at the time of the sale or use by the manufacturer, producer, or importer, is listed as an ozone-depleting chemical in the table contained in paragraph (2), and
(B) which is manufactured or produced in the United States or entered into the United States for consumption, use, or warehousing.
(2) Ozone-depleting chemicals 
(b) Ozone-depletion factor 
For purposes of this subchapter, the term ozone-depletion factor means, with respect to an ozone-depleting chemical, the factor assigned to such chemical under the following table: Ozone-depleting chemical: Ozone-depletion factor: CFC11 1.0 CFC12 1.0 CFC113 0.8 CFC114 1.0 CFC115 0.6 Halon-1211 3.0 Halon-1301 10.0 Halon-2402 6.0 Carbon tetrachloride 1.1 Methyl chloroform 0.1 CFC13. 1.0 CFC111 1.0 CFC112 1.0 CFC211 1.0 CFC212 1.0 CFC213 1.0 CFC214 1.0 CFC215 1.0 CFC216 1.0 CFC217 1.0.
(c) Imported taxable product 
For purposes of this subchapter
(1) In general 
The term imported taxable product means any product (other than an ozone-depleting chemical) entered into the United States for consumption, use, or warehousing if any ozone-depleting chemical was used as material in the manufacture or production of such product.
(2) De minimis exception 
The term imported taxable product shall not include any product specified in regulations prescribed by the Secretary as using a de minimis amount of ozone-depleting chemicals as materials in the manufacture or production thereof. The preceding sentence shall not apply to any product in which any ozone-depleting chemical (other than methyl chloroform) is used for purposes of refrigeration or air conditioning, creating an aerosol or foam, or manufacturing electronic components.
(d) Exceptions 

(1) Recycling 
No tax shall be imposed by section 4681 on any ozone-depleting chemical which is diverted or recovered in the United States as part of a recycling process (and not as part of the original manufacturing or production process), or on any recycled Halon-1301 or recycled Halon-2402 imported from any country which is a signatory to the Montreal Protocol on Substances that Deplete the Ozone Layer.
(2) Use in further manufacture 

(A) In general 
No tax shall be imposed by section 4681
(i) on the use of any ozone-depleting chemical in the manufacture or production of any other chemical if the ozone-depleting chemical is entirely consumed in such use,
(ii) on the sale by the manufacturer, producer, or importer of any ozone-depleting chemical
(I) for a use by the purchaser which meets the requirements of clause (i), or
(II) for resale by the purchaser to a second purchaser for a use by the second purchaser which meets the requirements of clause (i).

Clause (ii) shall apply only if the manufacturer, producer, and importer, and the 1st and 2d purchasers (if any), meet such registration requirements as may be prescribed by the Secretary.

(B) Credit or refund 
Under regulations prescribed by the Secretary, if
(i) a tax under this subchapter was paid with respect to any ozone-depleting chemical, and
(ii) such chemical was used (and entirely consumed) by any person in the manufacture or production of any other chemical,

then an amount equal to the tax so paid shall be allowed as a credit or refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by section 4681.

(3) Exports 

(A) In general 
Except as provided in subparagraph (B), rules similar to the rules of section 4662 (e) (other than section 4662 (e)(2)(A)(ii)(II)) shall apply for purposes of this subchapter.
(B) Limit on benefit 

(i) In general The aggregate tax benefit allowable under subparagraph (A) with respect to ozone-depleting chemicals manufactured, produced, or imported by any person during a calendar year shall not exceed the sum of
(I) the amount equal to the 1986 export percentage of the aggregate tax which would (but for this subsection and subsection (g)) be imposed by this subchapter with respect to the maximum quantity of ozone-depleting chemicals permitted to be manufactured or produced by such person during such calendar year under regulations prescribed by the Environmental Protection Agency (other than chemicals with respect to which subclause (II) applies),
(II) the aggregate tax which would (but for this subsection and subsection (g)) be imposed by this subchapter with respect to any additional production allowance granted to such person with respect to ozone-depleting chemicals manufactured or produced by such person during such calendar year by the Environmental Protection Agency under 40 CFR Part 82 (as in effect on September 14, 1989), and
(III) the aggregate tax which was imposed by this subchapter with respect to ozone-depleting chemicals imported by such person during the calendar year.
(ii) 1986 export percentage A persons 1986 export percentage is the percentage equal to the ozone-depletion factor adjusted pounds of ozone-depleting chemicals manufactured or produced by such person during 1986 which were exported during 1986, divided by the ozone-depletion factor adjusted pounds of all ozone-depleting chemicals manufactured or produced by such person during 1986. The percentage determined under the preceding sentence shall be computed by taking into account the sum of such persons direct 1986 exports (as determined by the Environmental Protection Agency) and such persons indirect 1986 exports (as allocated to such person by such Agency in determining such persons consumption and production rights for ozone-depleting chemicals).
(C) Separate application of limit for newly listed chemicals 

(i) In general Subparagraph (B) shall be applied separately with respect to newly listed chemicals and other chemicals.
(ii) Application to newly listed chemicals In applying subparagraph (B) to newly listed chemicals
(I) subparagraph (B) shall be applied by substituting 1989 for 1986 each place it appears, and
(II) clause (i)(II) thereof shall be applied by substituting for the regulations referred to therein any regulations (whether or not prescribed by the Secretary) which the Secretary determines are comparable to the regulations referred to in such clause with respect to newly listed chemicals.
(iii) Newly listed chemical For purposes of this subparagraph, the term newly listed chemical means any substance which appears in the table contained in subsection (a)(2) below Halon-2402.
(e) Other definitions 
For purposes of this subchapter
(1) Importer 
The term importer means the person entering the article for consumption, use, or warehousing.
(2) United States 
The term United States has the meaning given such term by section 4612 (a)(4).
(f) Special rules 

(1) Fractional parts of a pound 
In the case of a fraction of a pound, the tax imposed by this subchapter shall be the same fraction of the amount of such tax imposed on a whole pound.
(2) Disposition of revenues from Puerto Rico and the Virgin Islands 
The provisions of subsections (a)(3) and (b)(3) of section 7652 shall not apply to any tax imposed by this subchapter.
(g) Chemicals used as propellants in metered-dose inhalers 

(1) Exemption from tax 

(A) In general 
No tax shall be imposed by section 4681 on
(i) any use of any substance as a propellant in metered-dose inhalers, or
(ii) any qualified sale by the manufacturer, producer, or importer of any substance.
(B) Qualified sale 
For purposes of subparagraph (A), the term qualified sale means any sale by the manufacturer, producer, or importer of any substance
(i) for use by the purchaser as a propellant in metered dose inhalers, or
(ii) for resale by the purchaser to a 2d purchaser for such use by the 2d purchaser.

The preceding sentence shall apply only if the manufacturer, producer, and importer, and the 1st and 2d purchasers (if any) meet such registration requirements as may be prescribed by the Secretary.

(2) Overpayments 
If any substance on which tax was paid under this subchapter is used by any person as a propellant in metered-dose inhalers, credit or refund without interest shall be allowed to such person in an amount equal to the tax so paid. Amounts payable under the preceding sentence with respect to uses during the taxable year shall be treated as described in section 34 (a) for such year unless claim thereof has been timely filed under this paragraph.
(h) Imposition of floor stocks taxes 

(1) January 1, 1990, tax 
On any ozone-depleting chemical which on January 1, 1990, is held by any person (other than the manufacturer, producer, or importer thereof) for sale or for use in further manufacture, there is hereby imposed a floor stocks tax in an amount equal to the tax which would be imposed by section 4681 on such chemical if the sale of such chemical by the manufacturer, producer, or importer thereof had occurred during 1990.
(2) Other tax-increase dates 

(A) In general 
If, on any tax-increase date, any ozone-depleting chemical is held by any person (other than the manufacturer, producer, or importer thereof) for sale or for use in further manufacture, there is hereby imposed a floor stocks tax.
(B) Amount of tax 
The amount of the tax imposed by subparagraph (A) shall be the excess (if any) of
(i) the tax which would be imposed under section 4681 on such substance if the sale of such chemical by the manufacturer, producer, or importer thereof had occurred on the tax-increase date, over
(ii) the prior tax (if any) imposed by this subchapter on such substance.
(C) Tax-increase date 
For purposes of this paragraph, the term tax-increase date means January 1 of any calendar year after 1991.
(3) Due date 
The taxes imposed by this subsection on January 1 of any calendar year shall be paid on or before June 30 of such year.
(4) Application of other laws 
All other provisions of law, including penalties, applicable with respect to the taxes imposed by section 4681 shall apply to the floor stocks taxes imposed by this subsection.

TITLE 26 - US CODE - CHAPTER 39 - REGISTRATION-REQUIRED OBLIGATIONS

26 USC 4701 - Tax on issuer of registration-required obligation not in registered form

(a) Imposition of tax 
In the case of any person who issues a registration-required obligation which is not in registered form, there is hereby imposed on such person on the issuance of such obligation a tax in an amount equal to the product of
(1) 1 percent of the principal amount of such obligation, multiplied by
(2) the number of calendar years (or portions thereof) during the period beginning on the date of issuance of such obligation and ending on the date of maturity.
(b) Definitions 
For purposes of this section
(1) Registration-required obligation 
The term registration-required obligation has the same meaning as when used in section 163 (f), except that such term shall not include any obligation required to be registered under section 149 (a).
(2) Registered form 
The term registered form has the same meaning as when used in section 163 (f).

TITLE 26 - US CODE - CHAPTER 40 - GENERAL PROVISIONS RELATING TO OCCUPATIONAL TAXES

26 USC 4901 - Payment of tax

(a) Condition precedent to carrying on certain business 
No person shall be engaged in or carry on any trade or business subject to the tax imposed by section 4411 (wagering) until he has paid the special tax therefor.
(b) Computation 
All special taxes shall be imposed as of on the first day of July in each year, or on commencing any trade or business on which such tax is imposed. In the former case the tax shall be reckoned for 1 year, and in the latter case it shall be reckoned proportionately, from the first day of the month in which the liability to a special tax commenced, to and including the 30th day of June following.

26 USC 4902 - Liability of partners

Any number of persons doing business in copartnership at any one place shall be required to pay but one special tax.

26 USC 4903 - Liability in case of business in more than one location

The payment of the special tax imposed, other than the tax imposed by section 4411, shall not exempt from an additional special tax the person carrying on a trade or business in any other place than that stated in the register kept in the office of the official in charge of the internal revenue district; but nothing herein contained shall require a special tax for the storage of goods, wares, or merchandise in other places than the place of business, nor, except as provided in this subtitle, for the sale by manufacturers or producers of their own goods, wares, and merchandise, at the place of production or manufacture, and at their principal office or place of business, provided no goods, wares, or merchandise shall be kept except as samples at said office or place of business.

26 USC 4904 - Liability in case of different businesses of same ownership and location

Whenever more than one of the pursuits or occupations described in this subtitle are carried on in the same place by the same person at the same time, except as otherwise provided in this subtitle, the tax shall be paid for each according to the rates severally prescribed.

26 USC 4905 - Liability in case of death or change of location

(a) Requirements 
When any person who has paid the special tax for any trade or business dies, his spouse or child, or executors or administrators or other legal representatives, may occupy the house or premises, and in like manner carry on, for the residue of the term for which the tax is paid, the same trade or business as the deceased before carried on, in the same house and upon the same premises, without the payment of any additional tax. When any person removes from the house or premises for which any trade or business was taxed to any other place, he may carry on the trade or business specified in the register kept in the office of the official in charge of the internal revenue district at the place to which he removes, without the payment of any additional tax: Provided, That all cases of death, change, or removal, as aforesaid, with the name of the successor to any person deceased, or of the person making such change or removal, shall be registered with the Secretary, under regulations to be prescribed by the Secretary.
(b) Registration 
For registration in case of wagering, see section 4412.

26 USC 4906 - Application of State laws

The payment of any special tax imposed by this subtitle for carrying on any trade or business shall not be held to exempt any person from any penalty or punishment provided by the laws of any State for carrying on the same within such State, or in any manner to authorize the commencement or continuance of such trade or business contrary to the laws of such State or in places prohibited by municipal law; nor shall the payment of any such tax be held to prohibit any State from placing a duty or tax on the same trade or business, for State or other purposes.

26 USC 4907 - Federal agencies or instrumentalities

Any special tax imposed by this subtitle, except the tax imposed by section 4411, shall apply to any agency or instrumentality of the United States unless such agency or instrumentality is granted by statute a specific exemption from such tax.

TITLE 26 - US CODE - CHAPTER 41 - PUBLIC CHARITIES

26 USC 4911 - Tax on excess expenditures to influence legislation

(a) Tax imposed 

(1) In general 
There is hereby imposed on the excess lobbying expenditures of any organization to which this section applies a tax equal to 25 percent of the amount of the excess lobbying expenditures for the taxable year.
(2) Organizations to which this section applies 
This section applies to any organization with respect to which an election under section 501 (h) (relating to lobbying expenditures by public charities) is in effect for the taxable year.
(b) Excess lobbying expenditures 
For purposes of this section, the term excess lobbying expenditures means, for a taxable year, the greater of
(1) the amount by which the lobbying expenditures made by the organization during the taxable year exceed the lobbying nontaxable amount for such organization for such taxable year, or
(2) the amount by which the grass roots expenditures made by the organization during the taxable year exceed the grass roots nontaxable amount for such organization for such taxable year.
(c) Definitions 
For purposes of this section
(1) Lobbying expenditures 
The term lobbying expenditures means expenditures for the purpose of influencing legislation (as defined in subsection (d)).
(2) Lobbying nontaxable amount 
The lobbying nontaxable amount for any organization for any taxable year is the lesser of
(A)  $1,000,000 or
(B)  the amount determined under the following table:
(3) Grass roots expenditures 
The term grass roots expenditures means expenditures for the purpose of influencing legislation (as defined in subsection (d) without regard to paragraph (1)(B) thereof).
(4) Grass roots nontaxable amount 
The grass roots nontaxable amount for any organization for any taxable year is 25 percent of the lobbying nontaxable amount (determined under paragraph (2)) for such organization for such taxable year.
(d) Influencing legislation 

(1) General rule 
Except as otherwise provided in paragraph (2), for purposes of this section, the term influencing legislation means
(A) any attempt to influence any legislation through an attempt to affect the opinions of the general public or any segment thereof, and
(B) any attempt to influence any legislation through communication with any member or employee of a legislative body, or with any government official or employee who may participate in the formulation of the legislation.
(2) Exceptions 
For purposes of this section, the term influencing legislation, with respect to an organization, does not include
(A) making available the results of nonpartisan analysis, study, or research;
(B) providing of technical advice or assistance (where such advice would otherwise constitute the influencing of legislation) to a governmental body or to a committee or other subdivision thereof in response to a written request by such body or subdivision, as the case may be;
(C) appearances before, or communications to, any legislative body with respect to a possible decision of such body which might affect the existence of the organization, its powers and duties, tax-exempt status, or the deduction of contributions to the organization;
(D) communications between the organization and its bona fide members with respect to legislation or proposed legislation of direct interest to the organization and such members, other than communications described in paragraph (3); and
(E) any communication with a governmental official or employee, other than
(i) a communication with a member or employee of a legislative body (where such communication would otherwise constitute the influencing of legislation), or
(ii) a communication the principal purpose of which is to influence legislation.
(3) Communications with members 

(A) A communication between an organization and any bona fide member of such organization to directly encourage such member to communicate as provided in paragraph (1)(B) shall be treated as a communication described in paragraph (1)(B).
(B) A communication between an organization and any bona fide member of such organization to directly encourage such member to urge persons other than members to communicate as provided in either subparagraph (A) or subparagraph (B) of paragraph (1) shall be treated as a communication described in paragraph (1)(A).
(e) Other definitions and special rules 
For purposes of this section
(1) Exempt purpose expenditures 

(A) In general 
The term exempt purpose expenditures means, with respect to any organization for any taxable year, the total of the amounts paid or incurred by such organization to accomplish purposes described in section 170 (c)(2)(B) (relating to religious, charitable, educational, etc., purposes).
(B) Certain amounts included 
The term exempt purpose expenditures includes
(i) administrative expenses paid or incurred for purposes described in section 170 (c)(2)(B), and
(ii) amounts paid or incurred for the purpose of influencing legislation (whether or not for purposes described in section 170 (c)(2)(B)).
(C) Certain amounts excluded 
The term exempt purpose expenditures does not include amounts paid or incurred to or for
(i) a separate fundraising" target="_blank" title="fundraising">fundraising unit of such organization, or
(ii) one or more other organizations, if such amounts are paid or incurred primarily for fundraising" target="_blank" title="fundraising">fundraising.
(2) Legislation 
The term legislation includes action with respect to Acts, bills, resolutions, or similar items by the Congress, any State legislature, any local council, or similar governing body, or by the public in a referendum, initiative, constitutional amendment, or similar procedure.
(3) Action 
The term action is limited to the introduction, amendment, enactment, defeat, or repeal of Acts, bills, resolutions, or similar items.
(4) Depreciation, etc., treated as expenditures 
In computing expenditures paid or incurred for the purpose of influencing legislation (within the meaning of subsection (b)(1) or (b)(2)) or exempt purpose expenditures (as defined in paragraph (1)), amounts properly chargeable to capital account shall not be taken into account. There shall be taken into account a reasonable allowance for exhaustion, wear and tear, obsolescence, or amortization. Such allowance shall be computed only on the basis of the straight-line method of depreciation. For purposes of this section, a determination of whether an amount is properly chargeable to capital account shall be made on the basis of the principles that apply under subtitle A to amounts which are paid or incurred in a trade or business.
(f) Affiliated organizations 

(1) In general 
Except as otherwise provided in paragraph (4), if for a taxable year two or more organizations described in section 501 (c)(3) are members of an affiliated group of organizations as defined in paragraph (2), and an election under section 501 (h) is effective for at least one such organization for such year, then
(A) the determination as to whether excess lobbying expenditures have been made and the determination as to whether the expenditure limits of section 501 (h)(1) have been exceeded shall be made as though such affiliated group is one organization,
(B) if such group has excess lobbying expenditures, each such organization as to which an election under section 501 (h) is effective for such year shall be treated as an organization which has excess lobbying expenditures in an amount which equals such organizations proportionate share of such groups excess lobbying expenditures,
(C) if the expenditure limits of section 501 (h)(1) are exceeded, each such organization as to which an election under section 501 (h) is effective for such year shall be treated as an organization which is not described in section 501 (c)(3) by reason of the application of 501(h), and
(D) subparagraphs (C) and (D) of subsection (d)(2), paragraph (3) or subsection (d), and clause (i) of subsection (e)(1)(C) shall be applied as if such affiliated group were one organization.
(2) Definition of affiliation 
For purposes of paragraph (1), two organizations are members of an affiliated group of organizations but only if
(A) the governing instrument of one such organization requires it to be bound by decisions of the other organization on legislative issues, or
(B) the governing board of one such organization includes persons who
(i) are specifically designated representatives of another such organization or are members of the governing board, officers, or paid executive staff members of such other organization, and
(ii) by aggregating their votes, have sufficient voting power to cause or prevent action on legislative issues by the first such organization.
(3) Different taxable years 
If members of an affiliated group of organizations have different taxable years, their expenditures shall be computed for purposes of this section in a manner to be prescribed by regulations promulgated by the Secretary.
(4) Limited control 
If two or more organizations are members of an affiliated group of organizations (as defined in paragraph (2) without regard to subparagraph (B) thereof), no two members of such affiliated group are affiliated (as defined in paragraph (2) without regard to subparagraph (A) thereof), and the governing instrument of no such organization requires it to be bound by decisions of any of the other such organizations on legislative issues other than as to action with respect to Acts, bills, resolutions, or similar items by the Congress, then
(A) in the case of any organization whose decisions bind one or more members of such affiliated group, directly or indirectly, the determination as to whether such organization has paid or incurred excess lobbying expenditures and the determination as to whether such organization has exceeded the expenditure limits of section 501 (h)(1) shall be made as though such organization has paid or incurred those amounts paid or incurred by such members of such affiliated group to influence legislation with respect to Acts, bills, resolutions, or similar items by the Congress, and
(B) in the case of any organization to which subparagraph (A) does not apply, but which is a member of such affiliated group, the determination as to whether such organization has paid or incurred excess lobbying expenditures and the determination as to whether such organization has exceeded the expenditure limits of section 501 (h)(1) shall be made as though such organization is not a member of such affiliated group.

26 USC 4912 - Tax on disqualifying lobbying expenditures of certain organizations

(a) Tax on organization 
If an organization to which this section applies is not described in section 501 (c)(3) for any taxable year by reason of making lobbying expenditures, there is hereby imposed a tax on the lobbying expenditures of such organization for such taxable year equal to 5 percent of the amount of such expenditures. The tax imposed by this subsection shall be paid by the organization.
(b) On management 
If tax is imposed under subsection (a) on the lobbying expenditures of any organization, there is hereby imposed on the agreement of any organization manager to the making of any such expenditures, knowing that such expenditures are likely to result in the organization not being described in section 501 (c)(3), a tax equal to 5 percent of the amount of such expenditures, unless such agreement is not willful and is due to reasonable cause. The tax imposed by this subsection shall be paid by any manager who agreed to the making of the expenditures.
(c) Organizations to which section applies 

(1) In general 
Except as provided in paragraph (2), this section shall apply to any 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).
(2) Exceptions 
This section shall not apply to any organization
(A) to which an election under section 501 (h) applies,
(B) which is a disqualified organization (within the meaning of section 501 (h)(5)), or
(C) which is a private foundation.
(d) Definitions 

(1) Lobbying expenditures 
The term lobbying expenditure means any amount paid or incurred by the organization in carrying on propaganda, or otherwise attempting to influence legislation.
(2) Organization manager 
The term organization manager has the meaning given to such term by section 4955 (f)(2).
(3) Joint and several liability 
If more than 1 person is liable under subsection (b), all such persons shall be jointly and severally liable under such subsection.

TITLE 26 - US CODE - CHAPTER 42 - PRIVATE FOUNDATIONS; AND CERTAIN OTHER TAX-EXEMPT ORGANIZATIONS

Subchapter A - Private Foundations

26 USC 4940 - Excise tax based on investment income

(a) Tax-exempt foundations 
There is hereby imposed on each private foundation which is exempt from taxation under section 501 (a) for the taxable year, with respect to the carrying on its activities, a tax equal to 2 percent of the net investment income of such foundation for the taxable year.
(b) Taxable foundations 
There is hereby imposed on each private foundation which is not exempt from taxation under section 501 (a) for the taxable year, with respect to the carrying on of its activities, a tax equal to
(1) the amount (if any) by which the sum of
(A)  the tax imposed under subsection (a) (computed as if such subsection applied to such private foundation for the taxable year), plus
(B)  the amount of the tax which would have been imposed under section 511 for the taxable year if such private foundation had been exempt from taxation under section 501 (a), exceeds
(2) the tax imposed under subtitle A on such private foundation for the taxable year.
(c) Net investment income defined 

(1) In general 
For purposes of subsection (a), the net investment income is the amount by which
(A)  the sum of the gross investment income and the capital gain net income exceeds
(B)  the deductions allowed by paragraph (3). Except to the extent inconsistent with the provisions of this section, net investment income shall be determined under the principles of subtitle A.
(2) Gross investment income 
For purposes of paragraph (1), the term gross investment income means the gross amount of income from interest, dividends, rents, payments with respect to securities loans (as defined in section 512 (a)(5)), and royalties, but not including any such income to the extent included in computing the tax imposed by section 511. Such term shall also include income from sources similar to those in the preceding sentence.
(3) Deductions 

(A) In general 
For purposes of paragraph (1), there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred for the production or collection of gross investment income or for the management, conservation, or maintenance of property held for the production of such income, determined with the modifications set forth in subparagraph (B).
(B) Modifications 
For purposes of subparagraph (A)
(i) The deduction provided by section 167 shall be allowed, but only on the basis of the straight line method of depreciation.
(ii) The deduction for depletion provided by section 611 shall be allowed, but such deduction shall be determined without regard to section 613 (relating to percentage depletion).
(4) Capital gains and losses 
For purposes of paragraph (1) in determining capital gain net income
(A) There shall not be taken into account any gain or loss from the sale or other disposition of property to the extent that such gain or loss is taken into account for purposes of computing the tax imposed by section 511.
(B) The basis for determining gain in the case of property held by the private foundation on December 31, 1969, and continuously thereafter to the date of its disposition shall be deemed to be not less than the fair market value of such property on December 31, 1969.
(C) Losses from sales or other dispositions of property shall be allowed only to the extent of gains from such sales or other dispositions, and there shall be no capital loss carryovers or carrybacks.
(D) Except to the extent provided by regulation, under rules similar to the rules of section 1031 (including the exception under subsection (a)(2) thereof), no gain or loss shall be taken into account with respect to any portion of property used for a period of not less than 1 year for a purpose or function constituting the basis of the private foundations exemption if the entire property is exchanged immediately following such period solely for property of like kind which is to be used primarily for a purpose or function constituting the basis for such foundations exemption.
(5) Tax-exempt income 
For purposes of this section, net investment income shall be determined by applying section 103 (relating to State and local bonds) and section 265 (relating to expenses and interest relating to tax-exempt income).
(d) Exemption for certain operating foundations 

(1) In general 
No tax shall be imposed by this section on any private foundation which is an exempt operating foundation for the taxable year.
(2) Exempt operating foundation 
For purposes of this subsection, the term exempt operating foundation means, with respect to any taxable year, any private foundation if
(A) such foundation is an operating foundation (as defined in section 4942 (j)(3)),
(B) such foundation has been publicly supported for at least 10 taxable years,
(C) at all times during the taxable year, the governing body of such foundation
(i) consists of individuals at least 75 percent of whom are not disqualified individuals, and
(ii) is broadly representative of the general public, and
(D) at no time during the taxable year does such foundation have an officer who is a disqualified individual.
(3) Definitions 
For purposes of this subsection
(A) Publicly supported 
A private foundation is publicly supported for a taxable year if it meets the requirements of section 170 (b)(1)(A)(vi) or 509 (a)(2) for such taxable year.
(B) Disqualified individual 
The term disqualified individual means, with respect to any private foundation, an individual who is
(i) a substantial contributor to the foundation,
(ii) an owner of more than 20 percent of
(I) the total combined voting power of a corporation,
(II) the profits interest of a partnership, or
(III) the beneficial interest of a trust or unincorporated enterprise,

which is a substantial contributor to the foundation, or

(iii) a member of the family of any individual described in clause (i) or (ii).
(C) Substantial contributor 
The term substantial contributor means a person who is described in section 507 (d)(2).
(D) Family 
The term family has the meaning given to such term by section 4946 (d).
(E) Constructive ownership 
The rules of paragraphs (3) and (4) of section 4946 (a) shall apply for purposes of subparagraph (B)(ii).
(e) Reduction in tax where private foundation meets certain distribution requirements 

(1) In general 
In the case of any private foundation which meets the requirements of paragraph (2) for any taxable year, subsection (a) shall be applied with respect to such taxable year by substituting 1 percent for 2 percent.
(2) Requirements 
A private foundation meets the requirements of this paragraph for any taxable year if
(A) the amount of the qualifying distributions made by the private foundation during such taxable year equals or exceeds the sum of
(i) an amount equal to the assets of such foundation for such taxable year multiplied by the average percentage payout for the base period, plus
(ii) 1 percent of the net investment income of such foundation for such taxable year, and
(B) such private foundation was not liable for tax under section 4942 with respect to any year in the base period.
(3) Average percentage payout for base period 
For purposes of this subsection
(A) In general 
The average percentage payout for the base period is the average of the percentage payouts for taxable years in the base period.
(B) Percentage payout 
The term percentage payout means, with respect to any taxable year, the percentage determined by dividing
(i) the amount of the qualifying distributions made by the private foundation during the taxable year, by
(ii) the assets of the private foundation for the taxable year.
(C) Special rule where tax reduced under this subsection 
For purposes of this paragraph, if the amount of the tax imposed by this section for any taxable year in the base period is reduced by reason of this subsection, the amount of the qualifying distributions made by the private foundation during such year shall be reduced by the amount of such reduction in tax.
(4) Base period 
For purposes of this subsection
(A) In general 
The term base period means, with respect to any taxable year, the 5 taxable years preceding such taxable year.
(B) New private foundations, etc. 
If an organization has not been a private foundation throughout the base period referred to in subparagraph (A), the base period shall consist of the taxable years during which such foundation has been in existence.
(5) Other definitions 
For purposes of this subsection
(A) Qualifying distribution 
The term qualifying distribution has the meaning given such term by section 4942 (g).
(B) Assets 
The assets of a private foundation for any taxable year shall be treated as equal to the excess determined under section 4942 (e)(1).
(6) Treatment of successor organizations, etc. 
In the case of
(A) a private foundation which is a successor to another private foundation, this subsection shall be applied with respect to such successor by taking into account the experience of such other foundation, and
(B) a merger, reorganization, or division of a private foundation, this subsection shall be applied under regulations prescribed by the Secretary.

