
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC4955]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                 Subtitle D--Miscellaneous Excise Taxes
 
     CHAPTER 42--PRIVATE FOUNDATIONS; AND CERTAIN OTHER TAX-EXEMPT 
                              ORGANIZATIONS
 
 Subchapter C--Political Expenditures of Section 501(c)(3) Organizations
 
Sec. 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 2\1/2\ 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 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.

(Added Pub. L. 100-203, title X, Sec. 10712(a), Dec. 22, 1987, 101 Stat. 
1330-465; amended Pub. L. 104-168, title XIII, Sec. 1311(c)(1), July 30, 
1996, 110 Stat. 1478.)


                               Amendments

    1996--Subsec. (e). Pub. L. 104-168 substituted ``sections 4945 and 
4958'' for ``section 4945'' in heading and inserted ``or an excess 
benefit for purposes of section 4958'' before period at end of text.


                    Effective Date of 1996 Amendment

    Section 1311(d)(1), (2) of Pub. L. 104-168 provided that:
    ``(1) In general.--The amendments made by this section [enacting 
section 4958 of this title and amending this section and sections 4963, 
6213, 7422, and 7454 of this title] (other than subsection (b)) 
[amending section 501 of this title] shall apply to excess benefit 
transactions occurring on or after September 14, 1995.
    ``(2) Binding contracts.--The amendments referred to in paragraph 
(1) shall not apply to any benefit arising from a transaction pursuant 
to any written contract which was binding on September 13, 1995, and at 
all times thereafter before such transaction occurred.''


                             Effective Date

    Section 10712(d) of Pub. L. 100-203 provided that: ``The amendments 
made by this section [enacting this section and amending sections 4962, 
4963, 6213, 6501, 6503, 6684, 7422, and 7454 of this title] shall apply 
to taxable years beginning after the date of the enactment of this Act 
[Dec. 22, 1987].''

                  Section Referred to in Other Sections

    This section is referred to in sections 4912, 4962, 4963, 6033, 
6213, 6852, 7409, 7422, 7454 of this title.
