
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: 26USC4977]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                 Subtitle D--Miscellaneous Excise Taxes
 
               CHAPTER 43--QUALIFIED PENSION, ETC., PLANS
 
Sec. 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.

(Added Pub. L. 98-369, div. A, title V, Sec. 531(e)(1), July 18, 1984, 
98 Stat. 885; amended Pub. L. 99-514, title XVIII, Sec. 1853(c)(1), (2), 
Oct. 22, 1986, 100 Stat. 2871; Pub. L. 103-66, title XIII, 
Sec. 13213(d)(3)(D), Aug. 10, 1993, 107 Stat. 474; Pub. L. 104-188, 
title I, Sec. 1704(t)(66), Aug. 20, 1996, 110 Stat. 1890.)


                               Amendments

    1996--Subsec. (c). Pub. L. 104-188 substituted ``section 132(h)'' 
for ``section 132(i)(2)'' in closing provisions.
    1993--Subsec. (c). Pub. L. 103-66 substituted ``section 132(i)(2)'' 
for ``section 132(g)(2)'' in closing provisions.
    1986--Subsec. (c)(2). Pub. L. 99-514, Sec. 1853(c)(1), amended par. 
(2) generally. Prior to amendment, par. (2) read as follows: ``as of 
January 1, 1984, substantially all of the employees of the employer were 
entitled to employee discounts or services provided by the employer in 1 
line of business,''.
    Subsec. (f). Pub. L. 99-514, Sec. 1853(c)(2), added subsec. (f).


                    Effective Date of 1993 Amendment

    Amendment by Pub. L. 103-66 applicable to reimbursements or other 
payments in respect of expenses incurred after Dec. 31, 1993, see 
section 13213(e) of Pub. L. 103-66, set out as a note under section 62 
of this title.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 effective, except as otherwise provided, 
as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 
98-369, div. A, to which such amendment relates, see section 1881 of 
Pub. L. 99-514, set out as a note under section 48 of this title.


                             Effective Date

    Section effective Jan. 1, 1985, see section 531(h) of Pub. L. 98-
369, set out as a note under section 132 of this title.


           Plan Amendments Not Required Until January 1, 1989

    For provisions directing that if any amendments made by subtitle A 
or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 1800-1899A] of Pub. L. 99-514 require an amendment to any plan, 
such plan amendment shall not be required to be made before the first 
plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. 
L. 99-514, as amended, set out as a note under section 401 of this 
title.


     Application of Subsection (c) of this Section to Agricultural 
                    Cooperatives Incorporated in 1964

    Section 1853(c)(3) of Pub. L. 99-514 provided that: ``For purposes 
of determining whether the requirements of section 4977(c) of the 
Internal Revenue Code of 1954 [now 1986] are met in the case of an 
agricultural cooperative incorporated in 1964, there shall not be taken 
into account employees of a member of the same controlled group as such 
cooperative which became a member during July 1980.''