26 USC 4941 - Taxes on self-dealing

(a) Initial taxes 

(1) On self-dealer 
There is hereby imposed a tax on each act of self-dealing between a disqualified person and a private foundation. The rate of tax shall be equal to 10 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period. The tax imposed by this paragraph shall be paid by any disqualified person (other than a foundation manager acting only as such) who participates in the act of self-dealing. In the case of a government official (as defined in section 4946 (c)), a tax shall be imposed by this paragraph only if such disqualified person participates in the act of self-dealing knowing that it is such an act.
(2) On foundation manager 
In any case in which a tax is imposed by paragraph (1), there is hereby imposed on the participation of any foundation manager in an act of self-dealing between a disqualified person and a private foundation, knowing that it is such an act, a tax equal to 5 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period, unless such participation is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by any foundation manager who participated in the act of self-dealing.
(b) Additional taxes 

(1) On self-dealer 
In any case in which an initial tax is imposed by subsection (a)(1) on an act of self-dealing by a disqualified person with a private foundation and the act is not corrected within the taxable period, there is hereby imposed a tax equal to 200 percent of the amount involved. The tax imposed by this paragraph shall be paid by any disqualified person (other than a foundation manager acting only as such) who participated in the act of self-dealing.
(2) On foundation manager 
In any case in which an additional tax is imposed by paragraph (1), if a foundation manager refused to agree to part or all of the correction, there is hereby imposed a tax equal to 50 percent of the amount involved. The tax imposed by this paragraph shall be paid by any foundation manager who refused to agree to part or all of the correction.
(c) Special rules 
For purposes of subsections (a) and (b)
(1) Joint and several liability 
If more than one person is liable under any paragraph of subsection (a) or (b) with respect to any one act of self-dealing, all such persons shall be jointly and severally liable under such paragraph with respect to such act.
(2) $20,000 limit for management 
With respect to any one act of self-dealing, the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $20,000, and the maximum amount of the tax imposed by subsection (b)(2) shall not exceed $20,000.
(d) Self-dealing 

(1) In general 
For purposes of this section, the term self-dealing means any direct or indirect
(A) sale or exchange, or leasing, of property between a private foundation and a disqualified person;
(B) lending of money or other extension of credit between a private foundation and a disqualified person;
(C) furnishing of goods, services, or facilities between a private foundation and a disqualified person;
(D) payment of compensation (or payment or reimbursement of expenses) by a private foundation to a disqualified person;
(E) transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a private foundation; and
(F) agreement by a private foundation to make any payment of money or other property to a government official (as defined in section 4946 (c)), other than an agreement to employ such individual for any period after the termination of his government service if such individual is terminating his government service within a 90-day period.
(2) Special rules 
For purposes of paragraph (1)
(A) the transfer of real or personal property by a disqualified person to a private foundation shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the foundation assumes or if it is subject to a mortgage or similar lien which a disqualified person placed on the property within the 10-year period ending on the date of the transfer;
(B) the lending of money by a disqualified person to a private foundation shall not be an act of self-dealing if the loan is without interest or other charge (determined without regard to section 7872) and if the proceeds of the loan are used exclusively for purposes specified in section 501 (c)(3);
(C) the furnishing of goods, services, or facilities by a disqualified person to a private foundation shall not be an act of self-dealing if the furnishing is without charge and if the goods, services, or facilities so furnished are used exclusively for purposes specified in section 501 (c)(3);
(D) the furnishing of goods, services, or facilities by a private foundation to a disqualified person shall not be an act of self-dealing if such furnishing is made on a basis no more favorable than that on which such goods, services, or facilities are made available to the general public;
(E) except in the case of a government official (as defined in section 4946 (c)), the payment of compensation (and the payment or reimbursement of expenses) by a private foundation to a disqualified person for personal services which are reasonable and necessary to carrying out the exempt purpose of the private foundation shall not be an act of self-dealing if the compensation (or payment or reimbursement) is not excessive;
(F) any transaction between a private foundation and a corporation which is a disqualified person (as defined in section 4946 (a)), pursuant to any liquidation, merger, redemption, recapitalization, or other corporate adjustment, organization, or reorganization, shall not be an act of self-dealing if all of the securities of the same class as that held by the foundation are subject to the same terms and such terms provide for receipt by the foundation of no less than fair market value;
(G) in the case of a government official (as defined in section 4946 (c)), paragraph (1) shall in addition not apply to
(i) prizes and awards which are subject to the provisions of section 74 (b) (without regard to paragraph (3) thereof), if the recipients of such prizes and awards are selected from the general public,
(ii) scholarships and fellowship grants which would be subject to the provisions of section 117 (a) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) and are to be used for study at an educational organization described in section 170 (b)(1)(A)(ii),
(iii) any annuity or other payment (forming part of a stock-bonus, pension, or profit-sharing plan) by a trust which is a qualified trust under section 401,
(iv) any annuity or other payment under a plan which meets the requirements of section 404 (a)(2),
(v) any contribution or gift (other than a contribution or gift of money) to, or services or facilities made available to, any such individual, if the aggregate value of such contributions, gifts, services, and facilities to, or made available to, such individual during any calendar year does not exceed $25,
(vi) any payment made under chapter 41 of title 5, United States Code, or
(vii) any payment or reimbursement of traveling expenses for travel solely from one point in the United States to another point in the United States, but only if such payment or reimbursement does not exceed the actual cost of the transportation involved plus an amount for all other traveling expenses not in excess of 125 percent of the maximum amount payable under section 5702 of title 5, United States Code, for like travel by employees of the United States; and
(H) the leasing by a disqualified person to a private foundation of office space for use by the foundation in a building with other tenants who are not disqualified persons shall not be treated as an act of self-dealing if
(i) such leasing of office space is pursuant to a binding lease which was in effect on October 9, 1969, or pursuant to renewals of such a lease;
(ii) the execution of such lease was not a prohibited transaction (within the meaning of section 503 (b) or any corresponding provision of prior law) at the time of such execution; and
(iii) the terms of the lease (or any renewal) reflect an arms-length transaction.
(e) Other definitions 
For purposes of this section
(1) Taxable period 
The term taxable period means, with respect to any act of self-dealing, the period beginning with the date on which the act of self-dealing occurs and ending on the earliest of
(A) the date of mailing a notice of deficiency with respect to the tax imposed by subsection (a)(1) under section 6212,
(B) the date on which the tax imposed by subsection (a)(1) is assessed, or
(C) the date on which correction of the act of self-dealing is completed.
(2) Amount involved 
The term amount involved means, with respect to any act of self-dealing, the greater of the amount of money and the fair market value of the other property given or the amount of money and the fair market value of the other property received; except that, in the case of services described in subsection (d)(2)(E), the amount involved shall be only the excess compensation. For purposes of the preceding sentence, the fair market value
(A) in the case of the taxes imposed by subsection (a), shall be determined as of the date on which the act of self-dealing occurs; and
(B) in the case of the taxes imposed by subsection (b), shall be the highest fair market value during the taxable period.
(3) Correction 
The terms correction and correct mean, with respect to any act of self-dealing, undoing the transaction to the extent possible, but in any case placing the private foundation in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards.

26 USC 4942 - Taxes on failure to distribute income

(a) Initial tax 
There is hereby imposed on the undistributed income of a private foundation for any taxable year, which has not been distributed before the first day of the second (or any succeeding) taxable year following such taxable year (if such first day falls within the taxable period), a tax equal to 30 percent of the amount of such income remaining undistributed at the beginning of such second (or succeeding) taxable year. The tax imposed by this subsection shall not apply to the undistributed income of a private foundation
(1) for any taxable year for which it is an operating foundation (as defined in subsection (j)(3)), or
(2) to the extent that the foundation failed to distribute any amount solely because of an incorrect valuation of assets under subsection (e), if
(A) the failure to value the assets properly was not willful and was due to reasonable cause,
(B) such amount is distributed as qualifying distributions (within the meaning of subsection (g)) by the foundation during the allowable distribution period (as defined in subsection (j)(2)),
(C) the foundation notifies the Secretary that such amount has been distributed (within the meaning of subparagraph (B)) to correct such failure, and
(D) such distribution is treated under subsection (h)(2) as made out of the undistributed income for the taxable year for which a tax would (except for this paragraph) have been imposed under this subsection.
(b) Additional tax 
In any case in which an initial tax is imposed under subsection (a) on the undistributed income of a private foundation for any taxable year, if any portion of such income remains undistributed at the close of the taxable period, there is hereby imposed a tax equal to 100 percent of the amount remaining undistributed at such time.
(c) Undistributed income 
For purposes of this section, the term undistributed income means, with respect to any private foundation for any taxable year as of any time, the amount by which
(1) the distributable amount for such taxable year, exceeds
(2) the qualifying distributions made before such time out of such distributable amount.
(d) Distributable amount 
For purposes of this section, the term distributable amount means, with respect to any foundation for any taxable year, an amount equal to
(1) the sum of the minimum investment return plus the amounts described in subsection (f)(2)(C), reduced by
(2) the sum of the taxes imposed on such private foundation for the taxable year under subtitle A and section 4940.
(e) Minimum investment return 

(1) In general 
For purposes of subsection (d), the minimum investment return for any private foundation for any taxable year is 5 percent of the excess of
(A) the aggregate fair market value of all assets of the foundation other than those which are used (or held for use) directly in carrying out the foundations exempt purpose, over
(B) the acquisition indebtedness with respect to such assets (determined under section 514 (c)(1) without regard to the taxable year in which the indebtedness was incurred).
(2) Valuation 

(A) In general 
For purposes of paragraph (1)(A), the fair market value of securities for which market quotations are readily available shall be determined on a monthly basis. For all other assets, the fair market value shall be determined at such times and in such manner as the Secretary shall by regulations prescribe.
(B) Reductions in value for blockage or similar factors 
In determining the value of any securities under this paragraph, the fair market value of such securities (determined without regard to any reduction in value) shall not be reduced unless, and only to the extent that, the private foundation establishes that as a result of
(i) the size of the block of such securities,
(ii) the fact that the securities held are securities in a closely held corporation, or
(iii) the fact that the sale of such securities would result in a forced or distress sale,

the securities could not be liquidated within a reasonable period of time except at a price less than such fair market value. Any reduction in value allowable under this subparagraph shall not exceed 10 percent of such fair market value.

(f) Adjusted net income 

(1) Defined 
For purposes of subsection (j), the term adjusted net income means the excess (if any) of
(A) the gross income for the taxable year (determined with the income modifications provided by paragraph (2)), over
(B) the sum of the deductions (determined with the deduction modifications provided by paragraph (3)) which would be allowed to a corporation subject to the tax imposed by section 11 for the taxable year.
(2) Income modifications 
The income modifications referred to in paragraph (1)(A) are as follows:
(A) section 103 (relating to State and local bonds) shall not apply,
(B) capital gains and losses from the sale or other disposition of property shall be taken into account only in an amount equal to any net short-term capital gain for the taxable year;
(C) there shall be taken into account
(i) amounts received or accrued as repayments of amounts which were taken into account as a qualifying distribution within the meaning of subsection (g)(1)(A) for any taxable year;
(ii) notwithstanding subparagraph (B), amounts received or accrued from the sale or other disposition of property to the extent that the acquisition of such property was taken into account as a qualifying distribution (within the meaning of subsection (g)(1)(B)) for any taxable year; and
(iii) any amount set aside under subsection (g)(2) to the extent it is determined that such amount is not necessary for the purposes for which it was set aside; and
(D) section 483 (relating to imputed interest) shall not apply in the case of a binding contract made in a taxable year beginning before January 1, 1970.
(3) Deduction modifications 
The deduction modifications referred to in paragraph (1)(B) are as follows:
(A) no deduction shall be allowed other than all the ordinary and necessary expenses paid or incurred for the production or collection of gross income or for the management, conservation, or maintenance of property held for the production of such income and the allowances for depreciation and depletion determined under section 4940 (c)(3)(B), and
(B) section 265 (relating to expenses and interest relating to tax-exempt interest) shall not apply.
(4) Transitional rule 
For purposes of paragraph (2)(B), the basis (for purposes of determining gain) of property held by a private foundation on December 31, 1969, and continuously thereafter to the date of its disposition, shall be deemed to be not less than the fair market value of such property on December 31, 1969.
(g) Qualifying distributions defined 

(1) In general 
For purposes of this section, the term qualifying distribution means
(A) any amount (including that portion of reasonable and necessary administrative expenses) paid to accomplish one or more purposes described in section 170 (c)(2)(B), other than any contribution to (i) an organization controlled (directly or indirectly) by the foundation or one or more disqualified persons (as defined in section 4946) with respect to the foundation, except as provided in paragraph (3), or (ii) a private foundation which is not an operating foundation (as defined in subsection (j)(3)), except as provided in paragraph (3), or
(B) any amount paid to acquire an asset used (or held for use) directly in carrying out one or more purposes described in section 170 (c)(2)(B).
(2) Certain set-asides 

(A) In general 
For all taxable years beginning on or after January 1, 1975, subject to such terms and conditions as may be prescribed by the Secretary, an amount set aside for a specific project which comes within one or more purposes described in section 170 (c)(2)(B) may be treated as a qualifying distribution if it meets the requirements of subparagraph (B).
(B) Requirements 
An amount set aside for a specific project shall meet the requirements of this subparagraph if at the time of the set-aside the foundation establishes to the satisfaction of the Secretary that the amount will be paid for the specific project within 5 years, and either
(i) at the time of the set-aside the private foundation establishes to the satisfaction of the Secretary that the project is one which can better be accomplished by such set-aside than by immediate payment of funds, or
(ii) 
(I) the project will not be completed before the end of the taxable year of the foundation in which the set-aside is made,
(II) the private foundation in each taxable year beginning after December 31, 1975 (or after the end of the fourth taxable year following the year of its creation, whichever is later), distributes amounts, in cash or its equivalent, equal to not less than the distributable amount determined under subsection (d) (without regard to subsection (i)) for purposes described in section 170 (c)(2)(B) (including but not limited to payments with respect to set-asides which were treated as qualifying distributions in one or more prior years), and
(III) the private foundation has distributed (including but not limited to payments with respect to set-asides which were treated as qualifying distributions in one or more prior years) during the four taxable years immediately preceding its first taxable year beginning after December 31, 1975, or the fifth taxable year following the year of its creation, whichever is later, an aggregate amount, in cash or its equivalent, of not less than the sum of the following: 80 percent of the first preceding taxable years distributable amount; 60 percent of the second preceding taxable years distributable amount; 40 percent of the third preceding taxable years distributable amount; and 20 percent of the fourth preceding taxable years distributable amount.
(C) Certain failures to distribute 
If, for any taxable year to which clause (ii)(II) of subparagraph (B) applies, the private foundation fails to distribute in cash or its equivalent amounts not less than those required by such clause and
(i) the failure to distribute such amounts was not willful and was due to reasonable cause, and
(ii) the foundation distributes an amount in cash or its equivalent which is not less than the difference between the amounts required to be distributed under clause (ii)(II) of subparagraph (B) and the amounts actually distributed in cash or its equivalent during that taxable year within the correction period (as defined in section 4963 (e)),

such distribution in cash or its equivalent shall be treated for the purposes of this subparagraph as made during such year.

(D) Reduction in distribution amount 
If, during the taxable years in the adjustment period for which the organization is a private foundation, the foundation distributes amounts in cash or its equivalent which exceed the amount required to be distributed under clause (ii)(II) of subparagraph (B) (including but not limited to payments with respect to set-asides which were treated as qualifying distributions in prior years), then for purposes of this subsection the distribution required under clause (ii)(II) of subparagraph (B) for the taxable year shall be reduced by an amount equal to such excess.
(E) Adjustment period 
For purposes of subparagraph (D), with respect to any taxable year of a private foundation, the taxable years in the adjustment period are the taxable years (not exceeding 5) beginning after December 31, 1975, and immediately preceding the taxable year. In the case of a set-aside which satisfies the requirements of clause (i) of subparagraph (B), for good cause shown, the period for paying the amount set aside may be extended by the Secretary.
(3) Certain contributions to section 501 (c)(3) organizations 
For purposes of this section, the term qualifying distribution includes a contribution to a section 501 (c)(3) organization described in paragraph (1)(A)(i) or (ii) if
(A) not later than the close of the first taxable year after its taxable year in which such contribution is received, such organization makes a distribution equal to the amount of such contribution and such distribution is a qualifying distribution (within the meaning of paragraph (1) or (2), without regard to this paragraph) which is treated under subsection (h) as a distribution out of corpus (or would be so treated if such section 501 (c)(3) organization were a private foundation which is not an operating foundation), and
(B) the private foundation making the contribution obtains adequate records or other sufficient evidence from such organization showing that the qualifying distribution described in subparagraph (A) has been made by such organization.
(4) Limitation on distributions by nonoperating private foundations to supporting organizations 

(A) In general 
For purposes of this section, the term qualifying distribution shall not include any amount paid by a private foundation which is not an operating foundation to
(i) any type III supporting organization (as defined in section 4943 (f)(5)(A)) which is not a functionally integrated type III supporting organization (as defined in section 4943 (f)(5)(B)), and
(ii) any organization which is described in subparagraph (B) or (C) if
(I) a disqualified person of the private foundation directly or indirectly controls such organization or a supported organization (as defined in section 509(f)(3)) of such organization, or
(II) the Secretary determines by regulations that a distribution to such organization otherwise is inappropriate.
(B) Type I and type II supporting organizations 
An organization is described in this subparagraph if the organization meets the requirements of subparagraphs (A) and (C) of section 509 (a)(3) and is
(i) operated, supervised, or controlled by one or more organizations described in paragraph (1) or (2) of section 509 (a), or
(ii) supervised or controlled in connection with one or more such organizations.
(C) Functionally integrated type III supporting organizations 
An organization is described in this subparagraph if the organization is a functionally integrated type III supporting organization (as defined under section 4943 (f)(5)(B)).
(h) Treatment of qualifying distributions 

(1) In general 
Except as provided in paragraph (2), any qualifying distribution made during a taxable year shall be treated as made
(A) first out of the undistributed income of the immediately preceding taxable year (if the private foundation was subject to the tax imposed by this section for such preceding taxable year) to the extent thereof,
(B) second out of the undistributed income for the taxable year to the extent thereof, and
(C) then out of corpus.

For purposes of this paragraph, distributions shall be taken into account in the order of time in which made.

(2) Correction of deficient distributions for prior taxable years, etc. 
In the case of any qualifying distribution which (under paragraph (1)) is not treated as made out of the undistributed income of the immediately preceding taxable year, the foundation may elect to treat any portion of such distribution as made out of the undistributed income of a designated prior taxable year or out of corpus. The election shall be made by the foundation at such time and in such manner as the Secretary shall by regulations prescribe.
(i) Adjustment of distributable amount where distributions during prior years have exceeded income 

(1) In general 
If, for the taxable years in the adjustment period for which an organization is a private foundation
(A) the aggregate qualifying distributions treated (under subsection (h)) as made out of the undistributed income for such taxable year or as made out of corpus (except to the extent subsection (g)(3) with respect to the recipient private foundation or section 170 (b)(1)(F)(ii) applies) during such taxable years, exceed
(B) the distributable amounts for such taxable years (determined without regard to this subsection),

then, for purposes of this section (other than subsection (h)), the distributable amount for the taxable year shall be reduced by an amount equal to such excess.

(2) Taxable years in adjustment period 
For purposes of paragraph (1), with respect to any taxable year of a private foundation the taxable years in the adjustment period are the taxable years (not exceeding 5) beginning after December 31, 1969, and immediately preceding the taxable year.
(j) Other definitions 
For purposes of this section
(1) Taxable period 
The term taxable period means, with respect to the undistributed income for any taxable year, the period beginning with the first day of the taxable year and ending on the earlier of
(A) the date of mailing of a notice of deficiency with respect to the tax imposed by subsection (a) under section 6212, or
(B) the date on which the tax imposed by subsection (a) is assessed.
(2) Allowable distribution period 
The term allowable distribution period means, with respect to any private foundation, the period beginning with the first day of the first taxable year following the taxable year in which the incorrect valuation (described in subsection (a)(2)) occurred and ending 90 days after the date of mailing of a notice of deficiency (with respect to the tax imposed by subsection (a)) under section 6212 extended by
(A) any period in which a deficiency cannot be assessed under section 6213 (a), and
(B) any other period which the Secretary determines is reasonable and necessary to permit a distribution of undistributed income under this section.
(3) Operating foundation 
For purposes of this section, the term operating foundation means any organization
(A) which makes qualifying distributions (within the meaning of paragraph (1) or (2) of subsection (g)) directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated equal to substantially all of the lesser of
(i) its adjusted net income (as defined in subsection (f)), or
(ii) its minimum investment return; and
(B) 
(i) substantially more than half of the assets of which are devoted directly to such activities or to functionally related businesses (as defined in paragraph (4)), or to both, or are stock of a corporation which is controlled by the foundation and substantially all of the assets of which are so devoted.
(ii) which normally makes qualifying distributions (within the meaning of paragraph (1) or (2) of subsection (g)) directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated in an amount not less than two-thirds of its minimum investment return (as defined in subsection (e)), or
(iii) substantially all of the support (other than gross investment income as defined in section 509(e)) of which is normally received from the general public and from 5 or more exempt organizations which are not described in section 4946 (a)(1)(H) with respect to each other or the recipient foundation; not more than 25 percent of the support (other than gross investment income) of which is normally received from any one such exempt organization; and not more than half of the support of which is normally received from gross investment income.

Notwithstanding the provisions of subparagraph (A), if the qualifying distributions (within the meaning of paragraph (1) or (2) of subsection (g)) of an organization for the taxable year exceed the minimum investment return for the taxable year, clause (ii) of subparagraph (A) shall not apply unless substantially all of such qualifying distributions are made directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated.

(4) Functionally related business 
The term functionally related business means
(A) a trade or business which is not an unrelated trade or business (as defined in section 513), or
(B) an activity which is carried on within a larger aggregate of similar activities or within a larger complex of other endeavors which is related (aside from the need of the organization for income or funds or the use it makes of the profits derived) to the exempt purposes of the organization.
(5) Certain elderly care facilities 
For purposes of this section (but no other provisions of this title), the term operating foundation includes any organization which, on May 26, 1969, and at all times thereafter before the close of the taxable year, operated and maintained as its principal functional purpose facilities for the long-term care, comfort, maintenance, or education of permanently and totally disabled persons, elderly persons, needy widows, or children but only if such organization meets the requirements of paragraph (3)(B)(ii).

26 USC 4943 - Taxes on excess business holdings

(a) Initial tax 

(1) Imposition 
There is hereby imposed on the excess business holdings of any private foundation in a business enterprise during any taxable year which ends during the taxable period a tax equal to 10 percent of the value of such holdings.
(2) Special rules 
The tax imposed by paragraph (1)
(A) shall be imposed on the last day of the taxable year, but
(B) with respect to the private foundations holdings in any business enterprise, shall be determined as of that day during the taxable year when the foundations excess holdings in such enterprise were the greatest.
(b) Additional tax 
In any case in which an initial tax is imposed under subsection (a) with respect to the holdings of a private foundation in any business enterprise, if, at the close of the taxable period with respect to such holdings, the foundation still has excess business holdings in such enterprise, there is hereby imposed a tax equal to 200 percent of such excess business holdings.
(c) Excess business holdings 
For purposes of this section
(1) In general 
The term excess business holdings means, with respect to the holdings of any private foundation in any business enterprise, the amount of stock or other interest in the enterprise which the foundation would have to dispose of to a person other than a disqualified person in order for the remaining holdings of the foundation in such enterprise to be permitted holdings.
(2) Permitted holdings in a corporation 

(A) In general 
The permitted holdings of any private foundation in an incorporated business enterprise are
(i) 20 percent of the voting stock, reduced by
(ii) the percentage of the voting stock owned by all disqualified persons.

In any case in which all disqualified persons together do not own more than 20 percent of the voting stock of an incorporated business enterprise, nonvoting stock held by the private foundation shall also be treated as permitted holdings.

(B) 35 percent rule where third person has effective control of enterprise 
If
(i) the private foundation and all disqualified persons together do not own more than 35 percent of the voting stock of an incorporated business enterprise, and
(ii) it is established to the satisfaction of the Secretary that effective control of the corporation is in one or more persons who are not disqualified persons with respect to the foundation,

then subparagraph (A) shall be applied by substituting 35 percent for 20 percent.

(C) 2 percent de minimis rule 
A private foundation shall not be treated as having excess business holdings in any corporation in which it (together with all other private foundations which are described in section 4946 (a)(1)(H)) owns not more than 2 percent of the voting stock and not more than 2 percent in value of all outstanding shares of all classes of stock.
(3) Permitted holdings in partnerships, etc. 
The permitted holdings of a private foundation in any business enterprise which is not incorporated shall be determined under regulations prescribed by the Secretary. Such regulations shall be consistent in principle with paragraphs (2) and (4), except that
(A) in the case of a partnership or joint venture, profits interest shall be substituted for voting stock, and capital interest shall be substituted for nonvoting stock,
(B) in the case of a proprietorship, there shall be no permitted holdings, and
(C) in any other case, beneficial interest shall be substituted for voting stock.
(4) Present holdings 

(A) 
(i) In applying this section with respect to the holdings of any private foundation in a business enterprise, if such foundation and all disqualified persons together have holdings in such enterprise in excess of 20 percent of the voting stock on May 26, 1969, the percentage of such holdings shall be substituted for 20 percent, and for 35 percent (if the percentage of such holdings is greater than 35 percent), wherever it appears in paragraph (2), but in no event shall the percentage so substituted be more than 50 percent.
(ii) If the percentage of the holdings of any private foundation and all disqualified persons together in a business enterprise (or if the percentage of the holdings of the private foundation in such enterprise) decreases for any reason, clause (i) and subparagraph (D) shall, except as provided in the next sentence, be applied for all periods after such decrease by substituting such decreased percentage for the percentage held on May 26, 1969, but in no event shall the percentage substituted be less than 20 percent. For purposes of the preceding sentence, any decrease in percentage holdings attributable to issuances of stock (or to issuances of stock coupled with redemptions of stock) shall be disregarded so long as
(I) the net percentage decrease disregarded under this sentence does not exceed 2 percent, and
(II) the number of shares held by the foundation is not affected by any such issuance or redemption.
(iii) The percentage substituted under clause (i), and any percentage substituted under subparagraph (D), shall be applied both with respect to the voting stock and, separately, with respect to the value of all outstanding shares of all classes of stock.
(iv) In the case of any merger, recapitalization, or other reorganization involving one or more business enterprises, the application of clauses (i), (ii), and (iii) shall be determined under regulations prescribed by the Secretary.
(B) Any interest in a business enterprise which a private foundation holds on May 26, 1969, if the private foundation on such date has excess business holdings, shall (while held by the foundation) be treated as held by a disqualified person (rather than by the private foundation)
(i) during the 20-year period beginning on such date, if the private foundation and all disqualified persons have more than a 95 percent voting stock interest on such date,
(ii) except as provided in clause (i), during the 15-year period beginning on such date, if the foundation and all disqualified persons have more than a 75 percent voting stock interest (or more than a 75 percent profits or beneficial interest in the case of any unincorporated enterprise) on such date or more than a 75 percent interest in the value of all outstanding shares of all classes of stock (or more than a 75 percent capital interest in the case of a partnership or joint venture) on such date, or
(iii) during the 10year period beginning on such date, in any other case.
(C) The 20-year, 15-year, and 10-year periods described in subparagraph (B) for the disposition of excess business holdings shall be suspended during the pendency of any judicial proceeding by the private foundation which is necessary to reform, or to excuse such foundation from compliance with, its governing instrument or any other instrument (as in effect on May 26, 1969) in order to allow disposition of such holdings.
(D) 
(i) If, at any time during the second phase, all disqualified persons together have holdings in a business enterprise in excess of 2 percent of the voting stock of such enterprise, then subparagraph (A)(i) shall be applied by substituting for 50 percent the following: 50 percent, of which not more than 25 percent shall be voting stock held by the private foundation.
(ii) If, immediately before the close of the second phase, clause (i) of this subparagraph did not apply with respect to a business enterprise, then for all periods after the close of the second phase subparagraph (A)(i) shall be applied by substituting for 50 percent the following: 35 percent, or if at any time after the close of the second phase all disqualified persons together have had holdings in such enterprise which exceed 2 percent of the voting stock, 35 percent, of which not more than 25 percent shall be voting stock held by the private foundation.
(iii) For purposes of this subparagraph, the term second phase means the 15-year period immediately following the 20-year, 15-year, or 10-year period described in subparagraph (B), whichever applies, as modified by subparagraph (C).
(E) Clause (ii) of subparagraph (B) shall not apply with respect to any business enterprise if before January 1, 1971, one or more individuals who are substantial contributors (or members of the family (within the meaning of section 4946(d)) of one or more substantial contributors) to the private foundation and who on May 26, 1969, held more than 15 percent of the voting stock of the enterprise elect, in such manner as the Secretary may by regulations prescribe, not to have such clause (ii) apply with respect to such enterprise.
(5) Holdings acquired by trust or will 
Paragraph (4) (other than subparagraph (B)(i)) shall apply to any interest in a business enterprise which a private foundation acquires under the terms of a trust which was irrevocable on May 26, 1969, or under the terms of a will executed on or before such date, which are in effect on such date and at all times thereafter, as if such interest were held on May 26, 1969, except that the 15-year and 10-year periods prescribed in clauses (ii) and (iii) of paragraph (4)(B) shall commence with respect to such interest on the date of distribution under the trust or will in lieu of May 26, 1969.
(6) 5-year period to dispose of gifts, bequests, etc. 
Except as provided in paragraph (5), if, after May 26, 1969, there is a change in the holdings in a business enterprise (other than by purchase by the private foundation or by a disqualified person) which causes the private foundation to have
(A) excess business holdings in such enterprise, the interest of the foundation in such enterprise (immediately after such change) shall (while held by the foundation) be treated as held by a disqualified person (rather than by the foundation) during the 5-year period beginning on the date of such change in holdings; or
(B) an increase in excess business holdings in such enterprise (determined without regard to subparagraph (A)), subparagraph (A) shall apply, except that the excess holdings immediately preceding the increase therein shall not be treated, solely because of such increase, as held by a disqualified person (rather than by the foundation).

In any case where an acquisition by a disqualified person would result in a substitution under clause (i) or (ii) of subparagraph (D) of paragraph (4), the preceding sentence shall be applied with respect to such acquisition as if it did not contain the phrase or by a disqualified person in the material preceding subparagraph (A).

(7) 5-year extension of period to dispose of certain large gifts and bequests 
The Secretary may extend for an additional 5-year period the period under paragraph (6) for disposing of excess business holdings in the case of an unusually large gift or bequest of diverse business holdings or holdings with complex corporate structures if
(A) the foundation establishes that
(i) diligent efforts to dispose of such holdings have been made within the initial 5-year period, and
(ii) disposition within the initial 5-year period has not been possible (except at a price substantially below fair market value) by reason of such size and complexity or diversity of such holdings,
(B) before the close of the initial 5-year period
(i) the private foundation submits to the Secretary a plan for disposing of all of the excess business holdings involved in the extension, and
(ii) the private foundation submits the plan described in clause (i) to the Attorney General (or other appropriate State official) having administrative or supervisory authority or responsibility with respect to the foundations disposition of the excess business holdings involved and submits to the Secretary any response received by the private foundation from the Attorney General (or other appropriate State official) to such plan during such 5-year period, and
(C) the Secretary determines that such plan can reasonably be expected to be carried out before the close of the extension period.
(d) Definitions; special rules 
For purposes of this section
(1) Business holdings 
In computing the holdings of a private foundation, or a disqualified person (as defined in section 4946) with respect thereto, in any business enterprise, any stock or other interest owned, directly or indirectly, by or for a corporation, partnership, estate, or trust shall be considered as being owned proportionately by or for its shareholders, partners, or beneficiaries. The preceding sentence shall not apply with respect to an income or remainder interest of a private foundation in a trust described in section 4947 (a)(2), but only if, in the case of property transferred in trust after May 26, 1969, such foundation holds only an income interest or only a remainder interest in such trust.
(2) Taxable period 
The term taxable period means, with respect to any excess business holdings of a private foundation in a business enterprise, the period beginning on the first day on which there are excess holdings and ending on the earlier of
(A) the date of mailing of a notice of deficiency with respect to the tax imposed by subsection (a) under section 6212 in respect of such holdings, or
(B) the date on which the tax imposed by subsection (a) in respect of such holdings is assessed.
(3) Business enterprise 
The term business enterprise does not include
(A) a functionally related business (as defined in section 4942 (j)(4)), or
(B) a trade or business at least 95 percent of the gross income of which is derived from passive sources.

For purposes of subparagraph (B), gross income from passive sources includes the items excluded by section 512 (b)(1), (2), (3), and (5), and income from the sale of goods (including charges or costs passed on at cost to purchasers of such goods or income received in settlement of a dispute concerning or in lieu of the exercise of the right to sell such goods) if the seller does not manufacture, produce, physically receive or deliver, negotiate sales of, or maintain inventories in such goods.

