PRIA Logo™
Title 26 — Internal Revenue CodeRelease 119-73

§4967 Taxes on Prohibited Benefits

Title 26 › Subtitle Subtitle D— Miscellaneous Excise Taxes › Chapter 42— PRIVATE FOUNDATIONS; AND CERTAIN OTHER TAX-EXEMPT ORGANIZATIONS › Subchapter G— Donor Advised Funds › § 4967

Last updated Apr 6, 2026|Official source

Summary

If a donor or related person tells a donor advised fund to make a distribution, and that person ends up getting a more than incidental benefit from it, the IRS charges a tax equal to 125 percent of the benefit. The tax is owed by the person who gave the advice or who received the benefit. A fund manager who agrees to the distribution while knowing it would create that kind of benefit owes a separate 10 percent tax, capped at $10,000 per distribution. When several people are liable, they all share responsibility for the full amount. No tax applies here if the same distribution was already taxed under section 4958, the excess benefit rules.

Full Legal Text

Title 26, §4967

Internal Revenue Code — Source: USLM XML via OLRC

(a)(1)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)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)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)For purposes of subsection (a)—
(1)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)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)A person is described in this subsection if such person is described in section 4958(f)(7) with respect to a donor advised fund.

Legislative History

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Section applicable to taxable years beginning after Aug. 17, 2006, see section 1231(c) of Pub. L. 109–280, set out as an

Effective Date

of 2006 Amendment note under section 4963 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 4967

Title 26 — Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73