§4912 — Title 26 Internal Revenue Code | U.S. Code

Summary

A 5 percent tax must be paid by any organization that loses its 501(c)(3) tax-exempt status for a year because it spent money on lobbying. The tax is 5 percent of the lobbying spending and the organization must pay it. If an organization manager agreed to the spending while knowing it would likely cause the loss of 501(c)(3) status, that manager must also pay a tax equal to 5 percent of those lobbying amounts, unless the agreement was not willful and was for a reasonable cause. If more than one manager is liable, each can be held responsible for the whole amount. This rule applies to groups that were tax-exempt under 501(c)(3), except it does not apply to organizations that made an election under section 501(h), to disqualified organizations as defined in section 501(h)(5), or to private foundations. “Lobbying expenditure” means money spent on propaganda or trying to influence laws. “Organization manager” has the meaning given in section 4955(f)(2).

Title 26, §4912

Internal Revenue Code — Source: USLM XML via OLRC

(a)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)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)(1)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)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)(1)The term “lobbying expenditure” means any amount paid or incurred by the organization in carrying on propaganda, or otherwise attempting to influence legislation.

(2)The term “organization manager” has the meaning given to such term by section 4955(f)(2).

(3)If more than 1 person is liable under subsection (b), all such persons shall be jointly and severally liable under such subsection.

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 100–203, title X, § 10714(e), Dec. 22, 1987, 101 Stat. 1330–472, provided that: “The

Amendments

made by this section [enacting this section and amending section 6501 and 7454 of this title] shall apply to taxable years beginning after the date of the enactment of this Act [Dec. 22, 1987].”

§4912 Tax on disqualifying lobbying expenditures of certain organizations