(4) Disqualified person 
The term disqualified person (as defined in section 4946 (a)) does not include a plan described in section 4975 (e)(7) with respect to the holdings of a private foundation described in paragraphs (4) and (5) of subsection (c).
(e) Application of tax to donor advised funds 

(1) In general 
For purposes of this section, a donor advised fund (as defined in section 4966 (d)(2)) shall be treated as a private foundation.
(2) Disqualified person 
In applying this section to any donor advised fund (as so defined), the term disqualified person means, with respect to the donor advised fund, any person who is
(A) described in section 4966 (d)(2)(A)(iii),
(B) a member of the family of an individual described in subparagraph (A), or
(C) a 35-percent controlled entity (as defined in section 4958 (f)(3) by substituting persons described in subparagraph (A) or (B) of section 4943 (e)(2) for persons described in subparagraph (A) or (B) of paragraph (1) in subparagraph (A)(i) thereof).
(3) Present holdings 
For purposes of this subsection, rules similar to the rules of paragraphs (4), (5), and (6) of subsection (c) shall apply to donor advised funds (as so defined), except that
(A) the date of the enactment of this subsection shall be substituted for May 26, 1969 each place it appears in paragraphs (4), (5), and (6), and
(B) January 1, 2007 shall be substituted for January 1, 1970 in paragraph (4)(E).
(f) Application of tax to supporting organizations 

(1) In general 
For purposes of this section, an organization which is described in paragraph (3) shall be treated as a private foundation.
(2) Exception 
The Secretary may exempt the excess business holdings of any organization from the application of this subsection if the Secretary determines that such holdings are consistent with the purpose or function constituting the basis for its exemption under section 501.
(3) Organizations described 
An organization is described in this paragraph if such organization is
(A) a type III supporting organization (other than a functionally integrated type III supporting organization), or
(B) an organization which meets the requirements of subparagraphs (A) and (C) of section 509 (a)(3) and which is supervised or controlled in connection with one or more organizations described in paragraph (1) or (2) of section 509 (a), but only if such organization accepts any gift or contribution from any person described in section 509 (f)(2)(B).
(4) Disqualified person 

(A) In general 
In applying this section to any organization described in paragraph (3), the term disqualified person means, with respect to the organization
(i) any person who was, at any time during the 5-year period ending on the date described in subsection (a)(2)(A), in a position to exercise substantial influence over the affairs of the organization,
(ii) any member of the family (determined under section 4958(f)(4)) of an individual described in clause (i),
(iii) any 35-percent controlled entity (as defined in section 4958 (f)(3) by substituting persons described in clause (i) or (ii) of section 4943 (f)(4)(A) for persons described in subparagraph (A) or (B) of paragraph (1) in subparagraph (A)(i) thereof),
(iv) any person described in section 4958 (c)(3)(B), and
(v) any organization
(I) which is effectively controlled (directly or indirectly) by the same person or persons who control the organization in question, or
(II) substantially all of the contributions to which were made (directly or indirectly) by the same person or persons described in subparagraph (B) or a member of the family (within the meaning of section 4946(d)) of such a person.
(B) Persons described 
A person is described in this subparagraph if such person is
(i) a substantial contributor to the organization (as defined in section 4958 (c)(3)(C)),
(ii) an officer, director, or trustee of the organization (or an individual having powers or responsibilities similar to those of the officers, directors, or trustees of the organization), or
(iii) an owner of more than 20 percent of
(I) the total combined voting power of a corporation,
(II) the profits interest of a partnership, or
(III) the beneficial interest of a trust or unincorporated enterprise,

which is a substantial contributor (as so defined) to the organization.

(5) Type III supporting organization; functionally integrated type III supporting organization 
For purposes of this subsection
(A) Type III supporting organization 
The term type III supporting organization means an organization which meets the requirements of subparagraphs (A) and (C) of section 509 (a)(3) and which is operated in connection with one or more organizations described in paragraph (1) or (2) of section 509 (a).
(B) Functionally integrated type III supporting organization 
The term functionally integrated type III supporting organization means a type III supporting organization which is not required under regulations established by the Secretary to make payments to supported organizations (as defined under section 509 (f)(3)) due to the activities of the organization related to performing the functions of, or carrying out the purposes of, such supported organizations.
(6) Special rule for certain holdings of type III supporting organizations 
For purposes of this subsection, the term excess business holdings shall not include any holdings of a type III supporting organization in any business enterprise if, as of November 18, 2005, the holdings were held (and at all times thereafter, are held) for the benefit of the community pursuant to the direction of a State attorney general or a State official with jurisdiction over such organization.
(7) Present holdings 
For purposes of this subsection, rules similar to the rules of paragraphs (4), (5), and (6) of subsection (c) shall apply to organizations described in section 509 (a)(3), except that
(A) the date of the enactment of this subsection shall be substituted for May 26, 1969 each place it appears in paragraphs (4), (5), and (6), and
(B) January 1, 2007 shall be substituted for January 1, 1970 in paragraph (4)(E).

26 USC 4944 - Taxes on investments which jeopardize charitable purpose

(a) Initial taxes 

(1) On the private foundation 
If a private foundation invests any amount in such a manner as to jeopardize the carrying out of any of its exempt purposes, there is hereby imposed on the making of such investment a tax equal to 10 percent of the amount so invested for each year (or part thereof) in the taxable period. The tax imposed by this paragraph shall be paid by the private foundation.
(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 foundation manager in the making of the investment, knowing that it is jeopardizing the carrying out of any of the foundations exempt purposes, a tax equal to 10 percent of the amount so invested for each year (or part thereof) in the taxable period, unless such participation is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by any foundation manager who participated in the making of the investment.
(b) Additional taxes 

(1) On the foundation 
In any case in which an initial tax is imposed by subsection (a)(1) on the making of an investment and such investment is not removed from jeopardy within the taxable period, there is hereby imposed a tax equal to 25 percent of the amount of the investment. The tax imposed by this paragraph shall be paid by the private foundation.
(2) On the management 
In any case in which an additional tax is imposed by paragraph (1), if a foundation manager refused to agree to part or all of the removal from jeopardy, there is hereby imposed a tax equal to 5 percent of the amount of the investment. The tax imposed by this paragraph shall be paid by any foundation manager who refused to agree to part or all of the removal from jeopardy.
(c) Exception for program-related investments 
For purposes of this section, investments, the primary purpose of which is to accomplish one or more of the purposes described in section 170 (c)(2)(B), and no significant purpose of which is the production of income or the appreciation of property, shall not be considered as investments which jeopardize the carrying out of exempt purposes.
(d) Special rules 
For purposes of subsections (a) and (b)
(1) Joint and several liability 
If more than one person is liable under subsection (a)(2) or (b)(2) with respect to any one investment, all such persons shall be jointly and severally liable under such paragraph with respect to such investment.
(2) Limit for management 
With respect to any one investment, the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $10,000, and the maximum amount of the tax imposed by subsection (b)(2) shall not exceed $20,000.
(e) Definitions 
For purposes of this section
(1) Taxable period 
The term taxable period means, with respect to any investment which jeopardizes the carrying out of exempt purposes, the period beginning with the date on which the amount is so invested and ending on the earliest of
(A) the date of mailing of a notice of deficiency with respect to the tax imposed by subsection (a)(1) under section 6212,
(B) the date on which the tax imposed by subsection (a)(1) is assessed, or
(C) the date on which the amount so invested is removed from jeopardy.
(2) Removal from jeopardy 
An investment which jeopardizes the carrying out of exempt purposes shall be considered to be removed from jeopardy when such investment is sold or otherwise disposed of, and the proceeds of such sale or other disposition are not investments which jeopardize the carrying out of exempt purposes.

26 USC 4945 - Taxes on taxable expenditures

(a) Initial taxes 

(1) On the foundation 
There is hereby imposed on each taxable expenditure (as defined in subsection (d)) a tax equal to 20 percent of the amount thereof. The tax imposed by this paragraph shall be paid by the private foundation.
(2) On the management 
There is hereby imposed on the agreement of any foundation manager to the making of an expenditure, knowing that it is a taxable expenditure, a tax equal to 5 percent of the amount thereof, unless such agreement is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by any foundation manager who agreed to the making of the expenditure.
(b) Additional taxes 

(1) On the foundation 
In any case in which an initial tax is imposed by subsection (a)(1) on a taxable expenditure and such expenditure is not corrected within the taxable period, there is hereby imposed a tax equal to 100 percent of the amount of the expenditure. The tax imposed by this paragraph shall be paid by the private foundation.
(2) On the management 
In any case in which an additional tax is imposed by paragraph (1), if a foundation manager refused to agree to part or all of the correction, there is hereby imposed a tax equal to 50 percent of the amount of the taxable expenditure. The tax imposed by this paragraph shall be paid by any foundation manager who refused to agree to part or all of the correction.
(c) Special rules 
For purposes of subsections (a) and (b)
(1) Joint and several liability 
If more than one person is liable under subsection (a)(2) or (b)(2) with respect to the making of a taxable expenditure, all such persons shall be jointly and severally liable under such paragraph with respect to such expenditure.
(2) Limit for management 
With respect to any one taxable expenditure, the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $10,000, and the maximum amount of the tax imposed by subsection (b)(2) shall not exceed $20,000.
(d) Taxable expenditure 
For purposes of this section, the term taxable expenditure means any amount paid or incurred by a private foundation
(1) to carry on propaganda, or otherwise to attempt, to influence legislation, within the meaning of subsection (e),
(2) except as provided in subsection (f), to influence the outcome of any specific public election, or to carry on, directly or indirectly, any voter registration drive,
(3) as a grant to an individual for travel, study, or other similar purposes by such individual, unless such grant satisfies the requirements of subsection (g),
(4) as a grant to an organization unless
(A) such organization
(i) is described in paragraph (1) or (2) of section 509 (a),
(ii) is an organization described in section 509 (a)(3) (other than an organization described in clause (i) or (ii) of section 4942 (g)(4)(A)), or
(iii) is an exempt operating foundation (as defined in section 4940 (d)(2)), or
(B) the private foundation exercises expenditure responsibility with respect to such grant in accordance with subsection (h), or
(5) for any purpose other than one specified in section 170 (c)(2)(B).
(e) Activities within subsection (d)(1) 
For purposes of subsection (d)(1), the term taxable expenditure means any amount paid or incurred by a private foundation for
(1) any attempt to influence any legislation through an attempt to affect the opinion of the general public or any segment thereof, and
(2) any attempt to influence legislation through communication with any member or employee of a legislative body, or with any other government official or employee who may participate in the formulation of the legislation (except technical advice or assistance provided to a governmental body or to a committee or other subdivision thereof in response to a written request by such body or subdivision, as the case may be),

other than through making available the results of nonpartisan analysis, study, or research. Paragraph (2) of this subsection shall not apply to any amount paid or incurred in connection with an appearance before, or communication to, any legislative body with respect to a possible decision of such body which might affect the existence of the private foundation, its powers and duties, its tax-exempt status, or the deduction of contributions to such foundation.

(f) Nonpartisan activities carried on by certain organizations 
Subsection (d)(2) shall not apply to any amount paid or incurred by any organization
(1) which is described in section 501 (c)(3) and exempt from taxation under section 501 (a),
(2) the activities of which are nonpartisan, are not confined to one specific election period, and are carried on in 5 or more States,
(3) substantially all of the income of which is expended directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated,
(4) substantially all of the support (other than gross investment income as defined in section 509(e)) of which is received from exempt organizations, the general public, governmental units described in section 170 (c)(1), or any combination of the foregoing; not more than 25 percent of such support is received from any one exempt organization (for this purpose treating private foundations which are described in section 4946 (a)(1)(H) with respect to each other as one exempt organization); and not more than half of the support of which is received from gross investment income, and
(5) contributions to which for voter registration drives are not subject to conditions that they may be used only in specified States, possessions of the United States, or political subdivisions or other areas of any of the foregoing, or the District of Columbia, or that they may be used in only one specific election period.

In determining whether the organization meets the requirements of paragraph (4) for any taxable year of such organization, there shall be taken into account the support received by such organization during such taxable year and during the immediately preceding 4 taxable years of such organization (excluding therefrom any preceding taxable year which begins before January 1, 1970). Subsection (d)(4) shall not apply to any grant to an organization which meets the requirements of this subsection.

(g) Individual grants 
Subsection (d)(3) shall not apply to an individual grant awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance by the Secretary, if it is demonstrated to the satisfaction of the Secretary that
(1) the grant constitutes a scholarship or fellowship grant which would be subject to the provisions of section 117 (a) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) and is to be used for study at an educational organization described in section 170 (b)(1)(A)(ii),
(2) the grant constitutes a prize or award which is subject to the provisions of section 74 (b)(without regard to paragraph (3) thereof), if the recipient of such prize or award is selected from the general public, or
(3) the purpose of the grant is to achieve a specific objective, produce a report or other similar product, or improve or enhance a literary, artistic, musical, scientific, teaching, or other similar capacity, skill, or talent of the grantee.
(h) Expenditure responsibility 
The expenditure responsibility referred to in subsection (d)(4) means that the private foundation is responsible to exert all reasonable efforts and to establish adequate procedures
(1) to see that the grant is spent solely for the purpose for which made,
(2) to obtain full and complete reports from the grantee on how the funds are spent, and
(3) to make full and detailed reports with respect to such expenditures to the Secretary.
(i) Other definitions 
For purposes of this section
(1) Correction 
The terms correction and correct means, with respect to any taxable expenditure,
(A)  recovering part or all of the expenditure to the extent recovery is possible, and where full recovery is not possible such additional corrective action as is prescribed by the Secretary by regulations, or
(B)  in the case of a failure to comply with subsection (h)(2) or (h)(3), obtaining or making the report in question.
(2) Taxable period 
The term taxable period means, with respect to any taxable expenditure, the period beginning with the date on which the taxable expenditure occurs and ending on the earlier of
(A) the date of mailing a notice of deficiency with respect to the tax imposed by subsection (a)(1) under section 6212, or
(B) the date on which the tax imposed by subsection (a)(1) is assessed.

26 USC 4946 - Definitions and special rules

(a) Disqualified person 

(1) In general 
For purposes of this subchapter, the term disqualified person means, with respect to a private foundation, a person who is
(A) a substantial contributor to the foundation,
(B) a foundation manager (within the meaning of subsection (b)(1)),
(C) an owner of more than 20 percent of
(i) the total combined voting power of a corporation,
(ii) the profits interest of a partnership, or
(iii) the beneficial interest of a trust or unincorporated enterprise,

which is a substantial contributor to the foundation,

(D) a member of the family (as defined in subsection (d)) of any individual described in subparagraph (A), (B), or (C),
(E) a corporation of which persons described in subparagraph (A), (B), (C), or (D) own more than 35 percent of the total combined voting power,
(F) a partnership in which persons described in subparagraph (A), (B), (C), or (D) own more than 35 percent of the profits interest,
(G) a trust or estate in which persons described in subparagraph (A), (B), (C), or (D) hold more than 35 percent of the beneficial interest,
(H) only for purposes of section 4943, a private foundation
(i) which is effectively controlled (directly or indirectly) by the same person or persons who control the private foundation in question, or
(ii) substantially all of the contributions to which were made (directly or indirectly) by the same person or persons described in subparagraph (A), (B), or (C), or members of their families (within the meaning of subsection (d)), who made (directly or indirectly) substantially all of the contributions to the private foundation in question, and
(I) only for purposes of section 4941, a government official (as defined in subsection (c)).
(2) Substantial contributors 
For purposes of paragraph (1), the term substantial contributor means a person who is described in section 507 (d)(2).
(3) Stockholdings 
For purposes of paragraphs (1)(C)(i) and (1)(E), there shall be taken into account indirect stockholdings which would be taken into account under section 267 (c), except that, for purposes of this paragraph, section 267 (c)(4) shall be treated as providing that the members of the family of an individual are the members within the meaning of subsection (d).
(4) Partnerships; trusts 
For purposes of paragraphs (1)(C)(ii) and (iii), (1)(F), and (1)(G), the ownership of profits or beneficial interests shall be determined in accordance with the rules for constructive ownership of stock provided in section 267 (c) (other than paragraph (3) thereof), except that section 267 (c)(4) shall be treated as providing that the members of the family of an individual are the members within the meaning of subsection (d).
(b) Foundation manager 
For purposes of this subchapter, the term foundation manager means, with respect to any private foundation
(1) an officer, director, or trustee of a foundation (or an individual having powers or responsibilities similar to those of officers, directors, or trustees of the foundation), and
(2) with respect to any act (or failure to act), the employees of the foundation having authority or responsibility with respect to such act (or failure to act).
(c) Government official 
For purposes of subsection (a)(1)(I) and section 4941, the term government official means, with respect to an act of self-dealing described in section 4941, an individual who, at the time of such act, holds any of the following offices or positions (other than as a special Government employee, as defined in section 202 (a) of title 18, United States Code):
(1) an elective public office in the executive or legislative branch of the Government of the United States,
(2) an office in the executive or judicial branch of the Government of the United States, appointment to which was made by the President,
(3) a position in the executive, legislative, or judicial branch of the Government of the United States
(A) which is listed in schedule C of rule VI of the Civil Service Rules, or
(B) the compensation for which is equal to or greater than the lowest rate of basic pay for the Senior Executive Service under section 5382 of title 5, United States Code,
(4) a position under the House of Representatives or the Senate of the United States held by an individual receiving gross compensation at an annual rate of $15,000 or more,
(5) an elective or appointive public office in the executive, legislative, or judicial branch of the government of a State, possession of the United States, or political subdivision or other area of any of the foregoing, or of the District of Columbia, held by an individual receiving gross compensation at an annual rate of $20,000 or more,
(6) a position as personal or executive assistant or secretary to any of the foregoing, or
(7) a member of the Internal Revenue Service Oversight Board.
(d) Members of family 
For purposes of subsection (a)(1), the family of any individual shall include only his spouse, ancestors, children, grandchildren, great grandchildren, and the spouses of children, grandchildren, and great grandchildren.

26 USC 4947 - Application of taxes to certain nonexempt trusts

(a) Application of tax 

(1) Charitable trusts 
For purposes of part II of subchapter F of chapter 1 (other than section 508 (a), (b), and (c)) and for purposes of this chapter, a trust which is not exempt from taxation under section 501 (a), all of the unexpired interests in which are devoted to one or more of the purposes described in section 170 (c)(2)(B), and for which a deduction was allowed under section 170, 545 (b)(2), 642 (c), 2055, 2106 (a)(2), or 2522 (or the corresponding provisions of prior law), shall be treated as an organization described in section 501 (c)(3). For purposes of section 509 (a)(3)(A), such a trust shall be treated as if organized on the day on which it first becomes subject to this paragraph.
(2) Split-interest trusts 
In the case of a trust which is not exempt from tax under section 501 (a), not all of the unexpired interests in which are devoted to one or more of the purposes described in section 170 (c)(2)(B), and which has amounts in trust for which a deduction was allowed under section 170, 545 (b)(2), 642 (c), 2055, 2106 (a)(2), or 2522, section 507 (relating to termination of private foundation status), section 508 (e) (relating to governing instruments) to the extent applicable to a trust described in this paragraph, section 4941 (relating to taxes on self-dealing), section 4943 (relating to taxes on excess business holdings) except as provided in subsection (b)(3), section 4944 (relating to investments which jeopardize charitable purpose) except as provided in subsection (b)(3), and section 4945 (relating to taxes on taxable expenditures) shall apply as if such trust were a private foundation. This paragraph shall not apply with respect to
(A) any amounts payable under the terms of such trust to income beneficiaries, unless a deduction was allowed under section 170 (f)(2)(B), 2055 (e)(2)(B), or 2522 (c)(2)(B),
(B) any amounts in trust other than amounts for which a deduction was allowed under section 170, 545 (b)(2), 642 (c), 2055, 2106 (a)(2), or 2522, if such other amounts are segregated from amounts for which no deduction was allowable, or
(C) any amounts transferred in trust before May 27, 1969.
(3) Segregated amounts 
For purposes of paragraph (2)(B), a trust with respect to which amounts are segregated shall separately account for the various income, deduction, and other items properly attributable to each of such segregated amounts.
(b) Special rules 

(1) Regulations 
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.
(2) Limit to segregated amounts 
If any amounts in the trust are segregated within the meaning of subsection (a)(2)(B) of this section, the value of the net assets for purposes of subsections (c)(2) and (g) of section 507 shall be limited to such segregated amounts.
(3) Sections 4943 and 4944 
Sections 4943 and 4944 shall not apply to a trust which is described in subsection (a)(2) if
(A) all the income interest (and none of the remainder interest) of such trust is devoted solely to one or more of the purposes described in section 170 (c)(2)(B), and all amounts in such trust for which a deduction was allowed under section 170, 545 (b)(2), 642 (c), 2055, 2106 (a)(2), or 2522 have an aggregate value not more than 60 percent of the aggregate fair market value of all amounts in such trusts, or
(B) a deduction was allowed under section 170, 545 (b)(2), 642 (c), 2055, 2106 (a)(2), or 2522 for amounts payable under the terms of such trust to every remainder beneficiary but not to any income beneficiary.
(4) Section 507 
The provisions of section 507 (a) shall not apply to a trust which is described in subsection (a)(2) by reason of a distribution of qualified employer securities (as defined in section 664 (g)(4)) to an employee stock ownership plan (as defined in section 4975 (e)(7)) in a qualified gratuitous transfer (as defined by section 664 (g)).

26 USC 4948 - Application of taxes and denial of exemption with respect to certain foreign organizations

(a) Tax on income of certain foreign organizations 
In lieu of the tax imposed by section 4940, there is hereby imposed for each taxable year on the gross investment income (within the meaning of section 4940 (c)(2)) derived from sources within the United States (within the meaning of section 861) by every foreign organization which is a private foundation for the taxable year a tax equal to 4 percent of such income.
(b) Certain sections inapplicable 
Section 507 (relating to termination of private foundation status), section 508 (relating to special rules with respect to section 501 (c)(3) organizations), and this chapter (other than this section) shall not apply to any foreign organization which has received substantially all of its support (other than gross investment income) from sources outside the United States.
(c) Denial of exemption to foreign organizations engaged in prohibited transactions 

(1) General rule 
A foreign organization described in subsection (b) shall not be exempt from taxation under section 501 (a) if it has engaged in a prohibited transaction after December 31, 1969.
(2) Prohibited transactions 
For purposes of this subsection, the term prohibited transaction means any act or failure to act (other than with respect to section 4942 (e)) which would subject a foreign organization described in subsection (b), or a disqualified person (as defined in section 4946) with respect thereto, to liability for a penalty under section 6684 or a tax under section 507 if such foreign organization were a domestic organization.
(3) Taxable years affected 

(A) Except as provided in subparagraph (B), a foreign organization described in subsection (b) shall be denied exemption from taxation under section 501 (a) by reason of paragraph (1) for all taxable years beginning with the taxable year during which it is notified by the Secretary that it has engaged in a prohibited transaction. The Secretary shall publish such notice in the Federal Register on the day on which he so notifies such foreign organization.
(B) Under regulations prescribed by the Secretary any foreign organization described in subsection (b) which is denied exemption from taxation under section 501 (a) by reason of paragraph (1) may, with respect to the second taxable year following the taxable year in which notice is given under subparagraph (A) (or any taxable year thereafter), file claim for exemption from taxation under section 501 (a). If the Secretary is satisfied that such organization will not knowingly again engage in a prohibited transaction, such organization shall not, with respect to taxable years beginning with the taxable year with respect to which such claim is filed, be denied exemption from taxation under section 501 (a) by reason of any prohibited transaction which was engaged in before the date on which such notice was given under subparagraph (A).
(4) Disallowance of certain charitable deductions 
No gift or bequest shall be allowed as a deduction under section 170, 545 (b)(2), 642 (c), 2055, 2106 (a)(2), or 2522, if made
(A) to a foreign organization described in subsection (b) after the date on which the Secretary publishes notice under paragraph (3)(A) that he has notified such organization that it has engaged in a prohibited transaction, and
(B) in a taxable year of such organization for which it is not exempt from taxation under section 501 (a) by reason of paragraph (1).

Subchapter B - Black Lung Benefit Trusts

26 USC 4951 - Taxes on self-dealing

(a) Initial taxes 

(1) On self-dealer 
There is hereby imposed a tax on each act of self-dealing between a disqualified person and a trust described in section 501 (c)(21). The rate of tax shall be equal to 10 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period. The tax imposed by this paragraph shall be paid by any disqualified person (other than a trustee acting only as a trustee of the trust) who participates in the act of self-dealing.
(2) On trustee 
In any case in which a tax is imposed by paragraph (1), there is hereby imposed on the participation of any trustee of such a trust in an act of self-dealing between a disqualified person and the trust, knowing that it is such an act, a tax equal to 21/2 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period, unless such participation is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by any such trustee who participated in the act of self-dealing.
(b) Additional taxes 

(1) On self-dealer 
In any case in which an initial tax is imposed by subsection (a)(1) on an act of self-dealing by a disqualified person with a trust described in section 501 (c)(21) and in which the act is not corrected within the taxable period, there is hereby imposed a tax equal to 100 percent of the amount involved. The tax imposed by this paragraph shall be paid by any disqualified person (other than a trustee acting only as a trustee of such a trust) who participated in the act of self-dealing.
(2) On trustee 
In any case in which an additional tax is imposed by paragraph (1), if a trustee of such a trust refused to agree to part or all of the correction, there is hereby imposed a tax equal to 50 percent of the amount involved. The tax imposed by this paragraph shall be paid by any such trustee who refused to agree to part or all of the correction.
(c) Joint and several liability 
If more than one person is liable under any paragraph of subsection (a) or (b) with respect to any one act of self-dealing, all such persons shall be jointly and severally liable under such paragraph with respect to such act.
(d) Self-dealing 

(1) In general 
For purposes of this section, the term self-dealing means any direct or indirect
(A) sale, exchange, or leasing of real or personal property between a trust described in section 501 (c)(21) and a disqualified person;
(B) lending of money or other extension of credit between such a trust and a disqualified person;
(C) furnishing of goods, services, or facilities between such a trust and a disqualified person;
(D) payment of compensation (or payment or reimbursement of expenses) by such a trust to a disqualified person; and
(E) transfer to, or use by or for the benefit of, a disqualified person of the income or assets of such a trust.
(2) Special rules 
For purposes of paragraph (1)
(A) the transfer of personal property by a disqualified person to such a trust shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien;
(B) the furnishing of goods, services, or facilities by a disqualified person to such a trust shall not be an act of self-dealing if the furnishing is without charge and if the goods, services, or facilities so furnished are used exclusively for the purposes specified in section 501 (c)(21)(A); and
(C) the payment of compensation (and the payment or reimbursement of expenses) by such a trust to a disqualified person for personal services which are reasonable and necessary to carrying out the exempt purpose of the trust shall not be an act of self-dealing if the compensation (or payment or reimbursement) is not excessive.
(e) Definitions 
For purposes of this section
(1) Taxable period 
The term taxable period means, with respect to any act of self-dealing, the period beginning with the date on which the act of self-dealing occurs and ending on the earliest of
(A) the date of mailing a notice of deficiency with respect to the tax imposed by subsection (a)(1) under section 6212,
(B) the date on which the tax imposed by subsection (a)(1) is assessed, or
(C) the date on which correction of the act of self-dealing is completed.
(2) Amount involved 
The term amount involved means, with respect to any act of self-dealing, the greater of the amount of money and the fair market value of the other property given or the amount of money and the fair market value of the other property received; except that in the case of services described in subsection (d)(2)(C), the amount involved shall be only the excess compensation. For purposes of the preceding sentence, the fair market value
(A) in the case of the taxes imposed by subsection (a), shall be determined as of the date on which the act of self-dealing occurs; and
(B) in the case of taxes imposed by subsection (b), shall be the highest fair market value during the taxable period.
(3) Correction 
The terms correction and correct mean, with respect to any act of self-dealing, undoing the transaction to the extent possible, but in any case placing the trust in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards.
(4) Disqualified person 
The term disqualified person means, with respect to a trust described in section 501 (c)(21), a person who is
(A) a contributor to the trust,
(B) a trustee of the trust,
(C) an owner of more than 10 percent of
(i) the total combined voting power of a corporation,
(ii) the profits interest of a partnership, or
(iii) the beneficial interest of a trust or unincorporated enterprise,

which is a contributor to the trust,

(D) an officer, director, or employee of a person who is a contributor to the trust,
(E) the spouse, ancestor, lineal descendant, or spouse of a lineal descendant of an individual described in subparagraph (A), (B), (C), or (D),
(F) a corporation of which persons described in subparagraph (A), (B), (C), (D), or (E) own more than 35 percent of the total combined voting power,
(G) a partnership in which persons described in subparagraph (A), (B), (C), (D), or (E), own more than 35 percent of the profits interest, or
(H) a trust or estate in which persons described in subparagraph (A), (B), (C), (D), or (E), hold more than 35 percent of the beneficial interest.

For purposes of subparagraphs (C)(i) and (F), there shall be taken into account indirect stockholdings which would be taken into account under section 267 (c), except that, for purposes of this paragraph, section 267 (c)(4) shall be treated as providing that the members of the family of an individual are only those individuals described in subparagraph (E) of this paragraph. For purposes of subparagraphs (C) (ii) and (iii), (G), and (H), the ownership of profits or beneficial interests shall be determined in accordance with the rules for constructive ownership of stock provided in section 267 (c) (other than paragraph (3) thereof), except that section 267 (c)(4) shall be treated as providing that the members of the family of an individual are only those individuals described in subparagraph (E) of this paragraph.

(f) Payments of benefits 
For purposes of this section, a payment, out of assets or income of a trust described in section 501 (c)(21), for the purposes described in subclause (I) or (IV) of section 501 (c)(21)(A)(i) shall not be considered an act of self-dealing.

26 USC 4952 - Taxes on taxable expenditures

(a) Tax imposed 

(1) On the fund 
There is hereby imposed on each taxable expenditure (as defined in subsection (d)) from the assets or income of a trust described in section 501 (c)(21) a tax equal to 10 percent of the amount thereof. The tax imposed by this paragraph shall be paid by the trustee out of the assets of the trust.
(2) On the trustee 
There is hereby imposed on the agreement of any trustee of such a trust to the making of an expenditure, knowing that it is a taxable expenditure, a tax equal to 21/2 percent of the amount thereof, unless such agreement is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by the trustee who agreed to the making of the expenditure.
(b) Additional taxes 

(1) On the fund 
In any case in which an initial tax is imposed by subsection (a)(1) on a taxable expenditure and such expenditure is not corrected within the taxable period, there is hereby imposed a tax equal to 100 percent of the amount of the expenditure. The tax imposed by this paragraph shall be paid by the trustee out of the assets of the trust.
(2) On the trustee 
In any case in which an additional tax is imposed by paragraph (1), if a trustee refused to agree to a part or all of the correction, there is hereby imposed a tax equal to 50 percent of the amount of the taxable expenditure. The tax imposed by this paragraph shall be paid by any trustee who refused to agree to part or all of the correction.
(c) Joint and several liability 
For purposes of subsections (a) and (b), if more than one person is liable under subsection (a)(2) or (b)(2) with respect to the making of a taxable expenditure, all such persons shall be jointly and severally liable under such paragraph with respect to such expenditure.
(d) Taxable expenditure 
For purposes of this section, the term taxable expenditure means any amount paid or incurred by a trust described in section 501 (c)(21) other than for a purpose specified in such section.
(e) Definitions 

(1) Correction 
The terms correction and correct mean, with respect to any taxable expenditure, recovering part or all of the expenditure to the extent recovery is possible, and where full recovery is not possible, contributions by the person or persons whose liabilities for black lung benefit claims (as defined in section 192 (e)) are to be paid out of the trust to the extent necessary to place the trust in a financial position not worse than that in which it would be if the taxable expenditure had not been made.
(2) Taxable period 
The term taxable period means, with respect to any taxable expenditure, the period beginning with the date on which the taxable expenditure occurs and ending on the earlier of
(A) the date of mailing a notice of deficiency with respect to the tax imposed by subsection (a)(1) under section 6212, or
(B) the date on which the tax imposed by subsection (a)(1) is assessed.

26 USC 4953 - Tax on excess contributions to black lung benefit trusts

(a) Tax imposed 
There is hereby imposed for each taxable year a tax in an amount equal to 5 percent of the amount of the excess contributions made by a person to or under a trust or trusts described in section 501 (c)(21). The tax imposed by this subsection shall be paid by the person making the excess contribution.
(b) Excess contribution 
For purposes of this section, the term excess contribution means the sum of
(1) the amount by which the amount contributed for the taxable year to a trust or trusts described in section 501 (c)(21) exceeds the amount of the deduction allowable to such person for such contributions for the taxable year under section 192, and
(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of
(A) the excess of the maximum amount allowable as a deduction under section 192 for the taxable year over the amount contributed to the trust or trusts for the taxable year, and
(B) amounts distributed from the trust to the contributor which were excess contributions for the preceding taxable year.
(c) Treatment of withdrawal of excess contributions 
Amounts distributed during the taxable year from a trust described in section 501 (c)(21) to the contributor thereof the sum of which does not exceed the amount of the excess contribution made by the contributor shall not be treated as
(1) an act of self-dealing (within the meaning of section 4951),
(2) a taxable expenditure (within the meaning of section 4952), or
(3) an act contrary to the purposes for which the trust is exempt from taxation under section 501 (a).

Subchapter C - Political Expenditures of Section 501(c)(3) Organizations

26 USC 4955 - Taxes on political expenditures of section 501(c)(3) organizations

(a) Initial taxes 

(1) On the organization 
There is hereby imposed on each political expenditure by a section 501 (c)(3) organization a tax equal to 10 percent of the amount thereof. The tax imposed by this paragraph shall be paid by the organization.
(2) On the management 
There is hereby imposed on the agreement of any organization manager to the making of any expenditure, knowing that it is a political expenditure, a tax equal to 21/2 percent of the amount thereof, unless such agreement is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by any organization manager who agreed to the making of the expenditure.
(b) Additional taxes 

(1) On the organization 
In any case in which an initial tax is imposed by subsection (a)(1) on a political expenditure and such expenditure is not corrected within the taxable period, there is hereby imposed a tax equal to 100 percent of the amount of the expenditure. The tax imposed by this paragraph shall be paid by the organization.
(2) On the management 
In any case in which an additional tax is imposed by paragraph (1), if an organization manager refused to agree to part or all of the correction, there is hereby imposed a tax equal to 50 percent of the amount of the political expenditure. The tax imposed by this paragraph shall be paid by any organization manager who refused to agree to part or all of the correction.
(c) Special rules 
For purposes of subsections (a) and (b)
(1) Joint and several liability 
If more than 1 person is liable under subsection (a)(2) or (b)(2) with respect to the making of a political expenditure, all such persons shall be jointly and severally liable under such subsection with respect to such expenditure.
(2) Limit for management 
With respect to any 1 political expenditure, the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $5,000, and the maximum amount of the tax imposed by subsection (b)(2) shall not exceed $10,000.
(d) Political expenditure 
For purposes of this section
(1) In general 
The term political expenditure means any amount paid or incurred by a section 501 (c)(3) organization in any participation in, or intervention in (including the publication or distribution of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.
(2) Certain other expenditures included 
In the case of an organization which is formed primarily for purposes of promoting the candidacy (or prospective candidacy) of an individual for public office (or which is effectively controlled by a candidate or prospective candidate and which is availed of primarily for such purposes), the term political expenditure includes any of the following amounts paid or incurred by the organization:
(A) Amounts paid or incurred to such individual for speeches or other services.
(B) Travel expenses of such individual.
(C) Expenses of conducting polls, surveys, or other studies, or preparing papers or other materials, for use by such individual.
(D) Expenses of advertising, publicity, and fundraising" target="_blank" title="fundraising">fundraising for such individual.
(E) Any other expense which has the primary effect of promoting public recognition, or otherwise primarily accruing to the benefit, of such individual.
(e) Coordination with sections 4945 and 4958 
If tax is imposed under this section with respect to any political expenditure, such expenditure shall not be treated as a taxable expenditure for purposes of section 4945 or an excess benefit for purposes of section 4958.
(f) Other definitions 
For purposes of this section
(1) Section 501 (c)(3) organization 
The term section 501 (c)(3) organization means any organization which (without regard to any political expenditure) would be described in section 501 (c)(3) and exempt from taxation under section 501 (a).
(2) Organization manager 
The term organization manager means
(A) any officer, director, or trustee of the organization (or individual having powers or responsibilities similar to those of officers, directors, or trustees of the organization), and
(B) with respect to any expenditure, any employee of the organization having authority or responsibility with respect to such expenditure.
(3) Correction 
The terms correction and correct mean, with respect to any political expenditure, recovering part or all of the expenditure to the extent recovery is possible, establishment of safeguards to prevent future political expenditures, and where full recovery is not possible, such additional corrective action as is prescribed by the Secretary by regulations.
(4) Taxable period 
The term taxable period means, with respect to any political expenditure, the period beginning with the date on which the political expenditure occurs and ending on the earlier 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 tax imposed by subsection (a)(1) is assessed.

Subchapter D - Failure by Certain Charitable Organizations To Meet Certain Qualification Requirements

26 USC 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) 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.
(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 subparagraph (C)(ii)), 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
(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.
(4) 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 $20,000.
(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),
(C) a 35-percent controlled entity,
(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.[1]
(E) 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
(F) 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).
(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 individuals 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, 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.
(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.
[1] So in original. The period probably should be a comma.

Subchapter E - Abatement of First and Second Tier Taxes in Certain Cases

26 USC 4961 - Abatement of second tier taxes where there is correction

(a) General rule 
If any taxable event is corrected during the correction period for such event, then any second tier tax imposed with respect to such event (including interest, additions to the tax, and additional amounts) shall not be assessed, and if assessed the assessment shall be abated, and if collected shall be credited or refunded as an overpayment.
(b) Supplemental proceeding 
If the determination by a court that the taxpayer is liable for a second tier tax has become final, such court shall have jurisdiction to conduct any necessary supplemental proceeding to determine whether the taxable event was corrected during the correction period. Such a supplemental proceeding may be begun only during the period which ends on the 90th day after the last day of the correction period. Where such a supplemental proceeding has begun, the reference in the second sentence of section 6213 (a) to a final decision of the Tax Court shall be treated as including a final decision in such supplemental proceeding.
(c) Suspension of period of collection for second tier tax 

(1) Proceeding in District Court or United States Court of Federal Claims 
If, not later than 90 days after the day on which the second tier tax is assessed, the first tier tax is paid in full and a claim for refund of the amount so paid is filed, no levy or proceeding in court for the collection of the second tier tax shall be made, begun, or prosecuted until a final resolution of a proceeding begun as provided in paragraph (2) (and of any supplemental proceeding with respect thereto under subsection (b)). Notwithstanding section 7421 (a), the collection by levy or proceeding may be enjoined during the time such prohibition is in force by a proceeding in the proper court.
(2) Suit must be brought to determine liability 
If, within 90 days after the day on which his claim for refund is denied, the person against whom the second tier tax was assessed fails to begin a proceeding described in section 7422 for the determination of his liability for such tax, paragraph (1) shall cease to apply with respect to such tax, effective on the day following the close of the 90-day period referred to in this paragraph.
(3) Suspension of running of period of limitations on collection 
The running of the period of limitations provided in section 6502 on the collection by levy or by a proceeding in court with respect to any second tier tax described in paragraph (1) shall be suspended for the period during which the Secretary is prohibited from collecting by levy or a proceeding in court.
(4) Jeopardy collection 
If the Secretary makes a finding that the collection of the second tier tax is in jeopardy, nothing in this subsection shall prevent the immediate collection of such tax.

26 USC 4962 - Abatement of first tier taxes in certain cases

(a) General rule 
If it is established to the satisfaction of the Secretary that
(1) a taxable event was due to reasonable cause and not to willful neglect, and
(2) such event was corrected within the correction period for such event,

then any qualified first tier tax imposed with respect to such event (including interest) shall not be assessed and, if assessed, the assessment shall be abated and, if collected, shall be credited or refunded as an overpayment.

(b) Qualified first tier tax 
For purposes of this section, the term qualified first tier tax means any first tier tax imposed by subchapter A, C, D, or G of this chapter, except that such term shall not include the tax imposed by section 4941 (a) (relating to initial tax on self-dealing).
(c) Special rule for tax on political expenditures of section 501 (c)(3) organizations 
In the case of the tax imposed by section 4955 (a), subsection (a)(1) shall be applied by substituting not willful and flagrant for due to reasonable cause and not to willful neglect.

26 USC 4963 - Definitions

(a) First tier tax 
For purposes of this subchapter, the term first tier tax means any tax imposed by subsection (a) of section 4941, 4942, 4943, 4944, 4945, 4951, 4952, 4955, 4958, 4966, 4967, 4971, or 4975.
(b) Second tier tax 
For purposes of this subchapter, the term second tier tax means any tax imposed by subsection (b) of section 4941, 4942, 4943, 4944, 4945, 4951, 4952, 4955, 4958, 4971, or 4975.
(c) Taxable event 
For purposes of this subchapter, the term taxable event means any act (or failure to act) giving rise to liability for tax under section 4941, 4942, 4943, 4944, 4945, 4951, 4952, 4955, 4958, 4966, 4967, 4971, or 4975.
(d) Correct 
For purposes of this subchapter
(1) In general 
Except as provided in paragraph (2), the term correct has the same meaning as when used in the section which imposes the second tier tax.
(2) Special rules 
The term correct means
(A) in the case of the second tier tax imposed by section 4942 (b), reducing the amount of the undistributed income to zero,
(B) in the case of the second tier tax imposed by section 4943 (b), reducing the amount of the excess business holdings to zero, and
(C) in the case of the second tier tax imposed by section 4944, removing the investment from jeopardy.
(e) Correction period 
For purposes of this subchapter
(1) In general 
The term correction period means, with respect to any taxable event, the period beginning on the date on which such event occurs and ending 90 days after the date of mailing under section 6212 of a notice of deficiency with respect to the second tier tax imposed on such taxable event, extended by
(A) any period in which a deficiency cannot be assessed under section 6213 (a) (determined without regard to the last sentence of section 4961 (b)), and
(B) any other period which the Secretary determines is reasonable and necessary to bring about correction of the taxable event.
(2) Special rules for when taxable event occurs 
For purposes of paragraph (1), the taxable event shall be treated as occurring
(A) in the case of section 4942, on the first day of the taxable year for which there was a failure to distribute income,
(B) in the case of section 4943, on the first day on which there are excess business holdings,
(C) in the case of section 4971, on the last day of the plan year in which there is an accumulated funding deficiency, and
(D) in any other case, the date on which such event occurred.

Subchapter F - Tax Shelter Transactions

26 USC 4965 - Excise tax on certain tax-exempt entities entering into prohibited tax shelter transactions

(a) Being a party to and approval of prohibited transactions 

(1) Tax-exempt entity 

(A) In general 
If a transaction is a prohibited tax shelter transaction at the time any tax-exempt entity described in paragraph (1), (2), or (3) of subsection (c) becomes a party to the transaction, such entity shall pay a tax for the taxable year in which the entity becomes such a party and any subsequent taxable year in the amount determined under subsection (b)(1).
(B) Post-transaction determination 
If any tax-exempt entity described in paragraph (1), (2), or (3) of subsection (c) is a party to a subsequently listed transaction at any time during a taxable year, such entity shall pay a tax for such taxable year in the amount determined under subsection (b)(1).
(2) Entity manager 
If any entity manager of a tax-exempt entity approves such entity as (or otherwise causes such entity to be) a party to a prohibited tax shelter transaction at any time during the taxable year and knows or has reason to know that the transaction is a prohibited tax shelter transaction, such manager shall pay a tax for such taxable year in the amount determined under subsection (b)(2).
(b) Amount of tax 

(1) Entity 
In the case of a tax-exempt entity
(A) In general 
Except as provided in subparagraph (B), the amount of the tax imposed under subsection (a)(1) with respect to any transaction for a taxable year shall be an amount equal to the product of the highest rate of tax under section 11, and the greater of
(i) the entitys net income (after taking into account any tax imposed by this subtitle (other than by this section) with respect to such transaction) for such taxable year which
(I) in the case of a prohibited tax shelter transaction (other than a subsequently listed transaction), is attributable to such transaction, or
(II) in the case of a subsequently listed transaction, is attributable to such transaction and which is properly allocable to the period beginning on the later of the date such transaction is identified by guidance as a listed transaction by the Secretary or the first day of the taxable year, or
(ii) 75 percent of the proceeds received by the entity for the taxable year which
(I) in the case of a prohibited tax shelter transaction (other than a subsequently listed transaction), are attributable to such transaction, or
(II) in the case of a subsequently listed transaction, are attributable to such transaction and which are properly allocable to the period beginning on the later of the date such transaction is identified by guidance as a listed transaction by the Secretary or the first day of the taxable year.
(B) Increase in tax for certain knowing transactions 
In the case of a tax-exempt entity which knew, or had reason to know, a transaction was a prohibited tax shelter transaction at the time the entity became a party to the transaction, the amount of the tax imposed under subsection (a)(1)(A) with respect to any transaction for a taxable year shall be the greater of
(i) 100 percent of the entitys net income (after taking into account any tax imposed by this subtitle (other than by this section) with respect to the prohibited tax shelter transaction) for such taxable year which is attributable to the prohibited tax shelter transaction, or
(ii) 75 percent of the proceeds received by the entity for the taxable year which are attributable to the prohibited tax shelter transaction.

This subparagraph shall not apply to any prohibited tax shelter transaction to which a tax-exempt entity became a party on or before the date of the enactment of this section.

(2) Entity manager 
In the case of each entity manager, the amount of the tax imposed under subsection (a)(2) shall be $20,000 for each approval (or other act causing participation) described in subsection (a)(2).
(c) Tax-exempt entity 
For purposes of this section, the term tax-exempt entity means an entity which is
(1) described in section 501 (c) or 501 (d),
(2) described in section 170 (c) (other than the United States),
(3) an Indian tribal government (within the meaning of section 7701 (a)(40)),
(4) described in paragraph (1), (2), or (3) of section 4979 (e),
(5) a program described in section 529,
(6) an eligible deferred compensation plan described in section 457 (b) which is maintained by an employer described in section 457 (e)(1)(A), or
(7) an arrangement described in section 4973 (a).
(d) Entity manager 
For purposes of this section, the term entity manager means
(1) in the case of an entity described in paragraph (1), (2), or (3) of subsection (c)
(A) the person with authority or responsibility similar to that exercised by an officer, director, or trustee of an organization, and
(B) with respect to any act, the person having authority or responsibility with respect to such act, and
(2) in the case of an entity described in paragraph (4), (5), (6), or (7) of subsection (c), the person who approves or otherwise causes the entity to be a party to the prohibited tax shelter transaction.
(e) Prohibited tax shelter transaction; subsequently listed transaction 
For purposes of this section
(1) Prohibited tax shelter transaction 

(A) In general 
The term prohibited tax shelter transaction means
(i) any listed transaction, and
(ii) any prohibited reportable transaction.
(B) Listed transaction 
The term listed transaction has the meaning given such term by section 6707A (c)(2).
(C) Prohibited reportable transaction 
The term prohibited reportable transaction means any confidential transaction or any transaction with contractual protection (as defined under regulations prescribed by the Secretary) which is a reportable transaction (as defined in section 6707A (c)(1)).
(2) Subsequently listed transaction 
The term subsequently listed transaction means any transaction to which a tax-exempt entity is a party and which is determined by the Secretary to be a listed transaction at any time after the entity has become a party to the transaction. Such term shall not include a transaction which is a prohibited reportable transaction at the time the entity became a party to the transaction.
(f) Regulatory authority 
The Secretary is authorized to promulgate regulations which provide guidance regarding the determination of the allocation of net income or proceeds of a tax-exempt entity attributable to a transaction to various periods, including before and after the listing of the transaction or the date which is 90 days after the date of the enactment of this section.
(g) Coordination with other taxes and penalties 
The tax imposed by this section is in addition to any other tax, addition to tax, or penalty imposed under this title.

Subchapter G - Donor Advised Funds

26 USC 4966 - Taxes on taxable distributions

(a) Imposition of taxes 

(1) On the sponsoring organization 
There is hereby imposed on each taxable distribution a tax equal to 20 percent of the amount thereof. The tax imposed by this paragraph shall be paid by the sponsoring organization with respect to the donor advised fund.
(2) On the fund management 
There is hereby imposed on the agreement of any fund manager to the making of a distribution, knowing that it is a taxable distribution, a tax equal to 5 percent of the amount thereof. The tax imposed by this paragraph shall be paid by any fund manager who agreed to the making of the distribution.
(b) Special rules 
For purposes of subsection (a)
(1) Joint and several liability 
If more than one person is liable under subsection (a)(2) with respect to the making of a taxable distribution, all such persons shall be jointly and severally liable under such paragraph with respect to such distribution.
(2) Limit for management 
With respect to any one taxable distribution, the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $10,000.
(c) Taxable distribution 
For purposes of this section
(1) In general 
The term taxable distribution means any distribution from a donor advised fund
(A) to any natural person, or
(B) to any other person if
(i) such distribution is for any purpose other than one specified in section 170 (c)(2)(B), or
(ii) the sponsoring organization does not exercise expenditure responsibility with respect to such distribution in accordance with section 4945 (h).
(2) Exceptions 
Such term shall not include any distribution from a donor advised fund
(A) to any organization described in section 170 (b)(1)(A) (other than a disqualified supporting organization),
(B) to the sponsoring organization of such donor advised fund, or
(C) to any other donor advised fund.
(d) Definitions 
For purposes of this subchapter
(1) Sponsoring organization 
The term sponsoring organization means any organization which
(A) is described in section 170 (c) (other than in paragraph (1) thereof, and without regard to paragraph (2)(A) thereof),
(B) is not a private foundation (as defined in section 509 (a)), and
(C) maintains 1 or more donor advised funds.
(2) Donor advised fund 

(A) In general 
Except as provided in subparagraph (B) or (C), the term donor advised fund means a fund or account
(i) which is separately identified by reference to contributions of a donor or donors,
(ii) which is owned and controlled by a sponsoring organization, and
(iii) with respect to which a donor (or any person appointed or designated by such donor) has, or reasonably expects to have, advisory privileges with respect to the distribution or investment of amounts held in such fund or account by reason of the donors status as a donor.
(B) Exceptions 
The term donor advised fund shall not include any fund or account
(i) which makes distributions only to a single identified organization or governmental entity, or
(ii) with respect to which a person described in subparagraph (A)(iii) advises as to which individuals receive grants for travel, study, or other similar purposes, if
(I) such persons advisory privileges are performed exclusively by such person in the persons capacity as a member of a committee all of the members of which are appointed by the sponsoring organization,
(II) no combination of persons described in subparagraph (A)(iii) (or persons related to such persons) control, directly or indirectly, such committee, and
(III) all grants from such fund or account are awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance by the board of directors of the sponsoring organization, and such procedure is designed to ensure that all such grants meet the requirements of paragraph (1), (2), or (3) of section 4945 (g).
(C) Secretarial authority 
The Secretary may exempt a fund or account not described in subparagraph (B) from treatment as a donor advised fund
(i) if such fund or account is advised by a committee not directly or indirectly controlled by the donor or any person appointed or designated by the donor for the purpose of advising with respect to distributions from such fund (and any related parties), or
(ii) if such fund benefits a single identified charitable purpose.
(3) Fund manager 
The term fund manager means, with respect to any sponsoring organization
(A) an officer, director, or trustee of such sponsoring organization (or an individual having powers or responsibilities similar to those of officers, directors, or trustees of the sponsoring organization), and
(B) with respect to any act (or failure to act), the employees of the sponsoring organization having authority or responsibility with respect to such act (or failure to act).
(4) Disqualified supporting organization 

(A) In general 
The term disqualified supporting organization means, with respect to any distribution
(i) any type III supporting organization (as defined in section 4943 (f)(5)(A)) which is not a functionally integrated type III supporting organization (as defined in section 4943 (f)(5)(B)), and
(ii) any organization which is described in subparagraph (B) or (C) if
(I) the donor or any person designated by the donor for the purpose of advising with respect to distributions from a donor advised fund (and any related parties) directly or indirectly controls a supported organization (as defined in section 509(f)(3)) of such organization, or
(II) the Secretary determines by regulations that a distribution to such organization otherwise is inappropriate.
(B) Type I and type II supporting organizations 
An organization is described in this subparagraph if the organization meets the requirements of subparagraphs (A) and (C) of section 509 (a)(3) and is
(i) operated, supervised, or controlled by one or more organizations described in paragraph (1) or (2) of section 509 (a), or
(ii) supervised or controlled in connection with one or more such organizations.
(C) Functionally integrated type III supporting organizations 
An organization is described in this subparagraph if the organization is a functionally integrated type III supporting organization (as defined under section 4943 (f)(5)(B)).

26 USC 4967 - Taxes on prohibited benefits

(a) Imposition of taxes 

(1) On the donor, donor advisor, or related person 
There is hereby imposed on the advice of any person described in subsection (d) to have a sponsoring organization make a distribution from a donor advised fund which results in such person or any other person described in subsection (d) receiving, directly or indirectly, a more than incidental benefit as a result of such distribution, a tax equal to 125 percent of such benefit. The tax imposed by this paragraph shall be paid by any person described in subsection (d) who advises as to the distribution or who receives such a benefit as a result of the distribution.
(2) On the fund management 
There is hereby imposed on the agreement of any fund manager to the making of a distribution, knowing that such distribution would confer a benefit described in paragraph (1), a tax equal to 10 percent of the amount of such benefit. The tax imposed by this paragraph shall be paid by any fund manager who agreed to the making of the distribution.
(b) Exception 
No tax shall be imposed under this section with respect to any distribution if a tax has been imposed with respect to such distribution under section 4958.
(c) Special rules 
For purposes of subsection (a)
(1) Joint and several liability 
If more than one person is liable under paragraph (1) or (2) of subsection (a) with respect to a distribution described in subsection (a), all such persons shall be jointly and severally liable under such paragraph with respect to such distribution.
(2) Limit for management 
With respect to any one distribution described in subsection (a), the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $10,000.
(d) Person described 
A person is described in this subsection if such person is described in section 4958 (f)(7) with respect to a donor advised fund.

TITLE 26 - US CODE - CHAPTER 43 - QUALIFIED PENSION, ETC., PLANS

26 USC 4971 - Taxes on failure to meet minimum funding standards

(a) Initial tax 
If at any time during any taxable year an employer maintains a plan to which section 412 applies, there is hereby imposed for the taxable year a tax equal to
(1) in the case of a single-employer plan, 10 percent of the aggregate unpaid minimum required contributions for all plan years remaining unpaid as of the end of any plan year ending with or within the taxable year, and
(2) in the case of a multiemployer plan, 5 percent of the accumulated funding deficiency determined under section 431 as of the end of any plan year ending with or within the taxable year.
(b) Additional tax 
If
(1) a tax is imposed under subsection (a)(1) on any unpaid required minimum contribution and such amount remains unpaid as of the close of the taxable period, or
(2) a tax is imposed under subsection (a)(2) on any accumulated funding deficiency and the accumulated funding deficiency is not corrected within the taxable period,

there is hereby imposed a tax equal to 100 percent of the unpaid minimum required contribution or accumulated funding deficiency, whichever is applicable, to the extent not so paid or corrected.

(c) Definitions 
For purposes of this section
(1) Accumulated funding deficiency 
The term accumulated funding deficiency has the meaning given to such term by section 431.
(2) Correct 
The term correct means, with respect to an accumulated funding deficiency, the contribution, to or under the plan, of the amount necessary to reduce such accumulated funding deficiency as of the end of a plan year in which such deficiency arose to zero.
(3) Taxable period 
The term taxable period means, with respect to an accumulated funding deficiency, the period beginning with the end of the plan year in which there is an accumulated funding deficiency and ending on the earlier of
(A) the date of mailing of a notice of deficiency with respect to the tax imposed by subsection (a), or
(B) the date on which the tax imposed by subsection (a) is assessed.
(4) Unpaid minimum required contribution 

(A) In general 
The term unpaid minimum required contribution means, with respect to any plan year, any minimum required contribution under section 430 for the plan year which is not paid on or before the due date (as determined under section 430 (j)(1)) for the plan year.
(B) Ordering rule 
Any payment to or under a plan for any plan year shall be allocated first to unpaid minimum required contributions for all preceding plan years on a first-in, first-out basis and then to the minimum required contribution under section 430 for the plan year.
(d) Notification of the Secretary of Labor 
Before issuing a notice of deficiency with respect to the tax imposed by subsection (a) or (b), the Secretary shall notify the Secretary of Labor and provide him a reasonable opportunity (but not more than 60 days)
(1) to require the employer responsible for contributing to or under the plan to eliminate the accumulated funding deficiency, or
(2) to comment on the imposition of such tax.

In the case of a multiemployer plan which is in reorganization under section 418, the same notice and opportunity shall be provided to the Pension Benefit Guaranty Corporation.

(e) Liability for tax 

(1) In general 
Except as provided in paragraph (2), the tax imposed by subsection (a), (b), or (f) shall be paid by the employer responsible for contributing to or under the plan the amount described in section 412 (a)(1)(A).[1]
(2) Joint and several liability where employer member of controlled group 

(A) In general 
If an employer referred to in paragraph (1) is a member of a controlled group, each member of such group shall be jointly and severally liable for the tax imposed by subsection (a), (b), (f), or (g).
(B) Controlled group 
For purposes of subparagraph (A), the term controlled group means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414.
(f) Failure to pay liquidity shortfall 

(1) In general 
In the case of a plan to which section 430 (j)(4) applies, there is hereby imposed a tax of 10 percent of the excess (if any) of
(A) the amount of the liquidity shortfall for any quarter, over
(B) the amount of such shortfall which is paid by the required installment under section 430 (j) for such quarter (but only if such installment is paid on or before the due date for such installment).
(2) Additional tax 
If the plan has a liquidity shortfall as of the close of any quarter and as of the close of each of the following 4 quarters, there is hereby imposed a tax equal to 100 percent of the amount on which tax was imposed by paragraph (1) for such first quarter.
(3) Definitions and special rule 

(A) Liquidity shortfall; quarter 
For purposes of this subsection, the terms liquidity shortfall and quarter have the respective meanings given such terms by section 412 (m)(5).[2]
(B) Special rule 
If the tax imposed by paragraph (2) is paid with respect to any liquidity shortfall for any quarter, no further tax shall be imposed by this subsection on such shortfall for such quarter.
(4) Waiver by Secretary 
If the taxpayer establishes to the satisfaction of the Secretary that
(A) the liquidity shortfall described in paragraph (1) was due to reasonable cause and not willful neglect, and
(B) reasonable steps have been taken to remedy such liquidity shortfall,

the Secretary may waive all or part of the tax imposed by this subsection.

(g) Multiemployer plans in endangered or critical status 

(1) In general 
Except as provided in this subsection
(A) no tax shall be imposed under this section for a taxable year with respect to a multiemployer plan if, for the plan years ending with or within the taxable year, the plan is in critical status pursuant to section 432, and
(B) any tax imposed under this subsection for a taxable year with respect to a multiemployer plan if, for the plan years ending with or within the taxable year, the plan is in endangered status pursuant to section 432 shall be in addition to any other tax imposed by this section.
(2) Failure to comply with funding improvement or rehabilitation plan 

(A) In general 
If any funding improvement plan or rehabilitation plan in effect under section 432 with respect to a multiemployer plan requires an employer to make a contribution to the plan, there is hereby imposed a tax on each failure of the employer to make the required contribution within the time required under such plan.
(B) Amount of tax 
The amount of the tax imposed by subparagraph (A) shall be equal to the amount of the required contribution the employer failed to make in a timely manner.
(C) Liability for tax 
The tax imposed by subparagraph (A) shall be paid by the employer responsible for contributing to or under the rehabilitation plan which fails to make the contribution.
(3) Failure to meet requirements for plans in endangered or critical status 
If
(A) a plan which is in seriously endangered status fails to meet the applicable benchmarks by the end of the funding improvement period, or
(B) a plan which is in critical status either
(i) fails to meet the requirements of section 432 (e) by the end of the rehabilitation period, or
(ii) has received a certification under section 432 (b)(3)(A)(ii) for 3 consecutive plan years that the plan is not making the scheduled progress in meeting its requirements under the rehabilitation plan,

the plan shall be treated as having an accumulated funding deficiency for purposes of this section for the last plan year in such funding improvement, rehabilitation, or 3-consecutive year period (and each succeeding plan year until such benchmarks or requirements are met) in an amount equal to the greater of the amount of the contributions necessary to meet such benchmarks or requirements or the amount of such accumulated funding deficiency without regard to this paragraph.

(4) Failure to adopt rehabilitation plan 

(A) In general 
In the case of a multiemployer plan which is in critical status, there is hereby imposed a tax on the failure of such plan to adopt a rehabilitation plan within the time prescribed under section 432.
(B) Amount of tax 
The amount of the tax imposed under subparagraph (A) with respect to any plan sponsor for any taxable year shall be the greater of
(i) the amount of tax imposed under subsection (a) for the taxable year (determined without regard to this subsection), or
(ii) the amount equal to $1,100 multiplied by the number of days during the taxable year which are included in the period beginning on the first day of the 240-day period described in section 432 (e)(1)(A) and ending on the day on which the rehabilitation plan is adopted.
(C) Liability for tax 

(i) In general The tax imposed by subparagraph (A) shall be paid by each plan sponsor.
(ii) Plan sponsor For purposes of clause (i), the term plan sponsor in the case of a multiemployer plan means the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan.
(5) Waiver 
In the case of a failure described in paragraph (2) or (3) which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by this subsection. For purposes of this paragraph, reasonable cause includes unanticipated and material market fluctuations, the loss of a significant contributing employer, or other factors to the extent that the payment of tax under this subsection with respect to the failure would be excessive or otherwise inequitable relative to the failure involved.
(6) Terms used in section 432 
For purposes of this subsection, any term used in this subsection which is also used in section 432 shall have the meaning given such term by section 432.
(h) Cross references 
For disallowance of deduction for taxes paid under this section, see section 275. For liability for tax in case of an employer party to collective bargaining agreement, see section 413 (b)(6). For provisions concerning notification of Secretary of Labor of imposition of tax under this section, waiver of the tax imposed by subsection (b), and other coordination between Secretary of the Treasury and Secretary of Labor with respect to compliance with this section, see section 3002(b) of title III of the Employee Retirement Income Security Act of 1974.
[1] So in original. Probably should be “412(a)(2).”
[2] See References in Text note below.

26 USC 4972 - Tax on nondeductible contributions to qualified employer plans

(a) Tax imposed 
In the case of any qualified employer plan, there is hereby imposed a tax equal to 10 percent of the nondeductible contributions under the plan (determined as of the close of the taxable year of the employer).
(b) Employer liable for tax 
The tax imposed by this section shall be paid by the employer making the contributions.
(c) Nondeductible contributions 
For purposes of this section
(1) In general 
The term nondeductible contributions means, with respect to any qualified employer plan, the sum of
(A) the excess (if any) of
(i) the amount contributed for the taxable year by the employer to or under such plan, over
(ii) the amount allowable as a deduction under section 404 for such contributions (determined without regard to subsection (e) thereof), and
(B) the amount determined under this subsection for the preceding taxable year reduced by the sum of
(i) the portion of the amount so determined returned to the employer during the taxable year, and
(ii) the portion of the amount so determined deductible under section 404 for the taxable year (determined without regard to subsection (e) thereof).
(2) Ordering rule for section 404 
For purposes of paragraph (1), the amount allowable as a deduction under section 404 for any taxable year shall be treated as
(A) first from carryforwards to such taxable year from preceding taxable years (in order of time), and
(B) then from contributions made during such taxable year.
(3) Contributions which may be returned to employer 
In determining the amount of nondeductible contributions for any taxable year, there shall not be taken into account any contribution for such taxable year which is distributed to the employer in a distribution described in section 4980 (c)(2)(B)(ii) if such distribution is made on or before the last day on which a contribution may be made for such taxable year under section 404 (a)(6).
(4) Special rule for self-employed individuals 
For purposes of paragraph (1), if
(A) the amount which is required to be contributed to a plan under section 412 on behalf of an individual who is an employee (within the meaning of section 401 (c)(1)), exceeds
(B) the earned income (within the meaning of section 404(a)(8)) of such individual derived from the trade or business with respect to which such plan is established,

such excess shall be treated as an amount allowable as a deduction under section 404.

(5) Pre-1987 contributions 
The term nondeductible contribution shall not include any contribution made for a taxable year beginning before January 1, 1987.
(6) Exceptions 
In determining the amount of nondeductible contributions for any taxable year, there shall not be taken into account
(A) so much of the contributions to 1 or more defined contribution plans which are not deductible when contributed solely because of section 404 (a)(7) as does not exceed the amount of contributions described in section 401 (m)(4)(A), or
(B) so much of the contributions to a simple retirement account (within the meaning of section 408 (p)) or a simple plan (within the meaning of section 401 (k)(11)) which are not deductible when contributed solely because such contributions are not made in connection with a trade or business of the employer.

For purposes of subparagraph (A), the deductible limits under section 404 (a)(7) shall first be applied to amounts contributed to a defined benefit plan and then to amounts described in subparagraph (A). Subparagraph (B) shall not apply to contributions made on behalf of the employer or a member of the employers family (as defined in section 447 (e)(1)).

(7) Defined benefit plan exception 
In determining the amount of nondeductible contributions for any taxable year, an employer may elect for such year not to take into account any contributions to a defined benefit plan except, in the case of a multiemployer plan, to the extent that such contributions exceed the full-funding limitation (as defined in section 431 (c)(6)). For purposes of this paragraph, the deductible limits under section 404 (a)(7) shall first be applied to amounts contributed to defined contribution plans and then to amounts described in this paragraph. If an employer makes an election under this paragraph for a taxable year, paragraph (6) shall not apply to such employer for such taxable year.
(d) Definitions 
For purposes of this section
(1) Qualified employer plan 

(A) In general 
The term qualified employer plan means
(i) any plan meeting the requirements of section 401 (a) which includes a trust exempt from tax under section 501 (a),
(ii) an annuity plan described in section 403 (a),
(iii) any simplified employee pension (within the meaning of section 408 (k)), and
(iv) any simple retirement account (within the meaning of section 408 (p)).
(B) Exemption for governmental and tax exempt plans 
The term qualified employer plan does not include a plan described in subparagraph (A) or (B) of section 4980 (c)(1).
(2) Employer 
In the case of a plan which provides contributions or benefits for employees some or all of whom are self-employed individuals within the meaning of section 401 (c)(1), the term employer means the person treated as the employer under section 401 (c)(4).

26 USC 4973 - Tax on excess contributions to certain tax-favored accounts and annuities

(a) Tax imposed 
In the case of
(1) an individual retirement account (within the meaning of section 408 (a)),
(2) an Archer MSA (within the meaning of section 220 (d)),
(3) an individual retirement annuity (within the meaning of section 408 (b)), a custodial account treated as an annuity contract under section 403 (b)(7)(A) (relating to custodial accounts for regulated investment company stock),
(4) a Coverdell education savings account (as defined in section 530), or
(5) a health savings account (within the meaning of section 223 (d)),

there is imposed for each taxable year a tax in an amount equal to 6 percent of the amount of the excess contributions to such individuals accounts or annuities (determined as of the close of the taxable year). The amount of such tax for any taxable year shall not exceed 6 percent of the value of the account or annuity (determined as of the close of the taxable year). In the case of an endowment contract described in section 408 (b), the tax imposed by this section does not apply to any amount allocable to life, health, accident, or other insurance under such contract. The tax imposed by this subsection shall be paid by such individual.

(b) Excess contributions 
For purposes of this section, in the case of individual retirement accounts or individual retirement annuities, the term excess contributions means the sum of
(1) the excess (if any) of
(A) the amount contributed for the taxable year to the accounts or for the annuities (other than a contribution to a Roth IRA or a rollover contribution described in section 402 (c), 403 (a)(4), 403 (b)(8), 408 (d)(3), or 457 (e)(16)), over
(B) the amount allowable as a deduction under section 219 for such contributions, and
(2) the amount determined under this subsection for the preceding taxable year reduced by the sum of
(A) the distributions out of the account for the taxable year which were included in the gross income of the payee under section 408 (d)(1),
(B) the distributions out of the account for the taxable year to which section 408 (d)(5) applies, and
(C) the excess (if any) of the maximum amount allowable as a deduction under section 219 for the taxable year over the amount contributed (determined without regard to section 219 (f)(6)) to the accounts or for the annuities (including the amount contributed to a Roth IRA) for the taxable year.

For purposes of this subsection, any contribution which is distributed from the individual retirement account or the individual retirement annuity in a distribution to which section 408 (d)(4) applies shall be treated as an amount not contributed. For purposes of paragraphs (1)(B) and (2)(C), the amount allowable as a deduction under section 219 shall be computed without regard to section 219 (g).

(c) Section 403 (b) contracts 
For purposes of this section, in the case of a custodial account referred to in subsection (a)(3), the term excess contributions means the sum of
(1) the excess (if any) of the amount contributed for the taxable year to such account (other than a rollover contribution described in section 403 (b)(8) or 408 (d)(3)(A)(iii)), over the lesser of the amount excludable from gross income under section 403 (b) or the amount permitted to be contributed under the limitations contained in section 415 (or under whichever such section is applicable, if only one is applicable), and
(2) the amount determined under this subsection for the preceding taxable year, reduced by
(A) the excess (if any) of the lesser of (i) the amount excludable from gross income under section 403 (b) or (ii) the amount permitted to be contributed under the limitations contained in section 415 over the amount contributed to the account for the taxable year (or under whichever such section is applicable, if only one is applicable), and
(B) the sum of the distributions out of the account (for all prior taxable years) which are included in gross income under section 72 (e).
(d) Excess contributions to Archer MSAs 
For purposes of this section, in the case of Archer MSAs (within the meaning of section 220 (d)), the term excess contributions means the sum of
(1) the aggregate amount contributed for the taxable year to the accounts (other than rollover contributions described in section 220 (f)(5)) which is neither excludable from gross income under section 106 (b) nor allowable as a deduction under section 220 for such year, and
(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of
(A) the distributions out of the accounts which were included in gross income under section 220 (f)(2), and
(B) the excess (if any) of
(i) the maximum amount allowable as a deduction under section 220 (b)(1) (determined without regard to section 106 (b)) for the taxable year, over
(ii) the amount contributed to the accounts for the taxable year.

For purposes of this subsection, any contribution which is distributed out of the Archer MSA in a distribution to which section 220 (f)(3) or section 138 (c)(3) applies shall be treated as an amount not contributed.

(e) Excess contributions to Coverdell education savings accounts 
For purposes of this section
(1) In general 
In the case of Coverdell education savings accounts maintained for the benefit of any one beneficiary, the term excess contributions means the sum of
(A) the amount by which the amount contributed for the taxable year to such accounts exceeds $2,000 (or, if less, the sum of the maximum amounts permitted to be contributed under section 530 (c) by the contributors to such accounts for such year); and
(B) the amount determined under this subsection for the preceding taxable year, reduced by the sum of
(i) the distributions out of the accounts for the taxable year (other than rollover distributions); and
(ii) the excess (if any) of the maximum amount which may be contributed to the accounts for the taxable year over the amount contributed to the accounts for the taxable year.
(2) Special rules 
For purposes of paragraph (1), the following contributions shall not be taken into account:
(A) Any contribution which is distributed out of the Coverdell education savings account in a distribution to which section 530 (d)(4)(C) applies.
(B) Any rollover contribution.
(f) Excess contributions to Roth IRAs 
For purposes of this section, in the case of contributions to a Roth IRA (within the meaning of section 408A (b)), the term excess contributions means the sum of
(1) the excess (if any) of
(A) the amount contributed for the taxable year to Roth IRAs (other than a qualified rollover contribution described in section 408A (e)), over
(B) the amount allowable as a contribution under sections 408A (c)(2) and (c)(3), and
(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of
(A) the distributions out of the accounts for the taxable year, and
(B) the excess (if any) of the maximum amount allowable as a contribution under sections 408A (c)(2) and (c)(3) for the taxable year over the amount contributed by the individual to all individual retirement plans for the taxable year.

For purposes of this subsection, any contribution which is distributed from a Roth IRA in a distribution described in section 408 (d)(4) shall be treated as an amount not contributed.

(g) Excess contributions to health savings accounts 
For purposes of this section, in the case of health savings accounts (within the meaning of section 223 (d)), the term excess contributions means the sum of
(1) the aggregate amount contributed for the taxable year to the accounts (other than a rollover contribution described in section 220 (f)(5) or 223 (f)(5)) which is neither excludable from gross income under section 106 (d) nor allowable as a deduction under section 223 for such year, and
(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of
(A) the distributions out of the accounts which were included in gross income under section 223 (f)(2), and
(B) the excess (if any) of
(i) the maximum amount allowable as a deduction under section 223 (b) (determined without regard to section 106 (d)) for the taxable year, over
(ii) the amount contributed to the accounts for the taxable year.

For purposes of this subsection, any contribution which is distributed out of the health savings account in a distribution to which section 223 (f)(3) applies shall be treated as an amount not contributed.

26 USC 4974 - Excise tax on certain accumulations in qualified retirement plans

(a) General rule 
If the amount distributed during the taxable year of the payee under any qualified retirement plan or any eligible deferred compensation plan (as defined in section 457 (b)) is less than the minimum required distribution for such taxable year, there is hereby imposed a tax equal to 50 percent of the amount by which such minimum required distribution exceeds the actual amount distributed during the taxable year. The tax imposed by this section shall be paid by the payee.
(b) Minimum required distribution 
For purposes of this section, the term minimum required distribution means the minimum amount required to be distributed during a taxable year under section 401 (a)(9), 403 (b)(10), 408 (a)(6), 408 (b)(3), or 457 (d)(2), as the case may be, as determined under regulations prescribed by the Secretary.
(c) Qualified retirement plan 
For purposes of this section, the term qualified retirement plan means
(1) a plan described in section 401 (a) which includes a trust exempt from tax under section 501 (a),
(2) an annuity plan described in section 403 (a),
(3) an annuity contract described in section 403 (b),
(4) an individual retirement account described in section 408 (a), or
(5) an individual retirement annuity described in section 408 (b).

Such term includes any plan, contract, account, or annuity which, at any time, has been determined by the Secretary to be such a plan, contract, account, or annuity.

(d) Waiver of tax in certain cases 
If the taxpayer establishes to the satisfaction of the Secretary that
(1) the shortfall described in subsection (a) in the amount distributed during any taxable year was due to reasonable error, and
(2) reasonable steps are being taken to remedy the shortfall,

the Secretary may waive the tax imposed by subsection (a) for the taxable year.

26 USC 4975 - Tax on prohibited transactions

(a) Initial taxes on disqualified person 
There is hereby imposed a tax on each prohibited transaction. The rate of tax shall be equal to 15 percent of the amount involved with respect to the prohibited transaction for each year (or part thereof) in the taxable period. The tax imposed by this subsection shall be paid by any disqualified person who participates in the prohibited transaction (other than a fiduciary acting only as such).
(b) Additional taxes on disqualified person 
In any case in which an initial tax is imposed by subsection (a) on a prohibited transaction and the transaction is not corrected within the taxable period, there is hereby imposed a tax equal to 100 percent of the amount involved. The tax imposed by this subsection shall be paid by any disqualified person who participated in the prohibited transaction (other than a fiduciary acting only as such).
(c) Prohibited transaction 

(1) General rule 
For purposes of this section, the term prohibited transaction means any direct or indirect
(A) sale or exchange, or leasing, of any property between a plan and a disqualified person;
(B) lending of money or other extension of credit between a plan and a disqualified person;
(C) furnishing of goods, services, or facilities between a plan and a disqualified person;
(D) transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a plan;
(E) act by a disqualified person who is a fiduciary whereby he deals with the income or assets of a plan in his own interests or for his own account; or
(F) receipt of any consideration for his own personal account by any disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan.
(2) Special exemption 
The Secretary shall establish an exemption procedure for purposes of this subsection. Pursuant to such procedure, he may grant a conditional or unconditional exemption of any disqualified person or transaction, orders of disqualified persons or transactions, from all or part of the restrictions imposed by paragraph (1) of this subsection. Action under this subparagraph may be taken only after consultation and coordination with the Secretary of Labor. The Secretary may not grant an exemption under this paragraph unless he finds that such exemption is
(A) administratively feasible,
(B) in the interests of the plan and of its participants and beneficiaries, and
(C) protective of the rights of participants and beneficiaries of the plan.

Before granting an exemption under this paragraph, the Secretary shall require adequate notice to be given to interested persons and shall publish notice in the Federal Register of the pendency of such exemption and shall afford interested persons an opportunity to present views. No exemption may be granted under this paragraph with respect to a transaction described in subparagraph (E) or (F) of paragraph (1) unless the Secretary affords an opportunity for a hearing and makes a determination on the record with respect to the findings required under subparagraphs (A), (B), and (C) of this paragraph, except that in lieu of such hearing the Secretary may accept any record made by the Secretary of Labor with respect to an application for exemption under section 408(a) of title I of the Employee Retirement Income Security Act of 1974.

(3) Special rule for individual retirement accounts 
An individual for whose benefit an individual retirement account is established and his beneficiaries shall be exempt from the tax imposed by this section with respect to any transaction concerning such account (which would otherwise be taxable under this section) if, with respect to such transaction, the account ceases to be an individual retirement account by reason of the application of section 408 (e)(2)(A) or if section 408 (e)(4) applies to such account.
(4) Special rule for Archer MSAs 
An individual for whose benefit an Archer MSA (within the meaning of section 220 (d)) is established shall be exempt from the tax imposed by this section with respect to any transaction concerning such account (which would otherwise be taxable under this section) if section 220 (e)(2) applies to such transaction.
(5) Special rule for Coverdell education savings accounts 
An individual for whose benefit a Coverdell education savings account is established and any contributor to such account shall be exempt from the tax imposed by this section with respect to any transaction concerning such account (which would otherwise be taxable under this section) if section 530 (d) applies with respect to such transaction.
(6) Special rule for health savings accounts 
An individual for whose benefit a health savings account (within the meaning of section 223 (d)) is established shall be exempt from the tax imposed by this section with respect to any transaction concerning such account (which would otherwise be taxable under this section) if, with respect to such transaction, the account ceases to be a health savings account by reason of the application of section 223 (e)(2) to such account.
(d) Exemptions 
Except as provided in subsection (f)(6), the prohibitions provided in subsection (c) shall not apply to
(1) any loan made by the plan to a disqualified person who is a participant or beneficiary of the plan if such loan
(A) is available to all such participants or beneficiaries on a reasonably equivalent basis,
(B) is not made available to highly compensated employees (within the meaning of section 414 (q)) in an amount greater than the amount made available to other employees,
(C) is made in accordance with specific provisions regarding such loans set forth in the plan,
(D) bears a reasonable rate of interest, and
(E) is adequately secured;
(2) any contract, or reasonable arrangement, made with a disqualified person for office space, or legal, accounting, or other services necessary for the establishment or operation of the plan, if no more than reasonable compensation is paid therefor;
(3) any loan to an[1] leveraged employee stock ownership plan (as defined in subsection (e)(7)), if
(A) such loan is primarily for the benefit of participants and beneficiaries of the plan, and
(B) such loan is at a reasonable rate of interest, and any collateral which is given to a disqualified person by the plan consists only of qualifying employer securities (as defined in subsection (e)(8));
(4) the investment of all or part of a plans assets in deposits which bear a reasonable interest rate in a bank or similar financial institution supervised by the United States or a State, if such bank or other institution is a fiduciary of such plan and if
(A) the plan covers only employees of such bank or other institution and employees of affiliates of such bank or other institution, or
(B) such investment is expressly authorized by a provision of the plan or by a fiduciary (other than such bank or institution or affiliates thereof) who is expressly empowered by the plan to so instruct the trustee with respect to such investment;
(5) any contract for life insurance, health insurance, or annuities with one or more insurers which are qualified to do business in a State if the plan pays no more than adequate consideration, and if each such insurer or insurers is
(A) the employer maintaining the plan, or
(B) a disqualified person which is wholly owned (directly or indirectly) by the employer establishing the plan, or by any person which is a disqualified person with respect to the plan, but only if the total premiums and annuity considerations written by such insurers for life insurance, health insurance, or annuities for all plans (and their employers) with respect to which such insurers are disqualified persons (not including premiums or annuity considerations written by the employer maintaining the plan) do not exceed 5 percent of the total premiums and annuity considerations written for all lines of insurance in that year by such insurers (not including premiums or annuity considerations written by the employer maintaining the plan);
(6) the provision of any ancillary service by a bank or similar financial institution supervised by the United States or a State, if such service is provided at not more than reasonable compensation, if such bank or other institution is a fiduciary of such plan, and if
(A) such bank or similar financial institution has adopted adequate internal safeguards which assure that the provision of such ancillary service is consistent with sound banking and financial practice, as determined by Federal or State supervisory authority, and
(B) the extent to which such ancillary service is provided is subject to specific guidelines issued by such bank or similar financial institution (as determined by the Secretary after consultation with Federal and State supervisory authority), and under such guidelines the bank or similar financial institution does not provide such ancillary service
(i) in an excessive or unreasonable manner, and
(ii) in a manner that would be inconsistent with the best interests of participants and beneficiaries of employee benefit plans;
(7) the exercise of a privilege to convert securities, to the extent provided in regulations of the Secretary but only if the plan receives no less than adequate consideration pursuant to such conversion;
(8) any transaction between a plan and a common or collective trust fund or pooled investment fund maintained by a disqualified person which is a bank or trust company supervised by a State or Federal agency or between a plan and a pooled investment fund of an insurance company qualified to do business in a State if
(A) the transaction is a sale or purchase of an interest in the fund,
(B) the bank, trust company, or insurance company receives not more than a reasonable compensation, and
(C) such transaction is expressly permitted by the instrument under which the plan is maintained, or by a fiduciary (other than the bank, trust company, or insurance company, or an affiliate thereof) who has authority to manage and control the assets of the plan;
(9) receipt by a disqualified person of any benefit to which he may be entitled as a participant or beneficiary in the plan, so long as the benefit is computed and paid on a basis which is consistent with the terms of the plan as applied to all other participants and beneficiaries;
(10) receipt by a disqualified person of any reasonable compensation for services rendered, or for the reimbursement of expenses properly and actually incurred, in the performance of his duties with the plan, but no person so serving who already receives full-time pay from an employer or an association of employers, whose employees are participants in the plan or from an employee organization whose members are participants in such plan shall receive compensation from such fund, except for reimbursement of expenses properly and actually incurred;
(11) service by a disqualified person as a fiduciary in addition to being an officer, employee, agent, or other representative of a disqualified person;
(12) the making by a fiduciary of a distribution of the assets of the trust in accordance with the terms of the plan if such assets are distributed in the same manner as provided under section 4044 of title IV of the Employee Retirement Income Security Act of 1974 (relating to allocation of assets);
(13) any transaction which is exempt from section 406 of such Act by reason of section 408(e) of such Act (or which would be so exempt if such section 406 applied to such transaction) or which is exempt from section 406 of such Act by reason of section 408(b)(12) of such Act;
(14) any transaction required or permitted under part 1 of subtitle E of title IV or section 4223 of the Employee Retirement Income Security Act of 1974, but this paragraph shall not apply with respect to the application of subsection (c)(1) (E) or (F);
(15) a merger of multiemployer plans, or the transfer of assets or liabilities between multiemployer plans, determined by the Pension Benefit Guaranty Corporation to meet the requirements of section 4231 of such Act, but this paragraph shall not apply with respect to the application of subsection (c)(1)(E) or (F);
(16) a sale of stock held by a trust which constitutes an individual retirement account under section 408 (a) to the individual for whose benefit such account is established if
(A) such stock is in a bank (as defined in section 581) or a depository institution holding company (as defined in section 3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (w)(1)),2
(B) such stock is held by such trust as of the date of the enactment of this paragraph,
(C) such sale is pursuant to an election under section 1362 (a) by such bank or company,
(D) such sale is for fair market value at the time of sale (as established by an independent appraiser) and the terms of the sale are otherwise at least as favorable to such trust as the terms that would apply on a sale to an unrelated party,
(E) such trust does not pay any commissions, costs, or other expenses in connection with the sale, and
(F) the stock is sold in a single transaction for cash not later than 120 days after the S corporation election is made;
(17) Any[3] transaction in connection with the provision of investment advice described in subsection (e)(3)(B) to a participant or beneficiary in a plan and that permits such participant or beneficiary to direct the investment of plan assets in an individual account, if
(A) the transaction is
(i) the provision of the investment advice to the participant or beneficiary of the plan with respect to a security or other property available as an investment under the plan,
(ii) the acquisition, holding, or sale of a security or other property available as an investment under the plan pursuant to the investment advice, or
(iii) the direct or indirect receipt of fees or other compensation by the fiduciary adviser or an affiliate thereof (or any employee, agent, or registered representative of the fiduciary adviser or affiliate) in connection with the provision of the advice or in connection with an acquisition, holding, or sale of a security or other property available as an investment under the plan pursuant to the investment advice; and
(B) the requirements of subsection (f)(8) are met,[4]
(18) any transaction involving the purchase or sale of securities, or other property (as determined by the Secretary of Labor), between a plan and a party in interest (other than a fiduciary described in subsection (e)(3)(B)) with respect to a plan if
(A) the transaction involves a block trade,
(B) at the time of the transaction, the interest of the plan (together with the interests of any other plans maintained by the same plan sponsor), does not exceed 10 percent of the aggregate size of the block trade,
(C) the terms of the transaction, including the price, are at least as favorable to the plan as an arms length[5] transaction, and
(D) the compensation associated with the purchase and sale is not greater than the compensation associated with an arms length[5] transaction with an unrelated party,[4]
(19) any transaction involving the purchase or sale of securities, or other property (as determined by the Secretary of Labor), between a plan and a party in interest if
(A) the transaction is executed through an electronic communication network, alternative trading system, or similar execution system or trading venue subject to regulation and oversight by
(i) the applicable Federal regulating entity, or
(ii) such foreign regulatory entity as the Secretary of Labor may determine by regulation,
(B) either
(i) the transaction is effected pursuant to rules designed to match purchases and sales at the best price available through the execution system in accordance with applicable rules of the Securities and Exchange Commission or other relevant governmental authority, or
(ii) neither the execution system nor the parties to the transaction take into account the identity of the parties in the execution of trades,
(C) the price and compensation associated with the purchase and sale are not greater than the price and compensation associated with an arms length[5] transaction with an unrelated party,
(D) if[6] the party in interest has an ownership interest in the system or venue described in subparagraph (A), the system or venue has been authorized by the plan sponsor or other independent fiduciary for transactions described in this paragraph, and
(E) not less than 30 days prior to the initial transaction described in this paragraph executed through any system or venue described in subparagraph (A), a plan fiduciary is provided written or electronic notice of the execution of such transaction through such system or venue,[4]
(20) transactions described in subparagraphs (A), (B), and (D) of subsection (c)(1) between a plan and a person that is a party in interest other than a fiduciary (or an affiliate) who has or exercises any discretionary authority or control with respect to the investment of the plan assets involved in the transaction or renders investment advice (within the meaning of subsection (e)(3)(B)) with respect to those assets, solely by reason of providing services to the plan or solely by reason of a relationship to such a service provider described in subparagraph (F), (G), (H), or (I) of subsection (e)(2), or both, but only if in connection with such transaction the plan receives no less, nor pays no more, than adequate consideration,[4]
(21) any foreign exchange transactions, between a bank or broker-dealer (or any affiliate of either) and a plan (as defined in this section) with respect to which such bank or broker-dealer (or affiliate) is a trustee, custodian, fiduciary, or other party in interest person, if
(A) the transaction is in connection with the purchase, holding, or sale of securities or other investment assets (other than a foreign exchange transaction unrelated to any other investment in securities or other investment assets),
(B) at the time the foreign exchange transaction is entered into, the terms of the transaction are not less favorable to the plan than the terms generally available in comparable arms length[5] foreign exchange transactions between unrelated parties, or the terms afforded by the bank or broker-dealer (or any affiliate of either) in comparable arms-length foreign exchange transactions involving unrelated parties,
(C) the exchange rate used by such bank or broker-dealer (or affiliate) for a particular foreign exchange transaction does not deviate by more or less than 3 percent from the interbank bid and asked rates for transactions of comparable size and maturity at the time of the transaction as displayed on an independent service that reports rates of exchange in the foreign currency market for such currency, and
(D) the bank or broker-dealer (or any affiliate of either) does not have investment discretion, or provide investment advice, with respect to the transaction,[4]
(22) any transaction described in subsection (c)(1)(A) involving the purchase and sale of a security between a plan and any other account managed by the same investment manager, if
(A) the transaction is a purchase or sale, for no consideration other than cash payment against prompt delivery of a security for which market quotations are readily available,
(B) the transaction is effected at the independent current market price of the security (within the meaning of section 270.17a7(b) of title 17, Code of Federal Regulations),
(C) no brokerage commission, fee (except for customary transfer fees, the fact of which is disclosed pursuant to subparagraph (D)), or other remuneration is paid in connection with the transaction,
(D) a fiduciary (other than the investment manager engaging in the cross-trades or any affiliate) for each plan participating in the transaction authorizes in advance of any cross-trades (in a document that is separate from any other written agreement of the parties) the investment manager to engage in cross trades at the investment managers discretion, after such fiduciary has received disclosure regarding the conditions under which cross trades may take place (but only if such disclosure is separate from any other agreement or disclosure involving the asset management relationship), including the written policies and procedures of the investment manager described in subparagraph (H),
(E) each plan participating in the transaction has assets of at least $100,000,000, except that if the assets of a plan are invested in a master trust containing the assets of plans maintained by employers in the same controlled group (as defined in section 407(d)(7) of the Employee Retirement Income Security Act of 1974), the master trust has assets of at least $100,000,000,
(F) the investment manager provides to the plan fiduciary who authorized cross trading under subparagraph (D) a quarterly report detailing all cross trades executed by the investment manager in which the plan participated during such quarter, including the following information, as applicable:
(i)  the identity of each security bought or sold;
(ii)  the number of shares or units traded;
(iii)  the parties involved in the cross-trade; and
(iv)  trade price and the method used to establish the trade price,
(G) the investment manager does not base its fee schedule on the plans consent to cross trading, and no other service (other than the investment opportunities and cost savings available through a cross trade) is conditioned on the plans consent to cross trading,
(H) the investment manager has adopted, and cross-trades are effected in accordance with, written cross-trading policies and procedures that are fair and equitable to all accounts participating in the cross-trading program, and that include a description of the managers pricing policies and procedures, and the managers policies and procedures for allocating cross trades in an objective manner among accounts participating in the cross-trading program, and
(I) the investment manager has designated an individual responsible for periodically reviewing such purchases and sales to ensure compliance with the written policies and procedures described in subparagraph (H), and following such review, the individual shall issue an annual written report no later than 90 days following the period to which it relates signed under penalty of perjury to the plan fiduciary who authorized cross trading under subparagraph (D) describing the steps performed during the course of the review, the level of compliance, and any specific instances of non-compliance.

The written report shall also notify the plan fiduciary of the plans right to terminate participation in the investment managers cross-trading program at any time,[4] or

(23) except as provided in subsection (f)(11), a transaction described in subparagraph (A), (B), (C), or (D) of subsection (c)(1) in connection with the acquisition, holding, or disposition of any security or commodity, if the transaction is corrected before the end of the correction period.
(e) Definitions 

(1) Plan 
For purposes of this section, the term plan means
(A) a trust described in section 401 (a) which forms a part of a plan, or a plan described in section 403 (a), which trust or plan is exempt from tax under section 501 (a),
(B) an individual retirement account described in section 408 (a),
(C) an individual retirement annuity described in section 408 (b),
(D) an Archer MSA described in section 220 (d),
(E) a health savings account described in section 223 (d),
(F) a Coverdell education savings account described in section 530, or
(G) a trust, plan, account, or annuity which, at any time, has been determined by the Secretary to be described in any preceding subparagraph of this paragraph.
(2) Disqualified person 
For purposes of this section, the term disqualified person means a person who is
(A) a fiduciary;
(B) a person providing services to the plan;
(C) an employer any of whose employees are covered by the plan;
(D) an employee organization any of whose members are covered by the plan;
(E) an owner, direct or indirect, of 50 percent or more of
(i) the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of a corporation,
(ii) the capital interest or the profits interest of a partnership, or
(iii) the beneficial interest of a trust or unincorporated enterprise,

which is an employer or an employee organization described in subparagraph (C) or (D);

(F) a member of the family (as defined in paragraph (6)) of any individual described in subparagraph (A), (B), (C), or (E);
(G) a corporation, partnership, or trust or estate of which (or in which) 50 percent or more of
(i) the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of such corporation,
(ii) the capital interest or profits interest of such partnership, or
(iii) the beneficial interest of such trust or estate,

is owned directly or indirectly, or held by persons described in subparagraph (A), (B), (C), (D), or (E);

(H) an officer, director (or an individual having powers or responsibilities similar to those of officers or directors), a 10 percent or more shareholder, or a highly compensated employee (earning 10 percent or more of the yearly wages of an employer) of a person described in subparagraph (C), (D), (E), or (G); or
(I) a 10 percent or more (in capital or profits) partner or joint venturer of a person described in subparagraph (C), (D), (E), or (G).

The Secretary, after consultation and coordination with the Secretary of Labor or his delegate, may by regulation prescribe a percentage lower than 50 percent for subparagraphs (E) and (G) and lower than 10 percent for subparagraphs (H) and (I).

(3) Fiduciary 
For purposes of this section, the term fiduciary means any person who
(A) exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets,
(B) renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or
(C) has any discretionary authority or discretionary responsibility in the administration of such plan.

Such term includes any person designated under section 405(c)(1)(B) of the Employee Retirement Income Security Act of 1974.

(4) Stockholdings 
For purposes of paragraphs (2)(E)(i) and (G)(i) there shall be taken into account indirect stockholdings which would be taken into account under section 267 (c), except that, for purposes of this paragraph, section 267 (c)(4) shall be treated as providing that the members of the family of an individual are the members within the meaning of paragraph (6).
(5) Partnerships; trusts 
For purposes of paragraphs (2)(E)(ii) and (iii), (G)(ii) and (iii), and (I) the ownership of profits or beneficial interests shall be determined in accordance with the rules for constructive ownership of stock provided in section 267 (c) (other than paragraph (3) thereof), except that section 267 (c)(4) shall be treated as providing that the members of the family of an individual are the members within the meaning of paragraph (6).
(6) Member of family 
For purposes of paragraph (2)(F), the family of any individual shall include his spouse, ancestor, lineal descendant, and any spouse of a lineal descendant.
(7) Employee stock ownership plan 
The term employee stock ownership plan means a defined contribution plan
(A) which is a stock bonus plan which is qualified, or a stock bonus and a money purchase plan both of which are qualified under section 401 (a), and which are designed to invest primarily in qualifying employer securities; and
(B) which is otherwise defined in regulations prescribed by the Secretary.

A plan shall not be treated as an employee stock ownership plan unless it meets the requirements of section 409 (h), section 409(o), and, if applicable, section 409 (n), section 409(p), and section 664 (g) and, if the employer has a registration-type class of securities (as defined in section 409 (e)(4)), it meets the requirements of section 409 (e).

(8) Qualifying employer security 
The term qualifying employer security means any employer security within the meaning of section 409 (l). If any moneys or other property of a plan are invested in shares of an investment company registered under the Investment Company Act of 1940, the investment shall not cause that investment company or that investment companys investment adviser or principal underwriter to be treated as a fiduciary or a disqualified person for purposes of this section, except when an investment company or its investment adviser or principal underwriter acts in connection with a plan covering employees of the investment company, its investment adviser, or its principal underwriter.
(9) Section made applicable to withdrawal liability payment funds 
For purposes of this section
(A) In general 
The term plan includes a trust described in section 501 (c)(22).
(B) Disqualified person 
In the case of any trust to which this section applies by reason of subparagraph (A), the term disqualified person includes any person who is a disqualified person with respect to any plan to which such trust is permitted to make payments under section 4223 of the Employee Retirement Income Security Act of 1974.
(f) Other definitions and special rules 
For purposes of this section
(1) Joint and several liability 
If more than one person is liable under subsection (a) or (b) with respect to any one prohibited transaction, all such persons shall be jointly and severally liable under such subsection with respect to such transaction.
(2) Taxable period 
The term taxable period means, with respect to any prohibited transaction, the period beginning with the date on which the prohibited transaction occurs and ending on the earliest of
(A) the date of mailing a notice of deficiency with respect to the tax imposed by subsection (a) under section 6212,
(B) the date on which the tax imposed by subsection (a) is assessed, or
(C) the date on which correction of the prohibited transaction is completed.
(3) Sale or exchange; encumbered property 
A transfer or real or personal property by a disqualified person to a plan shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the plan assumes or if it is subject to a mortgage or similar lien which a disqualified person placed on the property within the 10-year period ending on the date of the transfer.
(4) Amount involved 
The term amount involved means, with respect to a prohibited transaction, the greater of the amount of money and the fair market value of the other property given or the amount of money and the fair market value of the other property received; except that, in the case of services described in paragraphs (2) and (10) of subsection (d) the amount involved shall be only the excess compensation. For purposes of the preceding sentence, the fair market value
(A) in the case of the tax imposed by subsection (a), shall be determined as of the date on which the prohibited transaction occurs; and
(B) in the case of the tax imposed by subsection (b), shall be the highest fair market value during the taxable period.
(5) Correction 
The terms correction and correct mean, with respect to a prohibited transaction, undoing the transaction to the extent possible, but in any case placing the plan in a financial position not worse than that in which it would be if the disqualified person were acting under the highest fiduciary standards.
(6) Exemptions not to apply to certain transactions 

(A) In general 
In the case of a trust described in section 401 (a) which is part of a plan providing contributions or benefits for employees some or all of whom are owner-employees (as defined in section 401 (c)(3)), the exemptions provided by subsection (d) (other than paragraphs (9) and (12)) shall not apply to a transaction in which the plan directly or indirectly
(i) lends any part of the corpus or income of the plan to,
(ii) pays any compensation for personal services rendered to the plan to, or
(iii) acquires for the plan any property from, or sells any property to,

any such owner-employee, a member of the family (as defined in section 267(c)(4)) of any such owner-employee, or any corporation in which any such owner-employee owns, directly or indirectly, 50 percent or more of the total combined voting power of all classes of stock entitled to vote or 50 percent or more of the total value of shares of all classes of stock of the corporation.

(B) Special rules for shareholder-employees, etc. 

(i) In general For purposes of subparagraph (A), the following shall be treated as owner-employees:
(I) A shareholder-employee.
(II) A participant or beneficiary of an individual retirement plan (as defined in section 7701 (a)(37)).
(III) An employer or association of employees which establishes such an individual retirement plan under section 408 (c).
(ii) Exception for certain transactions involving shareholder-employees Subparagraph (A)(iii) shall not apply to a transaction which consists of a sale of employer securities to an employee stock ownership plan (as defined in subsection (e)(7)) by a shareholder-employee, a member of the family (as defined in section 267(c)(4)) of such shareholder-employee, or a corporation in which such a shareholder-employee owns stock representing a 50 percent or greater interest described in subparagraph (A).
(iii) Loan exception For purposes of subparagraph (A)(i), the term owner-employee shall only include a person described in subclause (II) or (III) of clause (i).
(C) Shareholder-employee 
For purposes of subparagraph (B), the term shareholder-employee means an employee or officer of an S corporation who owns (or is considered as owning within the meaning of section 318 (a)(1)) more than 5 percent of the outstanding stock of the corporation on any day during the taxable year of such corporation.
(7) S corporation repayment of loans for qualifying employer securities 
A plan shall not be treated as violating the requirements of section 401 or 409 or subsection (e)(7), or as engaging in a prohibited transaction for purposes of subsection (d)(3), merely by reason of any distribution (as described in section 1368 (a)) with respect to S corporation stock that constitutes qualifying employer securities, which in accordance with the plan provisions is used to make payments on a loan described in subsection (d)(3) the proceeds of which were used to acquire such qualifying employer securities (whether or not allocated to participants). The preceding sentence shall not apply in the case of a distribution which is paid with respect to any employer security which is allocated to a participant unless the plan provides that employer securities with a fair market value of not less than the amount of such distribution are allocated to such participant for the year which (but for the preceding sentence) such distribution would have been allocated to such participant.
(8) Provision of investment advice to participant and beneficiaries 

(A) In general 
The prohibitions provided in subsection (c) shall not apply to transactions described in subsection (b)(14) if the investment advice provided by a fiduciary adviser is provided under an eligible investment advice arrangement.
(B) Eligible investment advice arrangement 
For purposes of this paragraph, the term eligible investment advice arrangement means an arrangement
(i) which either
(I) provides that any fees (including any commission or other compensation) received by the fiduciary adviser for investment advice or with respect to the sale, holding, or acquisition of any security or other property for purposes of investment of plan assets do not vary depending on the basis of any investment option selected, or
(II) uses a computer model under an investment advice program meeting the requirements of subparagraph (C) in connection with the provision of investment advice by a fiduciary adviser to a participant or beneficiary, and
(ii) with respect to which the requirements of subparagraphs (D), (E), (F), (G), (H), and (I) are met.
(C) Investment advice program using computer model 

(i) In general An investment advice program meets the requirements of this subparagraph if the requirements of clauses (ii), (iii), and (iv) are met.
(ii) Computer model The requirements of this clause are met if the investment advice provided under the investment advice program is provided pursuant to a computer model that
(I) applies generally accepted investment theories that take into account the historic returns of different asset classes over defined periods of time,
(II) utilizes relevant information about the participant, which may include age, life expectancy, retirement age, risk tolerance, other assets or sources of income, and preferences as to certain types of investments,
(III) utilizes prescribed objective criteria to provide asset allocation portfolios comprised of investment options available under the plan,
(IV) operates in a manner that is not biased in favor of investments offered by the fiduciary adviser or a person with a material affiliation or contractual relationship with the fiduciary adviser, and
(V) takes into account all investment options under the plan in specifying how a participants account balance should be invested and is not inappropriately weighted with respect to any investment option.
(iii) Certification
(I) In general The requirements of this clause are met with respect to any investment advice program if an eligible investment expert certifies, prior to the utilization of the computer model and in accordance with rules prescribed by the Secretary of Labor, that the computer model meets the requirements of clause (ii).
(II) Renewal of certifications If, as determined under regulations prescribed by the Secretary of Labor, there are material modifications to a computer model, the requirements of this clause are met only if a certification described in subclause (I) is obtained with respect to the computer model as so modified.
(III) Eligible investment expert The term eligible investment expert means any person which meets such requirements as the Secretary of Labor may provide and which does not bear any material affiliation or contractual relationship with any investment adviser or a related person thereof (or any employee, agent, or registered representative of the investment adviser or related person).
(iv) Exclusivity of recommendation The requirements of this clause are met with respect to any investment advice program if
(I) the only investment advice provided under the program is the advice generated by the computer model described in clause (ii), and
(II) any transaction described in subsection (b)(14)(B)(ii) occurs solely at the direction of the participant or beneficiary.

Nothing in the preceding sentence shall preclude the participant or beneficiary from requesting investment advice other than that described in clause (i), but only if such request has not been solicited by any person connected with carrying out the arrangement.

(D) Express authorization by separate fiduciary 
The requirements of this subparagraph are met with respect to an arrangement if the arrangement is expressly authorized by a plan fiduciary other than the person offering the investment advice program, any person providing investment options under the plan, or any affiliate of either.
(E) Audits 

(i) In general The requirements of this subparagraph are met if an independent auditor, who has appropriate technical training or experience and proficiency and so represents in writing
(I) conducts an annual audit of the arrangement for compliance with the requirements of this paragraph, and
(II) following completion of the annual audit, issues a written report to the fiduciary who authorized use of the arrangement which presents its specific findings regarding compliance of the arrangement with the requirements of this paragraph.
(ii) Special rule for individual retirement and similar plans In the case of a plan described in subparagraphs (B) through (F) (and so much of subparagraph (G) as relates to such subparagraphs) of subsection (e)(1), in lieu of the requirements of clause (i), audits of the arrangement shall be conducted at such times and in such manner as the Secretary of Labor may prescribe.
(iii) Independent auditor For purposes of this subparagraph, an auditor is considered independent if it is not related to the person offering the arrangement to the plan and is not related to any person providing investment options under the plan.
(F) Disclosure 
The requirements of this subparagraph are met if
(i) the fiduciary adviser provides to a participant or a beneficiary before the initial provision of the investment advice with regard to any security or other property offered as an investment option, a written notification (which may consist of notification by means of electronic communication)
(I) of the role of any party that has a material affiliation or contractual relationship with the financial adviser in the development of the investment advice program and in the selection of investment options available under the plan,
(II) of the past performance and historical rates of return of the investment options available under the plan,
(III) of all fees or other compensation relating to the advice that the fiduciary adviser or any affiliate thereof is to receive (including compensation provided by any third party) in connection with the provision of the advice or in connection with the sale, acquisition, or holding of the security or other property,
(IV) of any material affiliation or contractual relationship of the fiduciary adviser or affiliates thereof in the security or other property,
(V) the[7] manner, and under what circumstances, any participant or beneficiary information provided under the arrangement will be used or disclosed,
(VI) of the types of services provided by the fiduciary adviser in connection with the provision of investment advice by the fiduciary adviser,
(VII) that the adviser is acting as a fiduciary of the plan in connection with the provision of the advice, and
(VIII) that a recipient of the advice may separately arrange for the provision of advice by another adviser, that could have no material affiliation with and receive no fees or other compensation in connection with the security or other property, and
(ii) at all times during the provision of advisory services to the participant or beneficiary, the fiduciary adviser
(I) maintains the information described in clause (i) in accurate form and in the manner described in subparagraph (H),
(II) provides, without charge, accurate information to the recipient of the advice no less frequently than annually,
(III) provides, without charge, accurate information to the recipient of the advice upon request of the recipient, and
(IV) provides, without charge, accurate information to the recipient of the advice concerning any material change to the information required to be provided to the recipient of the advice at a time reasonably contemporaneous to the change in information.
(G) Other conditions 
The requirements of this subparagraph are met if
(i) the fiduciary adviser provides appropriate disclosure, in connection with the sale, acquisition, or holding of the security or other property, in accordance with all applicable securities laws,
(ii) the sale, acquisition, or holding occurs solely at the direction of the recipient of the advice,
(iii) the compensation received by the fiduciary adviser and affiliates thereof in connection with the sale, acquisition, or holding of the security or other property is reasonable, and
(iv) the terms of the sale, acquisition, or holding of the security or other property are at least as favorable to the plan as an arms length[5] transaction would be.
(H) Standards for presentation of information 

(i) In general The requirements of this subparagraph are met if the notification required to be provided to participants and beneficiaries under subparagraph (F)(i) is written in a clear and conspicuous manner and in a manner calculated to be understood by the average plan participant and is sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of the information required to be provided in the notification.
(ii) Model form for disclosure of fees and other compensation The Secretary of Labor shall issue a model form for the disclosure of fees and other compensation required in subparagraph (F)(i)(III) which meets the requirements of clause (i).
(I) Maintenance for 6 years of evidence of compliance 
The requirements of this subparagraph are met if a fiduciary adviser who has provided advice referred to in subparagraph (A) maintains, for a period of not less than 6 years after the provision of the advice, any records necessary for determining whether the requirements of the preceding provisions of this paragraph and of subsection (d)(17) have been met. A transaction prohibited under section 406 shall not be considered to have occurred solely because the records are lost or destroyed prior to the end of the 6-year period due to circumstances beyond the control of the fiduciary adviser.
(J) Definitions 
For purposes of this paragraph and subsection (d)(17)
(i) Fiduciary adviser The term fiduciary adviser means, with respect to a plan, a person who is a fiduciary of the plan by reason of the provision of investment advice by the person to the participant or beneficiary of the plan and who is
(I) registered as an investment adviser under the Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) or under the laws of the State in which the fiduciary maintains its principal office and place of business,
(II) a bank or similar financial institution referred to in section 408 (b)(4) or a savings association (as defined in section 3(b)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (b)(1)), but only if the advice is provided through a trust department of the bank or similar financial institution or savings association which is subject to periodic examination and review by Federal or State banking authorities,
(III) an insurance company qualified to do business under the laws of a State,
(IV) a person registered as a broker or dealer under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
(V) an affiliate of a person described in any of subclauses (I) through (IV), or
(VI) an employee, agent, or registered representative of a person described in subclauses (I) through (V) who satisfies the requirements of applicable insurance, banking, and securities laws relating to the provision of the advice.

For purposes of this title, a person who develops the computer model described in subparagraph (C)(ii) or markets the investment advice program or computer model shall be treated as a person who is a fiduciary of the plan by reason of the provision of investment advice referred to in subsection (e)(3)(B) to the participant or beneficiary and shall be treated as a fiduciary adviser for purposes of this paragraph and subsection (d)(17), except that the Secretary of Labor may prescribe rules under which only 1 fiduciary adviser may elect to be treated as a fiduciary with respect to the plan.

(ii) Affiliate The term affiliate of another entity means an affiliated person of the entity (as defined in section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a–2 (a)(3))).
(iii) Registered representative The term registered representative of another entity means a person described in section 3(a)(18) of the Securities Exchange Act of 1934 (15 U.S.C. 78c (a)(18)) (substituting the entity for the broker or dealer referred to in such section) or a person described in section 202(a)(17) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2 (a)(17)) (substituting the entity for the investment adviser referred to in such section).
(9) Block trade 
The term block trade means any trade of at least 10,000 shares or with a market value of at least $200,000 which will be allocated across two or more unrelated client accounts of a fiduciary.
(10) Adequate consideration 
The term adequate consideration means
(A) in the case of a security for which there is a generally recognized market
(i) the price of the security prevailing on a national securities exchange which is registered under section 6 of the Securities Exchange Act of 1934, taking into account factors such as the size of the transaction and marketability of the security, or
(ii) if the security is not traded on such a national securities exchange, a price not less favorable to the plan than the offering price for the security as established by the current bid and asked prices quoted by persons independent of the issuer and of the party in interest, taking into account factors such as the size of the transaction and marketability of the security, and
(B) in the case of an asset other than a security for which there is a generally recognized market, the fair market value of the asset as determined in good faith by a fiduciary or fiduciaries in accordance with regulations prescribed by the Secretary of Labor.
(11) Correction period 

(A) In general 
For purposes of subsection (d)(23), the term correction period means the 14-day period beginning on the date on which the disqualified person discovers, or reasonably should have discovered, that the transaction would (without regard to this paragraph and subsection (d)(23)) constitute a prohibited transaction.
(B) Exceptions 

(i) Employer securities Subsection (d)(23) does not apply to any transaction between a plan and a plan sponsor or its affiliates that involves the acquisition or sale of an employer security (as defined in section 407 (d)(1))8 or the acquisition, sale, or lease of employer real property (as defined in section 407 (d)(2)).[8]
(ii) Knowing prohibited transaction In the case of any disqualified person, subsection (d)(23) does not apply to a transaction if, at the time the transaction is entered into, the disqualified person knew (or reasonably should have known) that the transaction would (without regard to this paragraph) constitute a prohibited transaction.
(C) Abatement of tax where there is a correction 
If a transaction is not treated as a prohibited transaction by reason of subsection (d)(23), then no tax under subsections (a) and (b) shall be assessed with respect to such transaction, and if assessed the assessment shall be abated, and if collected shall be credited or refunded as an overpayment.
(D) Definitions 
For purposes of this paragraph and subsection (d)(23)
(i) Security The term security has the meaning given such term by section 475 (c)(2) (without regard to subparagraph (F)(iii) and the last sentence thereof).
(ii) Commodity The term commodity has the meaning given such term by section 475 (e)(2) (without regard to subparagraph (D)(iii) thereof).
(iii) Correct The term correct means, with respect to a transaction
(I) to undo the transaction to the extent possible and in any case to make good to the plan or affected account any losses resulting from the transaction, and
(II) to restore to the plan or affected account any profits made through the use of assets of the plan.
(g) Application of section 
This section shall not apply
(1) in the case of a plan to which a guaranteed benefit policy (as defined in section 401(b)(2)(B) of the Employee Retirement Income Security Act of 1974) is issued, to any assets of the insurance company, insurance service, or insurance organization merely because of its issuance of such policy;
(2) to a governmental plan (within the meaning of section 414 (d)); or
(3) to a church plan (within the meaning of section 414 (e)) with respect to which the election provided by section 410 (d) has not been made.

In the case of a plan which invests in any security issued by an investment company registered under the Investment Company Act of 1940, the assets of such plan shall be deemed to include such security but shall not, by reason of such investment, be deemed to include any assets of such company.

(h) Notification of Secretary of Labor 
Before sending a notice of deficiency with respect to the tax imposed by subsection (a) or (b), the Secretary shall notify the Secretary of Labor and provide him a reasonable opportunity to obtain a correction of the prohibited transaction or to comment on the imposition of such tax.
(i) Cross reference 
For provisions concerning coordination procedures between Secretary of Labor and Secretary of the Treasury with respect to application of tax imposed by this section and for authority to waive imposition of the tax imposed by subsection (b), see section 3003 of the Employee Retirement Income Security Act of 1974.
[1] So in original. Probably should be “a”.
[2] So in original. Another closing parenthesis probably should precede the comma.
[3] So in original. Probably should not be capitalized.
[4] So in original. The comma probably should be a semicolon.
[5] So in original. Probably should be “arm’s-length”.
[6] So in original. The word “if” probably should not appear.
[7] So in original. Probably should be “of the”.
[8] See References in Text note below.

26 USC 4976 - Taxes with respect to funded welfare benefit plans

(a) General rule 
If
(1) an employer maintains a welfare benefit fund, and
(2) there is a disqualified benefit provided during any taxable year,

there is hereby imposed on such employer a tax equal to 100 percent of such disqualified benefit.

(b) Disqualified benefit 
For purposes of subsection (a)
(1) In general 
The term disqualified benefit means
(A) any post-retirement medical benefit or life insurance benefit provided with respect to a key employee if a separate account is required to be established for such employee under section 419A (d) and such payment is not from such account,
(B) any post-retirement medical benefit or life insurance benefit provided with respect to an individual in whose favor discrimination is prohibited unless the plan meets the requirements of section 505 (b) with respect to such benefit (whether or not such requirements apply to such plan), and
(C) any portion of a welfare benefit fund reverting to the benefit of the employer.
(2) Exception for collective bargaining plans 
Paragraph (1)(B) shall not apply to any 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 the benefits referred to in paragraph (1)(B) were the subject of good faith bargaining between such employee representatives and such employer or employers.
(3) Exception for nondeductible contributions 
Paragraph (1)(C) shall not apply to any amount attributable to a contribution to the fund which is not allowable as a deduction under section 419 for the taxable year or any prior taxable year (and such contribution shall not be included in any carryover under section 419 (d)).
(4) Exception for certain amounts charged against existing reserve 
Subparagraphs (A) and (B) of paragraph (1) shall not apply to post-retirement benefits charged against an existing reserve for post-retirement medical or life insurance benefits (as defined in section 512 (a)(3)(E)) or charged against the income on such reserve.
(c) Definitions 
For purposes of this section, the terms used in this section shall have the same respective meanings as when used in subpart D of part I of subchapter D of chapter 1.

26 USC 4977 - Tax on certain fringe benefits provided by an employer

(a) Imposition of tax 
In the case of an employer to whom an election under this section applies for any calendar year, there is hereby imposed a tax for such calendar year equal to 30 percent of the excess fringe benefits.
(b) Excess fringe benefits 
For purposes of subsection (a), the term excess fringe benefits means, with respect to any calendar year
(1) the aggregate value of the fringe benefits provided by the employer during the calendar year which were not includible in gross income under paragraphs (1) and (2) of section 132 (a), over
(2) 1 percent of the aggregate amount of compensation
(A) which was paid by the employer during such calendar year to employees, and
(B) was includible in gross income for purposes of chapter 1.
(c) Effect of election on section 132 (a) 
If
(1) an election under this section is in effect with respect to an employer for any calendar year, and
(2) at all times on or after January 1, 1984, and before the close of the calendar year involved, substantially all of the employees of the employer were entitled to employee discounts on goods or services provided by the employer in 1 line of business,

for purposes of paragraphs (1) and (2) of section 132 (a) (but not for purposes of section 132 (h)), all employees of any line of business of the employer which was in existence on January 1, 1984, shall be treated as employees of the line of business referred to in paragraph (2).

(d) Period of election 
An election under this section shall apply to the calendar year for which made and all subsequent calendar years unless revoked by the employer.
(e) Treatment of controlled groups 
All employees treated as employed by a single employer under subsection (b), (c), or (m) of section 414 shall be treated as employed by a single employer for purposes of this section.
(f) Section to apply only to employment within the United States 
Except as otherwise provided in regulations, this section shall apply only with respect to employment within the United States.

26 USC 4978 - Tax on certain dispositions by employee stock ownership plans and certain cooperatives

(a) Tax on dispositions of securities to which section 1042 applies before close of minimum holding period 
If, during the 3-year period after the date on which the employee stock ownership plan or eligible worker-owned cooperative acquired any qualified securities in a sale to which section 1042 applied or acquired any qualified employer securities in a qualified gratuitous transfer to which section 664 (g) applied, such plan or cooperative disposes of any qualified securities and
(1) the total number of shares held by such plan or cooperative after such disposition is less than the total number of employer securities held immediately after such sale, or
(2) except to the extent provided in regulations, the value of qualified securities held by such plan or cooperative after such disposition is less than 30 percent of the total value of all employer securities as of such disposition (60 percent of the total value of all employer securities as of such disposition in the case of any qualified employer securities acquired in a qualified gratuitous transfer to which section 664 (g) applied),

there is hereby imposed a tax on the disposition equal to the amount determined under subsection (b).

(b) Amount of tax 

(1) In general 
The amount of the tax imposed by subsection (a) shall be equal to 10 percent of the amount realized on the disposition.
(2) Limitation 
The amount realized taken into account under paragraph (1) shall not exceed that portion allocable to qualified securities acquired in the sale to which section 1042 applied or acquired in the qualified gratuitous transfer to which section 664 (g) applied determined as if such securities were disposed of
(A) first from qualified securities to which section 1042 applied or to which section 664 (g) applied acquired during the 3-year period ending on the date of the disposition, beginning with the securities first so acquired, and
(B) then from any other employer securities.

If subsection (d) applies to a disposition, the disposition shall be treated as made from employer securities in the opposite order of the preceding sentence.

(3) Distributions to employees 
The amount realized on any distribution to an employee for less than fair market value shall be determined as if the qualified security had been sold to the employee at fair market value.
(c) Liability for payment of taxes 
The tax imposed by this subsection shall be paid by
(1) the employer, or
(2) the eligible worker-owned cooperative,

that made the written statement described in section 664 (g)(1)(E) or in section 1042 (b)(3) (as the case may be).

(d) Section not to apply to certain dispositions 

(1) Certain distributions to employees 
This section shall not apply with respect to any distribution of qualified securities (or sale of such securities) which is made by reason of
(A) the death of the employee,
(B) the retirement of the employee after the employee has attained 591/2 years of age,
(C) the disability of the employee (within the meaning of section 72 (m)(7)), or
(D) the separation of the employee from service for any period which results in a 1-year break in service (within the meaning of section 411 (a)(6)(A)).
(2) Certain reorganizations 
In the case of any exchange of qualified securities in any reorganization described in section 368 (a)(1) for stock of another corporation, such exchange shall not be treated as a disposition for purposes of this section.
(3) Liquidation of corporation into cooperative 
In the case of any exchange of qualified securities pursuant to the liquidation of the corporation issuing qualified securities into the eligible worker-owned cooperative in a transaction which meets the requirements of section 332 (determined by substituting 100 percent for 80 percent each place it appears in section 332 (b)(1)), such exchange shall not be treated as a disposition for purposes of this section.
(4) Dispositions to meet diversification requirements 
This section shall not apply to any disposition of qualified securities which is required under section 401 (a)(28).
(e) Definitions and special rules 
For purposes of this section
(1) Employee stock ownership plan 
The term employee stock ownership plan has the meaning given to such term by section 4975 (e)(7).
(2) Qualified securities 
The term qualified securities has the meaning given to such term by section 1042 (c)(1); except that such section shall be applied without regard to subparagraph (B) thereof for purposes of applying this section and section 4979A with respect to securities acquired in a qualified gratuitous transfer (as defined in section 664 (g)(1)).
(3) Eligible worker-owned cooperative 
The term eligible worker-owned cooperative has the meaning given to such term by section 1042 (c)(2).
(4) Disposition 
The term disposition includes any distribution.
(5) Employer securities 
The term employer securities has the meaning given to such term by section 409 (l).

26 USC 4978A - Repealed. Pub. L. 101239, title VII, 7304(a)(2)(C)(i), Dec. 19, 1989, 103 Stat. 2353]

Section, added Pub. L. 100–203, title X, § 10413(a), Dec. 22, 1987, 101 Stat. 1330–436; amended Pub. L. 100–647, title VI, § 6060(a), Nov. 10, 1988, 102 Stat. 3699, related to tax on certain dispositions of employer securities to which section 2057 applied.

26 USC 4978B - Repealed. Pub. L. 104188, title I, 1602(b)(5)(A), Aug. 20, 1996, 110 Stat. 1834]

Section, added Pub. L. 101–239, title VII, § 7301(d)(1), Dec. 19, 1989, 103 Stat. 2347; amended Pub. L. 101–508, title XI, § 11701(e), Nov. 5, 1990, 104 Stat. 1388–507, related to tax on disposition of employer securities to which former section 133 of this title applied.

26 USC 4979 - Tax on certain excess contributions

(a) General rule 
In the case of any plan, there is hereby imposed a tax for the taxable year equal to 10 percent of the sum of
(1) any excess contributions under such plan for the plan year ending in such taxable year, and
(2) any excess aggregate contributions under the plan for the plan year ending in such taxable year.
(b) Liability for tax 
The tax imposed by subsection (a) shall be paid by the employer.
(c) Excess contributions 
For purposes of this section, the term excess contributions has the meaning given such term by sections 401 (k)(8)(B), 408 (k)(6)(C), and 501 (c)(18).
(d) Excess aggregate contribution 
For purposes of this section, the term excess aggregate contribution has the meaning given to such term by section 401 (m)(6)(B). For purposes of determining excess aggregate contributions under an annuity contract described in section 403 (b), such contract shall be treated as a plan described in subsection (e)(1).
(e) Plan 
For purposes of this section, the term plan means
(1) a plan described in section 401 (a) which includes a trust exempt from tax under section 501 (a),
(2) any annuity plan described in section 403 (a),
(3) any annuity contract described in section 403 (b),
(4) a simplified employee pension of an employer which satisfies the requirements of section 408 (k), and
(5) a plan described in section 501 (c)(18).

Such term includes any plan which, at any time, has been determined by the Secretary to be such a plan.

(f) No tax where excess distributed within specified period after close of year 

(1) In general 
No tax shall be imposed under this section on any excess contribution or excess aggregate contribution, as the case may be, to the extent such contribution (together with any income allocable thereto through the end of the plan year for which the contribution was made) is distributed (or, if forfeitable, is forfeited) before the close of the first 21/2 months (6 months in the case of an excess contribution or excess aggregate contribution to an eligible automatic contribution arrangement (as defined in section 414 (w)(3))) of the following plan year.
(2) Year of inclusion 
Any amount distributed as provided in paragraph (1) shall be treated as earned and received by the recipient in the recipients taxable year in which such distributions were made.

26 USC 4979A - Tax on certain prohibited allocations of qualified securities

(a) Imposition of tax 
If
(1) there is a prohibited allocation of qualified securities by any employee stock ownership plan or eligible worker-owned cooperative,
(2) there is an allocation described in section 664 (g)(5)(A),
(3) there is any allocation of employer securities which violates the provisions of section 409 (p), or a nonallocation year described in subsection (e)(2)(C) with respect to an employee stock ownership plan, or
(4) any synthetic equity is owned by a disqualified person in any nonallocation year,

there is hereby imposed a tax on such allocation or ownership equal to 50 percent of the amount involved.

(b) Prohibited allocation 
For purposes of this section, the term prohibited allocation means
(1) any allocation of qualified securities acquired in a sale to which section 1042 applies which violates the provisions of section 409 (n), and
(2) any benefit which accrues to any person in violation of the provisions of section 409 (n).
(c) Liability for tax 
The tax imposed by this section shall be paid
(1) in the case of an allocation referred to in paragraph (1) or (2) of subsection (a), by
(A) the employer sponsoring such plan, or
(B) the eligible worker-owned cooperative,

which made the written statement described in section 664 (g)(1)(E) or in section 1042 (b)(3)(B) (as the case may be), and

(2) in the case of an allocation or ownership referred to in paragraph (3) or (4) of subsection (a), by the S corporation the stock in which was so allocated or owned.
(d) Special statute of limitations for tax attributable to certain allocations 
The statutory period for the assessment of any tax imposed by this section on an allocation described in subsection (a)(2) of qualified employer securities shall not expire before the date which is 3 years from the later of
(1) the 1st allocation of such securities in connection with a qualified gratuitous transfer (as defined in section 664 (g)(1)), or
(2) the date on which the Secretary is notified of the allocation described in subsection (a)(2).
(e) Definitions and special rules 
For purposes of this section
(1) Definitions 
Except as provided in paragraph (2), terms used in this section have the same respective meanings as when used in sections 409 and 4978.
(2) Special rules relating to tax imposed by reason of paragraph (3) or (4) of subsection (a) 

(A) Prohibited allocations 
The amount involved with respect to any tax imposed by reason of subsection (a)(3) is the amount allocated to the account of any person in violation of section 409 (p)(1).
(B) Synthetic equity 
The amount involved with respect to any tax imposed by reason of subsection (a)(4) is the value of the shares on which the synthetic equity is based.
(C) Special rule during first nonallocation year 
For purposes of subparagraph (A), the amount involved for the first nonallocation year of any employee stock ownership plan shall be determined by taking into account the total value of all the deemed-owned shares of all disqualified persons with respect to such plan.
(D) Statute of limitations 
The statutory period for the assessment of any tax imposed by this section by reason of paragraph (3) or (4) of subsection (a) shall not expire before the date which is 3 years from the later of
(i) the allocation or ownership referred to in such paragraph giving rise to such tax, or
(ii) the date on which the Secretary is notified of such allocation or ownership.

26 USC 4980 - Tax on reversion of qualified plan assets to employer

(a) Imposition of tax 
There is hereby imposed a tax of 20 percent of the amount of any employer reversion from a qualified plan.
(b) Liability for tax 
The tax imposed by subsection (a) shall be paid by the employer maintaining the plan.
(c) Definitions and special rules 
For purposes of this section
(1) Qualified plan 
The term qualified plan means any plan meeting the requirements of section 401 (a) or 403 (a), other than
(A) a plan maintained by an employer if such employer has, at all times, been exempt from tax under subtitle A, or
(B) a governmental plan (within the meaning of section 414 (d)).

Such term shall include any plan which, at any time, has been determined by the Secretary to be a qualified plan.

(2) Employer reversion 

(A) In general 
The term employer reversion means the amount of cash and the fair market value of other property received (directly or indirectly) by an employer from the qualified plan.
(B) Exceptions 
The term employer reversion shall not include
(i) except as provided in regulations, any amount distributed to or on behalf of any employee (or his beneficiaries) if such amount could have been so distributed before termination of such plan without violating any provision of section 401, or
(ii) any distribution to the employer which is allowable under section 401 (a)(2)
(I) in the case of a multiemployer plan, by reason of mistakes of law or fact or the return of any withdrawal liability payment,
(II) in the case of a plan other than a multiemployer plan, by reason of mistake of fact, or
(III) in the case of any plan, by reason of the failure of the plan to initially qualify or the failure of contributions to be deductible.
(3) Exception for employee stock ownership plans 

(A) In general 
If, upon an employer reversion from a qualified plan, any applicable amount is transferred from such plan to an employee stock ownership plan described in section 4975 (e)(7) or a tax credit employee stock ownership plan (as described in section 409), such amount shall not be treated as an employer reversion for purposes of this section (or includible in the gross income of the employer) if the requirements of subparagraphs (B), (C), and (D) are met.
(B) Investment in employer securities 
The requirements of this subparagraph are met if, within 90 days after the transfer (or such longer period as the Secretary may prescribe), the amount transferred is invested in employer securities (as defined in section 409 (l)) or used to repay loans used to purchase such securities.
(C) Allocation requirements 
The requirements of this subparagraph are met if the portion of the amount transferred which is not allocated under the plan to accounts of participants in the plan year in which the transfer occurs
(i) is credited to a suspense account and allocated from such account to accounts of participants no less rapidly than ratably over a period not to exceed 7 years, and
(ii) when allocated to accounts of participants under the plan, is treated as an employer contribution for purposes of section 415 (c), except that
(I) the annual addition (as determined under section 415 (c)) attributable to each such allocation shall not exceed the value of such securities as of the time such securities were credited to such suspense account, and
(II) no additional employer contributions shall be permitted to an employee stock ownership plan described in subparagraph (A) of the employer before the allocation of such amount.

The amount allocated in the year of transfer shall not be less than the lesser of the maximum amount allowable under section 415 or 1/8 of the amount attributable to the securities acquired. In the case of dividends on securities held in the suspense account, the requirements of this subparagraph are met only if the dividends are allocated to accounts of participants or paid to participants in proportion to their accounts, or used to repay loans used to purchase employer securities.

(D) Participants 
The requirements of this subparagraph are met if at least half of the participants in the qualified plan are participants in the employee stock ownership plan (as of the close of the 1st plan year for which an allocation of the securities is required).
(E) Applicable amount 
For purposes of this paragraph, the term applicable amount means any amount which
(i) is transferred after March 31, 1985, and before January 1, 1989, or
(ii) is transferred after December 31, 1988, pursuant to a termination which occurs after March 31, 1985, and before January 1, 1989.
(F) No credit or deduction allowed 
No credit or deduction shall be allowed under chapter 1 for any amount transferred to an employee stock ownership plan in a transfer to which this paragraph applies.
(G) Amount transferred to include income thereon, etc. 
The amount transferred shall not be treated as meeting the requirements of subparagraphs (B) and (C) unless amounts attributable to such amount also meet such requirements.
(4) Time for payment of tax 
For purposes of subtitle F, the time for payment of the tax imposed by subsection (a) shall be the last day of the month following the month in which the employer reversion occurs.
(d) Increase in tax for failure to establish replacement plan or increase benefits 

(1) In general 
Subsection (a) shall be applied by substituting 50 percent for 20 percent with respect to any employer reversion from a qualified plan unless
(A) the employer establishes or maintains a qualified replacement plan, or
(B) the plan provides benefit increases meeting the requirements of paragraph (3).
(2) Qualified replacement plan 
For purposes of this subsection, the term qualified replacement plan means a qualified plan established or maintained by the employer in connection with a qualified plan termination (hereinafter referred to as the replacement plan) with respect to which the following requirements are met:
(A) Participation requirement 
At least 95 percent of the active participants in the terminated plan who remain as employees of the employer after the termination are active participants in the replacement plan.
(B) Asset transfer requirement 

(i) 25 percent cushion A direct transfer from the terminated plan to the replacement plan is made before any employer reversion, and the transfer is in an amount equal to the excess (if any) of
(I) 25 percent of the maximum amount which the employer could receive as an employer reversion without regard to this subsection, over
(II) the amount determined under clause (ii).
(ii) Reduction for increase in benefits The amount determined under this clause is an amount equal to the present value of the aggregate increases in the accrued benefits under the terminated plan of any participants or beneficiaries pursuant to a plan amendment which
(I) is adopted during the 60-day period ending on the date of termination of the qualified plan, and
(II) takes effect immediately on the termination date.
(iii) Treatment of amount transferred In the case of the transfer of any amount under clause (i)
(I) such amount shall not be includible in the gross income of the employer,
(II) no deduction shall be allowable with respect to such transfer, and
(III) such transfer shall not be treated as an employer reversion for purposes of this section.
(C) Allocation requirements 

(i) In general In the case of any defined contribution plan, the portion of the amount transferred to the replacement plan under subparagraph (B)(i) is
(I) allocated under the plan to the accounts of participants in the plan year in which the transfer occurs, or
(II) credited to a suspense account and allocated from such account to accounts of participants no less rapidly than ratably over the 7-plan-year period beginning with the year of the transfer.
(ii) Coordination with section 415 limitation If, by reason of any limitation under section 415, any amount credited to a suspense account under clause (i)(II) may not be allocated to a participant before the close of the 7-year period under such clause
(I) such amount shall be allocated to the accounts of other participants, and
(II) if any portion of such amount may not be allocated to other participants by reason of any such limitation, shall be allocated to the participant as provided in section 415.
(iii) Treatment of income Any income on any amount credited to a suspense account under clause (i)(II) shall be allocated to accounts of participants no less rapidly than ratably over the remainder of the period determined under such clause (after application of clause (ii)).
(iv) Unallocated amounts at termination If any amount credited to a suspense account under clause (i)(II) is not allocated as of the termination date of the replacement plan
(I) such amount shall be allocated to the accounts of participants as of such date, except that any amount which may not be allocated by reason of any limitation under section 415 shall be allocated to the accounts of other participants, and
(II) if any portion of such amount may not be allocated to other participants under subclause (I) by reason of such limitation, such portion shall be treated as an employer reversion to which this section applies.
(3) Pro rata benefit increases 

(A) In general 
The requirements of this paragraph are met if a plan amendment to the terminated plan is adopted in connection with the termination of the plan which provides pro rata increases in the accrued benefits of all qualified participants which
(i) have an aggregate present value not less than 20 percent of the maximum amount which the employer could receive as an employer reversion without regard to this subsection, and
(ii) take effect immediately on the termination date.
(B) Pro rata increase 
For purposes of subparagraph (A), a pro rata increase is an increase in the present value of the accrued benefit of each qualified participant in an amount which bears the same ratio to the aggregate amount determined under subparagraph (A)(i) as
(i) the present value of such participants accrued benefit (determined without regard to this subsection), bears to
(ii) the aggregate present value of accrued benefits of the terminated plan (as so determined).

Notwithstanding the preceding sentence, the aggregate increases in the present value of the accrued benefits of qualified participants who are not active participants shall not exceed 40 percent of the aggregate amount determined under subparagraph (A)(i) by substituting equal to for not less than.

(4) Coordination with other provisions 

(A) Limitations 
A benefit may not be increased under paragraph (2)(B)(ii) or (3)(A), and an amount may not be allocated to a participant under paragraph (2)(C), if such increase or allocation would result in a failure to meet any requirement under section 401 (a)(4) or 415.
(B) Treatment as employer contributions 
Any increase in benefits under paragraph (2)(B)(ii) or (3)(A), or any allocation of any amount (or income allocable thereto) to any account under paragraph (2)(C), shall be treated as an annual benefit or annual addition for purposes of section 415.
(C) 10-year participation requirement 
Except as provided by the Secretary, section 415 (b)(5)(D) shall not apply to any increase in benefits by reason of this subsection to the extent that the application of this subparagraph does not discriminate in favor of highly compensated employees (as defined in section 414 (q)).
(5) Definitions and special rules 
For purposes of this subsection
(A) Qualified participant 
The term qualified participant means an individual who
(i) is an active participant,
(ii) is a participant or beneficiary in pay status as of the termination date,
(iii) is a participant not described in clause (i) or (ii)
(I) who has a nonforfeitable right to an accrued benefit under the terminated plan as of the termination date, and
(II) whose service, which was creditable under the terminated plan, terminated during the period beginning 3 years before the termination date and ending with the date on which the final distribution of assets occurs, or
(iv) is a beneficiary of a participant described in clause (iii)(II) and has a nonforfeitable right to an accrued benefit under the terminated plan as of the termination date.
(B) Present value 
Present value shall be determined as of the termination date and on the same basis as liabilities of the plan are determined on termination.
(C) Reallocation of increase 
Except as provided in paragraph (2)(C), if any benefit increase is reduced by reason of the last sentence of paragraph (3)(A)(ii) or paragraph (4), the amount of such reduction shall be allocated to the remaining participants on the same basis as other increases (and shall be treated as meeting any allocation requirement of this subsection).
(D) Plans taken into account 
For purposes of determining whether there is a qualified replacement plan under paragraph (2), the Secretary may provide that
(i) 2 or more plans may be treated as 1 plan, or
(ii) a plan of a successor employer may be taken into account.
(E) Special rule for participation requirement 
For purposes of paragraph (2)(A), all employers treated as 1 employer under section 414 (b), (c), (m), or (o) shall be treated as 1 employer.
(6) Subsection not to apply to employer in bankruptcy 
This subsection shall not apply to an employer who, as of the termination date of the qualified plan, is in bankruptcy liquidation under chapter 7 of title 11 of the United States Code or in similar proceedings under State law.

26 USC 4980A - Repealed. Pub. L. 10534, title X, 1073(a), Aug. 5, 1997, 111 Stat. 948]

Section, added Pub. L. 99–514, title XI, § 1133(a), Oct. 22, 1986, 100 Stat. 2481, 4981A; renumbered 4980A and amended Pub. L. 100–647, title I, § 1011A(g)(1)(A), (2)(6), (9), Nov. 10, 1988, 102 Stat. 3479–3482; Pub. L. 102–318, title V, § 521(b)(42), July 3, 1992, 106 Stat. 313; Pub. L. 104–188, title I, §§ 1401(b)(12), 1452 (b), Aug. 20, 1996, 110 Stat. 1789, 1816, related to tax on excess distributions from qualified retirement plans.

26 USC 4980B - Failure to satisfy continuation coverage requirements of group health plans

(a) General rule 
There is hereby imposed a tax on the failure of a group health plan to meet the requirements of subsection (f) with respect to any qualified beneficiary.
(b) Amount of tax 

(1) In general 
The amount of the tax imposed by subsection (a) on any failure with respect to a qualified beneficiary shall be $100 for each day in the noncompliance period with respect to such failure.
(2) Noncompliance period 
For purposes of this section, the term noncompliance period means, with respect to any failure, the period
(A) beginning on the date such failure first occurs, and
(B) ending on the earlier of
(i) the date such failure is corrected, or
(ii) the date which is 6 months after the last day in the period applicable to the qualified beneficiary under subsection (f)(2)(B) (determined without regard to clause (iii) thereof).

If a person is liable for tax under subsection (e)(1)(B) by reason of subsection (e)(2)(B) with respect to any failure, the noncompliance period for such person with respect to such failure shall not begin before the 45th day after the written request described in subsection (e)(2)(B) is provided to such person.

(3) Minimum tax for noncompliance period where failure discovered after notice of examination 
Notwithstanding paragraphs (1) and (2) of subsection (c)
(A) In general 
In the case of 1 or more failures with respect to a qualified beneficiary
(i) which are not corrected before the date a notice of examination of income tax liability is sent to the employer, and
(ii) which occurred or continued during the period under examination,

the amount of tax imposed by subsection (a) by reason of such failures with respect to such beneficiary shall not be less than the lesser of $2,500 or the amount of tax which would be imposed by subsection (a) without regard to such paragraphs.

(B) Higher minimum tax where violations are more than de minimis 
To the extent violations by the employer (or the plan in the case of a multiemployer plan) for any year are more than de minimis, subparagraph (A) shall be applied by substituting $15,000 for $2,500 with respect to the employer (or such plan).
(c) Limitations on amount of tax 

(1) Tax not to apply where failure not discovered exercising reasonable diligence 
No tax shall be imposed by subsection (a) on any failure during any period for which it is established to the satisfaction of the Secretary that none of the persons referred to in subsection (e) knew, or exercising reasonable diligence would have known, that such failure existed.
(2) Tax not to apply to failures corrected within 30 days 
No tax shall be imposed by subsection (a) on any failure if
(A) such failure was due to reasonable cause and not to willful neglect, and
(B) such failure is corrected during the 30-day period beginning on the 1st date any of the persons referred to in subsection (e) knew, or exercising reasonable diligence would have known, that such failure existed.
(3) $100 limit on amount of tax for failures on any day with respect to a qualified beneficiary 

(A) In general 
Except as provided in subparagraph (B), the maximum amount of tax imposed by subsection (a) on failures on any day during the noncompliance period with respect to a qualified beneficiary shall be $100.
(B) Special rule where more than 1 qualified beneficiary 
If there is more than 1 qualified beneficiary with respect to the same qualifying event, the maximum amount of tax imposed by subsection (a) on all failures on any day during the noncompliance period with respect to such qualified beneficiaries shall be $200.
(4) Overall limitation for unintentional failures 
In the case of failures which are due to reasonable cause and not to willful neglect
(A) Single employer plans 

(i) In general In the case of failures with respect to plans other than multiemployer plans, the tax imposed by subsection (a) for failures during the taxable year of the employer shall not exceed the amount equal to the lesser of
(I) 10 percent of the aggregate amount paid or incurred by the employer (or predecessor employer) during the preceding taxable year for group health plans, or
(II) $500,000.
(ii) Taxable years in the case of certain controlled groups For purposes of this subparagraph, if not all persons who are treated as a single employer for purposes of this section have the same taxable year, the taxable years taken into account shall be determined under principles similar to the principles of section 1561.
(B) Multiemployer plans 

(i) In general In the case of failures with respect to a multiemployer plan, the tax imposed by subsection (a) for failures during the taxable year of the trust forming part of such plan shall not exceed the amount equal to the lesser of
(I) 10 percent of the amount paid or incurred by such trust during such taxable year to provide medical care (as defined in section 213 (d)) directly or through insurance, reimbursement, or otherwise, or
(II) $500,000.

For purposes of the preceding sentence, all plans of which the same trust forms a part shall be treated as 1 plan.

(ii) Special rule for employers required to pay tax If an employer is assessed a tax imposed by subsection (a) by reason of a failure with respect to a multiemployer plan, the limit shall be determined under subparagraph (A) (and not under this subparagraph) and as if such plan were not a multiemployer plan.
(C) Special rule for persons providing benefits 
In the case of a person described in subsection (e)(1)(B) (and not subsection (e)(1)(A)), the aggregate amount of tax imposed by subsection (a) for failures during a taxable year with respect to all plans shall not exceed $2,000,000.
(5) Waiver by Secretary 
In the case of a failure which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by subsection (a) to the extent that the payment of such tax would be excessive relative to the failure involved.
(d) Tax not to apply to certain plans 
This section shall not apply to
(1) any failure of a group health plan to meet the requirements of subsection (f) with respect to any qualified beneficiary if the qualifying event with respect to such beneficiary occurred during the calendar year immediately following a calendar year during which all employers maintaining such plan normally employed fewer than 20 employees on a typical business day,
(2) any governmental plan (within the meaning of section 414 (d)), or
(3) any church plan (within the meaning of section 414 (e)).
(e) Liability for tax 

(1) In general 
Except as otherwise provided in this subsection, the following shall be liable for the tax imposed by subsection (a) on a failure:
(A) 
(i) In the case of a plan other than a multiemployer plan, the employer.
(ii) In the case of a multiemployer plan, the plan.
(B) Each person who is responsible (other than in a capacity as an employee) for administering or providing benefits under the plan and whose act or failure to act caused (in whole or in part) the failure.
(2) Special rules for persons described in paragraph (1)(B) 

(A) No liability unless written agreement 
Except in the case of liability resulting from the application of subparagraph (B) of this paragraph, a person described in subparagraph (B) (and not in subparagraph (A)) of paragraph (1) shall be liable for the tax imposed by subsection (a) on any failure only if such person assumed (under a legally enforceable written agreement) responsibility for the performance of the act to which the failure relates.
(B) Failure to cover qualified beneficiaries where current employees are covered 
A person shall be treated as described in paragraph (1)(B) with respect to a qualified beneficiary if
(i) such person provides coverage under a group health plan for any similarly situated beneficiary under the plan with respect to whom a qualifying event has not occurred, and
(ii) the
(I) employer or plan administrator, or
(II) in the case of a qualifying event described in subparagraph (C) or (E) of subsection (f)(3) where the person described in clause (i) is the plan administrator, the qualified beneficiary,

submits to such person a written request that such person make available to such qualified beneficiary the same coverage which such person provides to the beneficiary referred to in clause (i).

(f) Continuation coverage requirements of group health plans 

(1) In general 
A group health plan meets the requirements of this subsection only if the coverage of the costs of pediatric vaccines (as defined under section 2162 of the Public Health Service Act)[1] is not reduced below the coverage provided by the plan as of May 1, 1993, and only if each qualified beneficiary who would lose coverage under the plan as a result of a qualifying event is entitled to elect, within the election period, continuation coverage under the plan.
(2) Continuation coverage 
For purposes of paragraph (1), the term continuation coverage means coverage under the plan which meets the following requirements:
(A) Type of benefit coverage 
The coverage must consist of coverage which, as of the time the coverage is being provided, is identical to the coverage provided under the plan to similarly situated beneficiaries under the plan with respect to whom a qualifying event has not occurred. If coverage under the plan is modified for any group of similarly situated beneficiaries, the coverage shall also be modified in the same manner for all individuals who are qualified beneficiaries under the plan pursuant to this subsection in connection with such group.
(B) Period of coverage 
The coverage must extend for at least the period beginning on the date of the qualifying event and ending not earlier than the earliest of the following:
(i) Maximum required period
(I) General rule for terminations and reduced hours In the case of a qualifying event described in paragraph (3)(B), except as provided in subclause (II), the date which is 18 months after the date of the qualifying event.
(II) Special rule for multiple qualifying events If a qualifying event (other than a qualifying event described in paragraph (3)(F)) occurs during the 18 months after the date of a qualifying event described in paragraph (3)(B), the date which is 36 months after the date of the qualifying event described in paragraph (3)(B).
(III) Special rule for certain bankruptcy proceedings In the case of a qualifying event described in paragraph (3)(F) (relating to bankruptcy proceedings), the date of the death of the covered employee or qualified beneficiary (described in subsection (g)(1)(D)(iii)), or in the case of the surviving spouse or dependent children of the covered employee, 36 months after the date of the death of the covered employee.
(IV) General rule for other qualifying events In the case of a qualifying event not described in paragraph (3)(B) or (3)(F), the date which is 36 months after the date of the qualifying event.
(V) Medicare entitlement followed by qualifying event In the case of a qualifying event described in paragraph (3)(B) that occurs less than 18 months after the date the covered employee became entitled to benefits under title XVIII of the Social Security Act, the period of coverage for qualified beneficiaries other than the covered employee shall not terminate under this clause before the close of the 36-month period beginning on the date the covered employee became so entitled. In the case of a qualified beneficiary who is determined, under title II or XVI of the Social Security Act, to have been disabled at any time during the first 60 days of continuation coverage under this section, any reference in subclause (I) or (II) to 18 months is deemed a reference to 29 months (with respect to all qualified beneficiaries), but only if the qualified beneficiary has provided notice of such determination under paragraph (6)(C) before the end of such 18 months.
(ii) End of plan The date on which the employer ceases to provide any group health plan to any employee.
(iii) Failure to pay premium The date on which coverage ceases under the plan by reason of a failure to make timely payment of any premium required under the plan with respect to the qualified beneficiary. The payment of any premium (other than any payment referred to in the last sentence of subparagraph (C)) shall be considered to be timely if made within 30 days after the date due or within such longer period as applies to or under the plan.
(iv) Group health plan coverage or medicare entitlement The date on which the qualified beneficiary first becomes, after the date of the election
(I) covered under any other group health plan (as an employee or otherwise) which does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary (other than such an exclusion or limitation which does not apply to (or is satisfied by) such beneficiary by reason of chapter 100 of this title, part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, or title XXVII of the Public Health Service Act), or
(II) in the case of a qualified beneficiary other than a qualified beneficiary described in subsection (g)(1)(D) entitled to benefits under title XVIII of the Social Security Act.
(v) Termination of extended coverage for disability In the case of a qualified beneficiary who is disabled at any time during the first 60 days of continuation coverage under this section, the month that begins more than 30 days after the date of the final determination under title II or XVI of the Social Security Act that the qualified beneficiary is no longer disabled.
(C) Premium requirements 
The plan may require payment of a premium for any period of continuation coverage, except that such premium
(i) shall not exceed 102 percent of the applicable premium for such period, and
(ii) may, at the election of the payor, be made in monthly installments.

In no event may the plan require the payment of any premium before the day which is 45 days after the day on which the qualified beneficiary made the initial election for continuation coverage. In the case of an individual described in the last sentence of subparagraph (B)(i), any reference in clause (i) of this subparagraph to 102 percent is deemed a reference to 150 percent for any month after the 18th month of continuation coverage described in subclause (I) or (II) of subparagraph (B)(i).

(D) No requirement of insurability 
The coverage may not be conditioned upon, or discriminate on the basis of lack of, evidence of insurability.
(E) Conversion option 
In the case of a qualified beneficiary whose period of continuation coverage expires under subparagraph (B)(i), the plan must, during the 180-day period ending on such expiration date, provide to the qualified beneficiary the option of enrollment under a conversion health plan otherwise generally available under the plan.
(3) Qualifying event 
For purposes of this subsection, the term qualifying event means, with respect to any covered employee, any of the following events which, but for the continuation coverage required under this subsection, would result in the loss of coverage of a qualified beneficiary
(A) The death of the covered employee.
(B) The termination (other than by reason of such employees gross misconduct), or reduction of hours, of the covered employees employment.
(C) The divorce or legal separation of the covered employee from the employees spouse.
(D) The covered employee becoming entitled to benefits under title XVIII of the Social Security Act.
(E) A dependent child ceasing to be a dependent child under the generally applicable requirements of the plan.
(F) A proceeding in a case under title 11, United States Code, commencing on or after July 1, 1986, with respect to the employer from whose employment the covered employee retired at any time.

In the case of an event described in subparagraph (F), a loss of coverage includes a substantial elimination of coverage with respect to a qualified beneficiary described in subsection (g)(1)(D) within one year before or after the date of commencement of the proceeding.

(4) Applicable premium 
For purposes of this subsection
(A) In general 
The term applicable premium means, with respect to any period of continuation coverage of qualified beneficiaries, the cost to the plan for such period of the coverage for similarly situated beneficiaries with respect to whom a qualifying event has not occurred (without regard to whether such cost is paid by the employer or employee).
(B) Special rule for self-insured plans 
To the extent that a plan is a self-insured plan
(i) In general Except as provided in clause (ii), the applicable premium for any period of continuation coverage of qualified beneficiaries shall be equal to a reasonable estimate of the cost of providing coverage for such period for similarly situated beneficiaries which
(I) is determined on an actuarial basis, and
(II) takes into account such factors as the Secretary may prescribe in regulations.
(ii) Determination on basis of past cost If a plan administrator elects to have this clause apply, the applicable premium for any period of continuation coverage of qualified beneficiaries shall be equal to
(I) the cost to the plan for similarly situated beneficiaries for the same period occurring during the preceding determination period under subparagraph (C), adjusted by
(II) the percentage increase or decrease in the implicit price deflator of the gross national product (calculated by the Department of Commerce and published in the Survey of Current Business) for the 12-month period ending on the last day of the sixth month of such preceding determination period.
(iii) Clause (ii) not to apply where significant change A plan administrator may not elect to have clause (ii) apply in any case in which there is any significant difference between the determination period and the preceding determination period, in coverage under, or in employees covered by, the plan. The determination under the preceding sentence for any determination period shall be made at the same time as the determination under subparagraph (C).
(C) Determination period 
The determination of any applicable premium shall be made for a period of 12 months and shall be made before the beginning of such period.
(5) Election 
For purposes of this subsection
(A) Election period 
The term election period means the period which
(i) begins not later than the date on which coverage terminates under the plan by reason of a qualifying event,
(ii) is of at least 60 days duration, and
(iii) ends not earlier than 60 days after the later of
(I) the date described in clause (i), or
(II) in the case of any qualified beneficiary who receives notice under paragraph (6)(D), the date of such notice.
(B) Effect of election on other beneficiaries 
Except as otherwise specified in an election, any election of continuation coverage by a qualified beneficiary described in subparagraph (A)(i) or (B) of subsection (g)(1) shall be deemed to include an election of continuation coverage on behalf of any other qualified beneficiary who would lose coverage under the plan by reason of the qualifying event. If there is a choice among types of coverage under the plan, each qualified beneficiary is entitled to make a separate selection among such types of coverage.
(C) Temporary extension of COBRA election period for certain individuals 

(i) In general In the case of a nonelecting TAA-eligible individual and notwithstanding subparagraph (A), such individual may elect continuation coverage under this subsection during the 60-day period that begins on the first day of the month in which the individual becomes a TAA-eligible individual, but only if such election is made not later than 6 months after the date of the TAA-related loss of coverage.
(ii) Commencement of coverage; no reach-back Any continuation coverage elected by a TAA-eligible individual under clause (i) shall commence at the beginning of the 60-day election period described in such paragraph and shall not include any period prior to such 60-day election period.
(iii) Preexisting conditions With respect to an individual who elects continuation coverage pursuant to clause (i), the period
(I) beginning on the date of the TAA-related loss of coverage, and
(II) ending on the first day of the 60-day election period described in clause (i),

shall be disregarded for purposes of determining the 63-day periods referred to in section 9801 (c)(2), section 701(c)(2) of the Employee Retirement Income Security Act of 1974, and section 2701(c)(2) of the Public Health Service Act.

(iv) Definitions For purposes of this subsection:
(I) Nonelecting TAA-eligible individual The term nonelecting TAA-eligible individual means a TAA-eligible individual who has a TAA-related loss of coverage and did not elect continuation coverage under this subsection during the TAA-related election period.
(II) TAA-eligible individual The term TAA-eligible individual means an eligible TAA recipient (as defined in paragraph (2) of section 35 (c)) and an eligible alternative TAA recipient (as defined in paragraph (3) of such section).
(III) TAA-related election period The term TAA-related election period means, with respect to a TAA-related loss of coverage, the 60-day election period under this subsection which is a direct consequence of such loss.
(IV) TAA-related loss of coverage The term TAA-related loss of coverage means, with respect to an individual whose separation from employment gives rise to being an TAA-eligible individual, the loss of health benefits coverage associated with such separation.
(6) Notice requirement 
In accordance with regulations prescribed by the Secretary
(A) The group health plan shall provide, at the time of commencement of coverage under the plan, written notice to each covered employee and spouse of the employee (if any) of the rights provided under this subsection.
(B) The employer of an employee under a plan must notify the plan administrator of a qualifying event described in subparagraph (A), (B), (D), or (F) of paragraph (3) with respect to such employee within 30 days (or, in the case of a group health plan which is a multiemployer plan, such longer period of time as may be provided in the terms of the plan) of the date of the qualifying event.
(C) Each covered employee or qualified beneficiary is responsible for notifying the plan administrator of the occurrence of any qualifying event described in subparagraph (C) or (E) of paragraph (3) within 60 days after the date of the qualifying event and each qualified beneficiary who is determined, under title II or XVI of the Social Security Act, to have been disabled at any time during the first 60 days of continuation coverage under this section is responsible for notifying the plan administrator of such determination within 60 days after the date of the determination and for notifying the plan administrator within 30 days of the date of any final determination under such title or titles that the qualified beneficiary is no longer disabled.
(D) The plan administrator shall notify
(i) in the case of a qualifying event described in subparagraph (A), (B), (D), or (F) of paragraph (3), any qualified beneficiary with respect to such event, and
(ii) in the case of a qualifying event described in subparagraph (C) or (E) of paragraph (3) where the covered employee notifies the plan administrator under subparagraph (C), any qualified beneficiary with respect to such event, of such beneficiarys rights under this subsection.

The requirements of subparagraph (B) shall be considered satisfied in the case of a multiemployer plan in connection with a qualifying event described in paragraph (3)(B) if the plan provides that the determination of the occurrence of such qualifying event will be made by the plan administrator. For purposes of subparagraph (D), any notification shall be made within 14 days (or, in the case of a group health plan which is a multiemployer plan, such longer period of time as may be provided in the terms of the plan) of the date on which the plan administrator is notified under subparagraph (B) or (C), whichever is applicable, and any such notification to an individual who is a qualified beneficiary as the spouse of the covered employee shall be treated as notification to all other qualified beneficiaries residing with such spouse at the time such notification is made.

(7) Covered employee 
For purposes of this subsection, the term covered employee means an individual who is (or was) provided coverage under a group health plan by virtue of the performance of services by the individual for 1 or more persons maintaining the plan (including as an employee defined in section 401 (c)(1)).
(8) Optional extension of required periods 
A group health plan shall not be treated as failing to meet the requirements of this subsection solely because the plan provides both
(A) that the period of extended coverage referred to in paragraph (2)(B) commences with the date of the loss of coverage, and
(B) that the applicable notice period provided under paragraph (6)(B) commences with the date of the loss of coverage.
(g) Definitions 
For purposes of this section
(1) Qualified beneficiary 

(A) In general 
The term qualified beneficiary means, with respect to a covered employee under a group health plan, any other individual who, on the day before the qualifying event for that employee, is a beneficiary under the plan
(i) as the spouse of the covered employee, or
(ii) as the dependent child of the employee.

Such term shall also include a child who is born to or placed for adoption with the covered employee during the period of continuation coverage under this section.

(B) Special rule for terminations and reduced employment 
In the case of a qualifying event described in subsection (f)(3)(B), the term qualified beneficiary includes the covered employee.
(C) Exception for nonresident aliens 
Notwithstanding subparagraphs (A) and (B), the term qualified beneficiary does not include an individual whose status as a covered employee is attributable to a period in which such individual was a nonresident alien who received no earned income (within the meaning of section 911 (d)(2)) from the employer which constituted income from sources within the United States (within the meaning of section 861 (a)(3)). If an individual is not a qualified beneficiary pursuant to the previous sentence, a spouse or dependent child of such individual shall not be considered a qualified beneficiary by virtue of the relationship of the individual.
(D) Special rule for retirees and widows 
In the case of a qualifying event described in subsection (f)(3)(F), the term qualified beneficiary includes a covered employee who had retired on or before the date of substantial elimination of coverage and any other individual who, on the day before such qualifying event, is a beneficiary under the plan
(i) as the spouse of the covered employee,
(ii) as the dependent child of the covered employee, or
(iii) as the surviving spouse of the covered employee.
(2) Group health plan 
The term group health plan has the meaning given such term by section 5000 (b)(1). Such term shall not include any plan substantially all of the coverage under which is for qualified long-term care services (as defined in section 7702B (c)).
(3) Plan administrator 
The term plan administrator has the meaning given the term administrator by section 3(16)(A) of the Employee Retirement Income Security Act of 1974.
(4) Correction 
A failure of a group health plan to meet the requirements of subsection (f) with respect to any qualified beneficiary shall be treated as corrected if
(A) such failure is retroactively undone to the extent possible, and
(B) the qualified beneficiary is placed in a financial position which is as good as such beneficiary would have been in had such failure not occurred.

For purposes of applying subparagraph (B), the qualified beneficiary shall be treated as if he had elected the most favorable coverage in light of the expenses he incurred since the failure first occurred.

[1] See References in Text note below.

26 USC 4980C - Requirements for issuers of qualified long-term care insurance contracts

(a) General rule 
There is hereby imposed on any person failing to meet the requirements of subsection (c) or (d) a tax in the amount determined under subsection (b).
(b) Amount 

(1) In general 
The amount of the tax imposed by subsection (a) shall be $100 per insured for each day any requirement of subsection (c) or (d) is not met with respect to each qualified long-term care insurance contract.
(2) Waiver 
In the case of a failure which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by subsection (a) to the extent that payment of the tax would be excessive relative to the failure involved.
(c) Responsibilities 
The requirements of this subsection are as follows:
(1) Requirements of model provisions 

(A) Model regulation 
The following requirements of the model regulation must be met:
(i) Section 13 (relating to application forms and replacement coverage).
(ii) Section 14 (relating to reporting requirements), except that the issuer shall also report at least annually the number of claims denied during the reporting period for each class of business (expressed as a percentage of claims denied), other than claims denied for failure to meet the waiting period or because of any applicable preexisting condition.
(iii) Section 20 (relating to filing requirements for marketing).
(iv) Section 21 (relating to standards for marketing), including inaccurate completion of medical histories, other than sections 21C (1) and 21C (6) thereof, except that
(I) in addition to such requirements, no person shall, in selling or offering to sell a qualified long-term care insurance contract, misrepresent a material fact; and
(II) no such requirements shall include a requirement to inquire or identify whether a prospective applicant or enrollee for long-term care insurance has accident and sickness insurance.
(v) Section 22 (relating to appropriateness of recommended purchase).
(vi) Section 24 (relating to standard format outline of coverage).
(vii) Section 25 (relating to requirement to deliver shoppers guide).
(B) Model Act 
The following requirements of the model Act must be met:
(i) Section 6F (relating to right to return), except that such section shall also apply to denials of applications and any refund shall be made within 30 days of the return or denial.
(ii) Section 6G (relating to outline of coverage).
(iii) Section 6H (relating to requirements for certificates under group plans).
(iv) Section 6I (relating to policy summary).
(v) Section 6J (relating to monthly reports on accelerated death benefits).
(vi) Section 7 (relating to incontestability period).
(C) Definitions 
For purposes of this paragraph, the terms model regulation and model Act have the meanings given such terms by section 7702B (g)(2)(B).
(2) Delivery of policy 
If an application for a qualified long-term care insurance contract (or for a certificate under such a contract for a group) is approved, the issuer shall deliver to the applicant (or policyholder or certificateholder) the contract (or certificate) of insurance not later than 30 days after the date of the approval.
(3) Information on denials of claims 
If a claim under a qualified long-term care insurance contract is denied, the issuer shall, within 60 days of the date of a written request by the policyholder or certificateholder (or representative)
(A) provide a written explanation of the reasons for the denial, and
(B) make available all information directly relating to such denial.
(d) Disclosure 
The requirements of this subsection are met if the issuer of a long-term care insurance policy discloses in such policy and in the outline of coverage required under subsection (c)(1)(B)(ii) that the policy is intended to be a qualified long-term care insurance contract under section 7702B (b).
(e) Qualified long-term care insurance contract defined 
For purposes of this section, the term qualified long-term care insurance contract has the meaning given such term by section 7702B.
(f) Coordination with State requirements 
If a State imposes any requirement which is more stringent than the analogous requirement imposed by this section or section 7702B (g), the requirement imposed by this section or section 7702B (g) shall be treated as met if the more stringent State requirement is met.

26 USC 4980D - Failure to meet certain group health plan requirements

(a) General rule 
There is hereby imposed a tax on any failure of a group health plan to meet the requirements of chapter 100 (relating to group health plan requirements).
(b) Amount of tax 

(1) In general 
The amount of the tax imposed by subsection (a) on any failure shall be $100 for each day in the noncompliance period with respect to each individual to whom such failure relates.
(2) Noncompliance period 
For purposes of this section, the term noncompliance period means, with respect to any failure, the period
(A) beginning on the date such failure first occurs, and
(B) ending on the date such failure is corrected.
(3) Minimum tax for noncompliance period where failure discovered after notice of examination 
Notwithstanding paragraphs (1) and (2) of subsection (c)
(A) In general 
In the case of 1 or more failures with respect to an individual
(i) which are not corrected before the date a notice of examination of income tax liability is sent to the employer, and
(ii) which occurred or continued during the period under examination,

the amount of tax imposed by subsection (a) by reason of such failures with respect to such individual shall not be less than the lesser of $2,500 or the amount of tax which would be imposed by subsection (a) without regard to such paragraphs.

(B) Higher minimum tax where violations are more than de minimis 
To the extent violations for which any person is liable under subsection (e) for any year are more than de minimis, subparagraph (A) shall be applied by substituting $15,000 for $2,500 with respect to such person.
(C) Exception for church plans 
This paragraph shall not apply to any failure under a church plan (as defined in section 414 (e)).
(c) Limitations on amount of tax 

(1) Tax not to apply where failure not discovered exercising reasonable diligence 
No tax shall be imposed by subsection (a) on any failure during any period for which it is established to the satisfaction of the Secretary that the person otherwise liable for such tax did not know, and exercising reasonable diligence would not have known, that such failure existed.
(2) Tax not to apply to failures corrected within certain periods 
No tax shall be imposed by subsection (a) on any failure if
(A) such failure was due to reasonable cause and not to willful neglect, and
(B) 
(i) in the case of a plan other than a church plan (as defined in section 414 (e)), such failure is corrected during the 30-day period beginning on the first date the person otherwise liable for such tax knew, or exercising reasonable diligence would have known, that such failure existed, and
(ii) in the case of a church plan (as so defined), such failure is corrected before the close of the correction period (determined under the rules of section 414 (e)(4)(C)).
(3) Overall limitation for unintentional failures 
In the case of failures which are due to reasonable cause and not to willful neglect
(A) Single employer plans 

(i) In general In the case of failures with respect to plans other than specified multiple employer health plans, the tax imposed by subsection (a) for failures during the taxable year of the employer shall not exceed the amount equal to the lesser of
(I) 10 percent of the aggregate amount paid or incurred by the employer (or predecessor employer) during the preceding taxable year for group health plans, or
(II) $500,000.
(ii) Taxable years in the case of certain controlled groups For purposes of this subparagraph, if not all persons who are treated as a single employer for purposes of this section have the same taxable year, the taxable years taken into account shall be determined under principles similar to the principles of section 1561.
(B) Specified multiple employer health plans 

(i) In general In the case of failures with respect to a specified multiple employer health plan, the tax imposed by subsection (a) for failures during the taxable year of the trust forming part of such plan shall not exceed the amount equal to the lesser of
(I) 10 percent of the amount paid or incurred by such trust during such taxable year to provide medical care (as defined in section 9832 (d)(3)) directly or through insurance, reimbursement, or otherwise, or
(II) $500,000.

For purposes of the preceding sentence, all plans of which the same trust forms a part shall be treated as one plan.

(ii) Special rule for employers required to pay tax If an employer is assessed a tax imposed by subsection (a) by reason of a failure with respect to a specified multiple employer health plan, the limit shall be determined under subparagraph (A) (and not under this subparagraph) and as if such plan were not a specified multiple employer health plan.
(4) Waiver by Secretary 
In the case of a failure which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by subsection (a) to the extent that the payment of such tax would be excessive relative to the failure involved.
(d) Tax not to apply to certain insured small employer plans 

(1) In general 
In the case of a group health plan of a small employer which provides health insurance coverage solely through a contract with a health insurance issuer, no tax shall be imposed by this section on the employer on any failure (other than a failure attributable to section 9811) which is solely because of the health insurance coverage offered by such issuer.
(2) Small employer 

(A) In general 
For purposes of paragraph (1), the term small employer means, with respect to a calendar year and a plan year, an employer who employed an average of at least 2 but not more than 50 employees on business days during the preceding calendar year and who employs at least 2 employees on the first day of the plan year. For purposes of the preceding sentence, all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as one employer.
(B) Employers not in existence in preceding year 
In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether such employer is a small employer shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year.
(C) Predecessors 
Any reference in this paragraph to an employer shall include a reference to any predecessor of such employer.
(3) Health insurance coverage; health insurance issuer 
For purposes of paragraph (1), the terms health insurance coverage and health insurance issuer have the respective meanings given such terms by section 9832.
(e) Liability for tax 
The following shall be liable for the tax imposed by subsection (a) on a failure:
(1) Except as otherwise provided in this subsection, the employer.
(2) In the case of a multiemployer plan, the plan.
(3) In the case of a failure under section 9803 (relating to guaranteed renewability) with respect to a plan described in subsection (f)(2)(B), the plan.
(f) Definitions 
For purposes of this section
(1) Group health plan 
The term group health plan has the meaning given such term by section 9832 (a).
(2) Specified multiple employer health plan 
The term specified multiple employer health plan means a group health plan which is
(A) any multiemployer plan, or
(B) any multiple employer welfare arrangement (as defined in section 3(40) of the Employee Retirement Income Security Act of 1974, as in effect on the date of the enactment of this section).
(3) Correction 
A failure of a group health plan shall be treated as corrected if
(A) such failure is retroactively undone to the extent possible, and
(B) the person to whom the failure relates is placed in a financial position which is as good as such person would have been in had such failure not occurred.

26 USC 4980E - Failure of employer to make comparable Archer MSA contributions

(a) General rule 
In the case of an employer who makes a contribution to the Archer MSA of any employee with respect to coverage under a high deductible health plan of the employer during a calendar year, there is hereby imposed a tax on the failure of such employer to meet the requirements of subsection (d) for such calendar year.
(b) Amount of tax 
The amount of the tax imposed by subsection (a) on any failure for any calendar year is the amount equal to 35 percent of the aggregate amount contributed by the employer to Archer MSAs of employees for taxable years of such employees ending with or within such calendar year.
(c) Waiver by Secretary 
In the case of a failure which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by subsection (a) to the extent that the payment of such tax would be excessive relative to the failure involved.
(d) Employer required to make comparable MSA contributions for all participating employees 

(1) In general 
An employer meets the requirements of this subsection for any calendar year if the employer makes available comparable contributions to the Archer MSAs of all comparable participating employees for each coverage period during such calendar year.
(2) Comparable contributions 

(A) In general 
For purposes of paragraph (1), the term comparable contributions means contributions
(i) which are the same amount, or
(ii) which are the same percentage of the annual deductible limit under the high deductible health plan covering the employees.
(B) Part-year employees 
In the case of an employee who is employed by the employer for only a portion of the calendar year, a contribution to the Archer MSA of such employee shall be treated as comparable if it is an amount which bears the same ratio to the comparable amount (determined without regard to this subparagraph) as such portion bears to the entire calendar year.
(3) Comparable participating employees 
For purposes of paragraph (1), the term comparable participating employees means all employees
(A) who are eligible individuals covered under any high deductible health plan of the employer, and
(B) who have the same category of coverage.

For purposes of subparagraph (B), the categories of coverage are self-only and family coverage.

(4) Part-time employees 

(A) In general 
Paragraph (3) shall be applied separately with respect to part-time employees and other employees.
(B) Part-time employee 
For purposes of subparagraph (A), the term part-time employee means any employee who is customarily employed for fewer than 30 hours per week.
(e) Controlled groups 
For purposes of this section, all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer.
(f) Definitions 
Terms used in this section which are also used in section 220 have the respective meanings given such terms in section 220.

26 USC 4980F - Failure of applicable plans reducing benefit accruals to satisfy notice requirements

(a) Imposition of tax 
There is hereby imposed a tax on the failure of any applicable pension plan to meet the requirements of subsection (e) with respect to any applicable individual.
(b) Amount of tax 

(1) In general 
The amount of the tax imposed by subsection (a) on any failure with respect to any applicable individual shall be $100 for each day in the noncompliance period with respect to such failure.
(2) Noncompliance period 
For purposes of this section, the term noncompliance period means, with respect to any failure, the period beginning on the date the failure first occurs and ending on the date the notice to which the failure relates is provided or the failure is otherwise corrected.
(c) Limitations on amount of tax 

(1) Tax not to apply where failure not discovered and reasonable diligence exercised 
No tax shall be imposed by subsection (a) on any failure during any period for which it is established to the satisfaction of the Secretary that any person subject to liability for the tax under subsection (d) did not know that the failure existed and exercised reasonable diligence to meet the requirements of subsection (e).
(2) Tax not to apply to failures corrected within 30 days 
No tax shall be imposed by subsection (a) on any failure if
(A) any person subject to liability for the tax under subsection (d) exercised reasonable diligence to meet the requirements of subsection (e), and
(B) such person provides the notice described in subsection (e) during the 30-day period beginning on the first date such person knew, or exercising reasonable diligence would have known, that such failure existed.
(3) Overall limitation for unintentional failures 

(A) In general 
If the person subject to liability for tax under subsection (d) exercised reasonable diligence to meet the requirements of subsection (e), the tax imposed by subsection (a) for failures during the taxable year of the employer (or, in the case of a multiemployer plan, the taxable year of the trust forming part of the plan) shall not exceed $500,000. For purposes of the preceding sentence, all multiemployer plans of which the same trust forms a part shall be treated as 1 plan.
(B) Taxable years in the case of certain controlled groups 
For purposes of this paragraph, if all persons who are treated as a single employer for purposes of this section do not have the same taxable year, the taxable years taken into account shall be determined under principles similar to the principles of section 1561.
(4) Waiver by Secretary 
In the case of a failure which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by subsection (a) to the extent that the payment of such tax would be excessive or otherwise inequitable relative to the failure involved.
(d) Liability for tax 
The following shall be liable for the tax imposed by subsection (a):
(1) In the case of a plan other than a multiemployer plan, the employer.
(2) In the case of a multiemployer plan, the plan.
(e) Notice requirements for plans significantly reducing benefit accruals 

(1) In general 
If an applicable pension plan is amended to provide for a significant reduction in the rate of future benefit accrual, the plan administrator shall provide the notice described in paragraph (2) to each applicable individual (and to each employee organization representing applicable individuals) and to each employer who has an obligation to contribute to the plan.
(2) Notice 
The notice required by paragraph (1) shall be written in a manner calculated to be understood by the average plan participant and shall provide sufficient information (as determined in accordance with regulations prescribed by the Secretary) to allow applicable individuals to understand the effect of the plan amendment. The Secretary may provide a simplified form of notice for, or exempt from any notice requirement, a plan
(A) which has fewer than 100 participants who have accrued a benefit under the plan, or
(B) which offers participants the option to choose between the new benefit formula and the old benefit formula.
(3) Timing of notice 
Except as provided in regulations, the notice required by paragraph (1) shall be provided within a reasonable time before the effective date of the plan amendment.
(4) Designees 
Any notice under paragraph (1) may be provided to a person designated, in writing, by the person to which it would otherwise be provided.
(5) Notice before adoption of amendment 
A plan shall not be treated as failing to meet the requirements of paragraph (1) merely because notice is provided before the adoption of the plan amendment if no material modification of the amendment occurs before the amendment is adopted.
(f) Definitions and special rules 
For purposes of this section
(1) Applicable individual 
The term applicable individual means, with respect to any plan amendment
(A) each participant in the plan, and
(B) any beneficiary who is an alternate payee (within the meaning of section 414 (p)(8)) under an applicable qualified domestic relations order (within the meaning of section 414 (p)(1)(A)),

whose rate of future benefit accrual under the plan may reasonably be expected to be significantly reduced by such plan amendment.

(2) Applicable pension plan 
The term applicable pension plan means
(A) any defined benefit plan described in section 401 (a) which includes a trust exempt from tax under section 501 (a), or
(B) an individual account plan which is subject to the funding standards of section 412.

Such term shall not include a governmental plan (within the meaning of section 414 (d)) or a church plan (within the meaning of section 414 (e)) with respect to which the election provided by section 410 (d) has not been made.

(3) Early retirement 
A plan amendment which eliminates or reduces any early retirement benefit or retirement-type subsidy (within the meaning of section 411 (d)(6)(B)(i)) shall be treated as having the effect of reducing the rate of future benefit accrual.
(g) New technologies 
The Secretary may by regulations allow any notice under subsection (e) to be provided by using new technologies.

26 USC 4980G - Failure of employer to make comparable health savings account contributions

(a) General rule 
In the case of an employer who makes a contribution to the health savings account of any employee during a calendar year, there is hereby imposed a tax on the failure of such employer to meet the requirements of subsection (b) for such calendar year.
(b) Rules and requirements 
Rules and requirements similar to the rules and requirements of section 4980E shall apply for purposes of this section.
(c) Regulations 
The Secretary shall issue regulations to carry out the purposes of this section, including regulations providing special rules for employers who make contributions to Archer MSAs and health savings accounts during the calendar year.
(d) Exception 
For purposes of applying section 4980E to a contribution to a health savings account of an employee who is not a highly compensated employee (as defined in section 414 (q)), highly compensated employees shall not be treated as comparable participating employees.

TITLE 26 - US CODE - CHAPTER 44 - QUALIFIED INVESTMENT ENTITIES

26 USC 4981 - Excise tax on undistributed income of real estate investment trusts

(a) Imposition of tax 
There is hereby imposed a tax on every real estate investment trust for each calendar year equal to 4 percent of the excess (if any) of
(1) the required distribution for such calendar year, over
(2) the distributed amount for such calendar year.
(b) Required distribution 
For purposes of this section
(1) In general 
The term required distribution means, with respect to any calendar year, the sum of
(A) 85 percent of the real estate investment trusts ordinary income for such calendar year, plus
(B) 95 percent of the real estate investment trusts capital gain net income for such calendar year.
(2) Increase by prior year shortfall 
The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of
(A) the grossed up required distribution for the preceding calendar year, over
(B) the distributed amount for such preceding calendar year.
(3) Grossed up required distribution 
The grossed up required distribution for any calendar year is the required distribution for such year determined
(A) with the application of paragraph (2) to such taxable year, and
(B) by substituting 100 percent for each percentage set forth in paragraph (1).
(c) Distributed amount 
For purposes of this section
(1) In general 
The term distributed amount means, with respect to any calendar year, the sum of
(A) the deduction for dividends paid (as defined in section 561) during such calendar year (but computed without regard to that portion of such deduction which is attributable to the amount excluded under section 857 (b)(2)(D)), and
(B) any amount on which tax is imposed under subsection (b)(1) or (b)(3)(A) of section 857 for any taxable year ending in such calendar year.
(2) Increase by prior year overdistribution 
The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of
(A) the distributed amount for the preceding calendar year (determined with the application of this paragraph to such preceding calendar year), over
(B) the grossed up required distribution for such preceding calendar year.
(3) Determination of dividends paid 
The amount of the dividends paid during any calendar year shall be determined without regard to the provisions of section 858.
(d) Time for payment of tax 
The tax imposed by this section for any calendar year shall be paid on or before March 15 of the following calendar year.
(e) Definitions and special rules 
For purposes of this section
(1) Ordinary income 
The term ordinary income means the real estate investment trust taxable income (as defined in section 857 (b)(2)) determined
(A) without regard to subparagraph (B) of section 857 (b)(2),
(B) by not taking into account any gain or loss from the sale or exchange of a capital asset, and
(C) by treating the calendar year as the trusts taxable year.
(2) Capital gain net income 

(A) In general 
The term capital gain net income has the meaning given such term by section 1222 (9) (determined by treating the calendar year as the trusts taxable year).
(B) Reduction for net ordinary loss 
The amount determined under subparagraph (A) shall be reduced by the amount of the trusts net ordinary loss for the taxable year.
(C) Net ordinary loss 
For purposes of this paragraph, the net ordinary loss for the calendar year is the amount which would be net operating loss of the trust for the calendar year if the amount of such loss were determined in the same manner as ordinary income is determined under paragraph (1).
(3) Treatment of deficiency distributions 
In the case of any deficiency dividend (as defined in section 860 (f))
(A) such dividend shall be taken into account when paid without regard to section 860, and
(B) any income giving rise to the adjustment shall be treated as arising when the dividend is paid.

26 USC 4982 - Excise tax on undistributed income of regulated investment companies

(a) Imposition of tax 
There is hereby imposed a tax on every regulated investment company for each calendar year equal to 4 percent of the excess (if any) of
(1) the required distribution for such calendar year, over
(2) the distributed amount for such calendar year.
(b) Required distribution 
For purposes of this section
(1) In general 
The term required distribution means, with respect to any calendar year, the sum of
(A) 98 percent of the regulated investment companys ordinary income for such calendar year, plus
(B) 98 percent of the regulated investment companys capital gain net income for the 1-year period ending on October 31 of such calendar year.
(2) Increase by prior year shortfall 
The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of
(A) the grossed up required distribution for the preceding calendar year, over
(B) the distributed amount for such preceding calendar year.
(3) Grossed up required distribution 
The grossed up required distribution for any calendar year is the required distribution for such year determined
(A) with the application of paragraph (2) to such taxable year, and
(B) by substituting 100 percent for each percentage set forth in paragraph (1).
(c) Distributed amount 
For purposes of this section
(1) In general 
The term distributed amount means, with respect to any calendar year, the sum of
(A) the deduction for dividends paid (as defined in section 561) during such calendar year, and
(B) any amount on which tax is imposed under subsection (b)(1) or (b)(3)(A) of section 852 for any taxable year ending in such calendar year.
(2) Increase by prior year overdistribution 
The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of
(A) the distributed amount for the preceding calendar year (determined with the application of this paragraph to such preceding calendar year), over
(B) the grossed up required distribution for such preceding calendar year.
(3) Determination of dividends paid 
The amount of the dividends paid during any calendar year shall be determined without regard to
(A) the provisions of section 855, and
(B) any exempt-interest dividend as defined in section 852 (b)(5).
(d) Time for payment of tax 
The tax imposed by this section for any calendar year shall be paid on or before March 15 of the following calendar year.
(e) Definitions and special rules 
For purposes of this section
(1) Ordinary income 
The term ordinary income means the investment company taxable income (as defined in section 852 (b)(2)) determined
(A) without regard to subparagraphs (A) and (D) of section 852 (b)(2),
(B) by not taking into account any gain or loss from the sale or exchange of a capital asset, and
(C) by treating the calendar year as the companys taxable year.
(2) Capital gain net income 

(A) In general 
Except as provided in subparagraph (B), the term capital gain net income has the meaning given such term by section 1222 (9) (determined by treating the 1-year period ending on October 31 of any calendar year as the companys taxable year).
(B) Reduction by net ordinary loss for calendar year 
The amount determined under subparagraph (A) shall be reduced (but not below the net capital gain) by the amount of the companys net ordinary loss for the calendar year.
(C) Definitions 
For purposes of this paragraph
(i) Net capital gain The term net capital gain has the meaning given such term by section 1222 (11) (determined by treating the 1-year period ending on October 31 of the calendar year as the companys taxable year).
(ii) Net ordinary loss The net ordinary loss for the calendar year is the amount which would be the net operating loss of the company for the calendar year if the amount of such loss were determined in the same manner as ordinary income is determined under paragraph (1).
(3) Treatment of deficiency distributions 
In the case of any deficiency dividend (as defined in section 860 (f))
(A) such dividend shall be taken into account when paid without regard to section 860, and
(B) any income giving rise to the adjustment shall be treated as arising when the dividend is paid.
(4) Election to use taxable year in certain cases 

(A) In general 
If
(i) the taxable year of the regulated investment company ends with the month of November or December, and
(ii) such company makes an election under this paragraph,

subsection (b)(1)(B) and paragraph (2) of this subsection shall be applied by taking into account the companys taxable year in lieu of the 1-year period ending on October 31 of the calendar year.

(B) Election revocable only with consent 
An election under this paragraph, once made, may be revoked only with the consent of the Secretary.
(5) Treatment of foreign currency gains and losses after October 31 of calendar year 
Any foreign currency gain or loss which is attributable to a section 988 transaction and which is properly taken into account for the portion of the calendar year after October 31 shall not be taken into account in determining the amount of the ordinary income of the regulated investment company for such calendar year but shall be taken into account in determining the ordinary income of the investment company for the following calendar year. In the case of any company making an election under paragraph (4), the preceding sentence shall be applied by substituting the last day of the companys taxable year for October 31.
(6) Treatment of gain recognized under section 1296 
For purposes of determining a regulated investment companys ordinary income
(A) notwithstanding paragraph (1)(C), section 1296 shall be applied as if such companys taxable year ended on October 31, and
(B) any ordinary gain or loss from an actual disposition of stock in a passive foreign investment company during the portion of the calendar year after October 31 shall be taken into account in determining such regulated investment companys ordinary income for the following calendar year.

In the case of a company making an election under paragraph (4), the preceding sentence shall be applied by substituting the last day of the companys taxable year for October 31.

(f) Exception for certain regulated investment companies 
This section shall not apply to any regulated investment company for any calendar year if at all times during such calendar year each shareholder in such company was either
(1) a trust described in section 401 (a) and exempt from tax under section 501 (a), or
(2) a segregated asset account of a life insurance company held in connection with variable contracts (as defined in section 817 (d)).

For purposes of the preceding sentence, any shares attributable to an investment in the regulated investment company (not exceeding $250,000) made in connection with the organization of such company shall not be taken into account.

TITLE 26 - US CODE - CHAPTER 45 - PROVISIONS RELATING TO EXPATRIATED ENTITIES

26 USC 4985 - Stock compensation of insiders in expatriated corporations

(a) Imposition of tax 
In the case of an individual who is a disqualified individual with respect to any expatriated corporation, there is hereby imposed on such person a tax equal to
(1) the rate of tax specified in section 1 (h)(1)(C), multiplied by
(2) the value (determined under subsection (b)) of the specified stock compensation held (directly or indirectly) by or for the benefit of such individual or a member of such individuals family (as defined in section 267) at any time during the 12-month period beginning on the date which is 6 months before the expatriation date.
(b) Value 
For purposes of subsection (a)
(1) In general 
The value of specified stock compensation shall be
(A) in the case of a stock option (or other similar right) or a stock appreciation right, the fair value of such option or right, and
(B) in any other case, the fair market value of such compensation.
(2) Date for determining value 
The determination of value shall be made
(A) in the case of specified stock compensation held on the expatriation date, on such date,
(B) in the case of such compensation which is canceled during the 6 months before the expatriation date, on the day before such cancellation, and
(C) in the case of such compensation which is granted after the expatriation date, on the date such compensation is granted.
(c) Tax to apply only if shareholder gain recognized 
Subsection (a) shall apply to any disqualified individual with respect to an expatriated corporation only if gain (if any) on any stock in such corporation is recognized in whole or part by any shareholder by reason of the acquisition referred to in section 7874 (a)(2)(B)(i) with respect to such corporation.
(d) Exception where gain recognized on compensation 
Subsection (a) shall not apply to
(1) any stock option which is exercised on the expatriation date or during the 6-month period before such date and to the stock acquired in such exercise, if income is recognized under section 83 on or before the expatriation date with respect to the stock acquired pursuant to such exercise, and
(2) any other specified stock compensation which is exercised, sold, exchanged, distributed, cashed-out, or otherwise paid during such period in a transaction in which income, gain, or loss is recognized in full.
(e) Definitions 
For purposes of this section
(1) Disqualified individual 
The term disqualified individual means, with respect to a corporation, any individual who, at any time during the 12-month period beginning on the date which is 6 months before the expatriation date
(A) is subject to the requirements of section 16(a) of the Securities Exchange Act of 1934 with respect to such corporation or any member of the expanded affiliated group which includes such corporation, or
(B) would be subject to such requirements if such corporation or member were an issuer of equity securities referred to in such section.
(2) Expatriated corporation; expatriation date 

(A) Expatriated corporation 
The term expatriated corporation means any corporation which is an expatriated entity (as defined in section 7874 (a)(2)). Such term includes any predecessor or successor of such a corporation.
(B) Expatriation date 
The term expatriation date means, with respect to a corporation, the date on which the corporation first becomes an expatriated corporation.
(3) Specified stock compensation 

(A) In general 
The term specified stock compensation means payment (or right to payment) granted by the expatriated corporation (or by any member of the expanded affiliated group which includes such corporation) to any person in connection with the performance of services by a disqualified individual for such corporation or member if the value of such payment or right is based on (or determined by reference to) the value (or change in value) of stock in such corporation (or any such member).
(B) Exceptions 
Such term shall not include
(i) any option to which part II of subchapter D of chapter 1 applies, or
(ii) any payment or right to payment from a plan referred to in section 280G (b)(6).
(4) Expanded affiliated group 
The term expanded affiliated group means an affiliated group (as defined in section 1504 (a) without regard to section 1504 (b)(3)); except that section 1504 (a) shall be applied by substituting more than 50 percent for at least 80 percent each place it appears.
(f) Special rules 
For purposes of this section
(1) Cancellation of restriction 
The cancellation of a restriction which by its terms will never lapse shall be treated as a grant.
(2) Payment or reimbursement of tax by corporation treated as specified stock compensation 
Any payment of the tax imposed by this section directly or indirectly by the expatriated corporation or by any member of the expanded affiliated group which includes such corporation
(A) shall be treated as specified stock compensation, and
(B) shall not be allowed as a deduction under any provision of chapter 1.
(3) Certain restrictions ignored 
Whether there is specified stock compensation, and the value thereof, shall be determined without regard to any restriction other than a restriction which by its terms will never lapse.
(4) Property transfers 
Any transfer of property shall be treated as a payment and any right to a transfer of property shall be treated as a right to a payment.
(5) Other administrative provisions 
For purposes of subtitle F, any tax imposed by this section shall be treated as a tax imposed by subtitle A.
(g) Regulations 
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.

TITLE 26 - US CODE - CHAPTER 46 - GOLDEN PARACHUTE PAYMENTS

26 USC 4999 - Golden parachute payments

(a) Imposition of tax 
There is hereby imposed on any person who receives an excess parachute payment a tax equal to 20 percent of the amount of such payment.
(b) Excess parachute payment defined 
For purposes of this section, the term excess parachute payment has the meaning given to such term by section 280G (b).
(c) Administrative provisions 

(1) Withholding 
In the case of any excess parachute payment which is wages (within the meaning of section 3401) the amount deducted and withheld under section 3402 shall be increased by the amount of the tax imposed by this section on such payment.
(2) Other administrative provisions 
For purposes of subtitle F, any tax imposed by this section shall be treated as a tax imposed by subtitle A.

TITLE 26 - US CODE - CHAPTER 47 - CERTAIN GROUP HEALTH PLANS

26 USC 5000 - Certain group health plans

(a) Imposition of tax 
There is hereby imposed on any employer (including a self-employed person) or employee organization that contributes to a nonconforming group health plan a tax equal to 25 percent of the employers or employee organizations expenses incurred during the calendar year for each group health plan to which the employer or employee organization contributes.
(b) Group health plan and large group health plan 
For purposes of this section
(1) Group health plan 
The term group health plan means a plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organization to provide health care (directly or otherwise) to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families.
(2) Large group health plan 
The term large group health plan means a plan of, or contributed to by, an employer or employee organization (including a self-insured plan) to provide health care (directly or otherwise) to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families, that covers employees of at least one employer that normally employed at least 100 employees on a typical business day during the previous calendar year. For purposes of the preceding sentence
(A) all employers treated as a single employer under subsection (a) or (b) of section 52 shall be treated as a single employer,
(B) all employees of the members of an affiliated service group (as defined in section 414 (m)) shall be treated as employed by a single employer, and
(C) leased employees (as defined in section 414 (n)(2)) shall be treated as employees of the person for whom they perform services to the extent they are so treated under section 414 (n).
(c) Nonconforming group health plan 
For purposes of this section, the term nonconforming group health plan means a group health plan or large group health plan that at any time during a calendar year does not comply with the requirements of subparagraphs (A) and (C) or subparagraph (B), respectively, of paragraph (1), or with the requirements of paragraph (2), of section 1862(b) of the Social Security Act.
(d) Government entities 
For purposes of this section, the term employer does not include a Federal or other governmental entity.