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26 U.S.C. § 4965 — Excise tax on certain tax-exempt entities entering into prohibited tax shelter transactions
Federal law — U.S. Code and appendices · legal_authorities
**(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 entity’s 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 tha
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Source file: Laws/federal/codes/united-states-code/title-26/section-4965-excise-tax-on-certain-tax-exempt-entities-entering-into-prohibited-tax-s--d3d5e52a39.md
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Source location: Title 26, Chapter 42, § 4965; chapter-042-private-foundations-and-certain-other-tax-exempt-organizations.md
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**(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 entity’s 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 entity’s 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),
(7) an arrangement described in section 4973(a), or
(8) a program described in section 529A.
**(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.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Definitions.—** For purposes of this section—
(1) the term “agency” means agency as defined in section 552(e) 11 See References in Text note below. of this title;
(2) the term “individual” means a citizen of the United States or an alien lawfully admitted for permanent residence;
(3) the term “maintain” includes maintain, collect, use, or disseminate;
(4) the term “record” means any item, collection, or grouping of information about an individual that is maintained by an agency, including, but not limited to, his education, financial transactions, medical history, and criminal or employment history and that contains his name, or the identifying number, symbol, or other identifying particular assigned to the individual, such as a finger or voice print or a photograph;
(5) the term “system of records” means a group of any records under the control of any agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual;
(6) the term “statistical record” means a record in a system of records maintained for statistical research or reporting purposes only and not used in whole or in part in making any determination about an identifiable individual, except as provided by [section 8 of title 13](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title13-section8&num=0&edition=prelim);
(7) the term “routine use” means, with respect to the disclosure of a record, the use of such record for a purpose which is compatible with the purpose for which it was collected;
(8) the term “matching program”—
(A) means any computerized comparison of—
(i) two or more automated systems of records or a system of records with non-Federal records for the purpose
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Married individuals filing joint returns and surviving spouses** There is hereby imposed on the taxable income of—
(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000.
**(b) Heads of households** There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000.
**(c) Unmarried individuals (other than surviving spouses and heads of households)** There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,50
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** When required by regulations prescribed by the Secretary any person made liable for any tax imposed by this title, or with respect to the collection thereof, shall make a return or statement according to the forms and regulations prescribed by the Secretary. Every person required to make a return or statement shall include therein the information required by such forms or regulations.
**(b) Identification of taxpayer** The Secretary is authorized to require such information with respect to persons subject to the taxes imposed by chapter 21 or chapter 24 as is necessary or helpful in securing proper identification of such persons.
**(c) Returns, etc., of DISCS and former DISCS and former FSC’s**
(1) **Records and information** — A DISC, former DISC, or former FSC (as defined in section 922 as in effect before its repeal by the FSC Repeal and Extraterritorial Income Exclusion Act of 2000) shall for the taxable year—
(A) furnish such information to persons who were shareholders at any time during such taxable year, and to the Secretary, and
(B) keep such records, as may be required by regulations prescribed by the Secretary.
(2) **Returns** — A DISC shall file for the taxable year such returns as may be prescribed by the Secretary by forms or regulations.
**(d) Authority to require information concerning section 912 allowances** The Secretary may by regulations require any individual who receives allowances which are excluded from gross income under section 912 for any taxable year to include on his return of the taxes imposed by subtitle A for such taxable year such information with respect to the amount and type of such allowances as the Secretary determines to be appropriate.
**(e) Regulations requiring returns on magnetic media, etc.**
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 6011
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Organizations required to file**
(1) **In general** — Except as provided in paragraph (3), every organization exempt from taxation under section 501(a) shall file an annual return, stating specifically the items of gross income, receipts, and disbursements, and such other information for the purpose of carrying out the internal revenue laws as the Secretary may by forms or regulations prescribe, and shall keep such records, render under oath such statements, make such other returns, and comply with such rules and regulations as the Secretary may from time to time prescribe; except that, in the discretion of the Secretary, any organization described in section 401(a) may be relieved from stating in its return any information which is reported in returns filed by the employer which established such organization.
(2) **Being a party to certain reportable transactions** — Every tax-exempt entity described in section 4965(c) shall file (in such form and manner and at such time as determined by the Secretary) a disclosure of—
(A) such entity’s being a party to any prohibited tax shelter transaction (as defined in section 4965(e)), and
(B) the identity of any other party to such transaction which is known by such tax-exempt entity.
(3) **Exceptions from filing**
(A) *Mandatory exceptions* — Paragraph (1) shall not apply to—
(i) churches, their integrated auxiliaries, and conventions or associations of churches,
(ii) any organization (other than a private foundation, as defined in section 509(a)) described in subparagraph (C), the gross receipts of which in each taxable year are normally not more than $5,000, or
(iii) the exclusively religious activities of any religious order.
(B) *Discretionary exceptions* — The Secretary may relieve any or
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 6033
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Returns with respect to certain payments aggregating less than $10** In the case of each failure to file a statement of a payment to another person required under the authority of—
(1) section 6042(a)(2) (relating to payments of dividends aggregating less than $10), or
(2) section 6044(a)(2) (relating to payments of patronage dividends aggregating less than $10),
on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid (upon notice and demand by the Secretary and in the same manner as tax) by the person failing to so file the statement, $1 for each such statement not so filed, but the total amount imposed on the delinquent person for all such failures during the calendar year shall not exceed $1,000.
**(b) Failure to report tips** In the case of failure by an employee to report to his employer on the date and in the manner prescribed therefor any amount of tips required to be so reported by section 6053(a) which are wages (as defined in section 3121(a)) or which are compensation (as defined in section 3231(e)), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be paid by the employee, in addition to the tax imposed by section 3101 or section 3201 (as the case may be) with respect to the amount of tips which he so failed to report, an amount equal to 50 percent of such tax.
**(c) Returns by exempt organizations and by certain trusts**
(1) **Annual returns under section 6033(a)(1) or 6012(a)(6)**
(A) *Penalty on organization* — In the case of—
(i) a failure to file a return required under section 6033(a)(1) (relating to returns by exempt organization
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 6652
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Federal law — U.S. Code and appendices · legal_authorities
Page 3051
TITLE 26—INTERNAL REVENUE CODE
§ 4965
EFFECTIVE DATE
For effective date of section with respect to any first
tier tax and to any second tier tax, see section 2(d) of
Pub. L. 96–596, set out as a note under section 4961 of
this title.
Subchapter F—Tax Shelter Transactions
Sec.
4965.
Excise tax on certain tax-exempt entities en-
tering into prohibited tax shelter trans-
actions.
§ 4965. Excise tax on certain tax-exempt entities
entering into prohibited tax shelter trans-
actions
(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 en-
tity described in paragraph (1), (2), or (3) of
subsection (c) becomes a party to the trans-
action, 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 sub-
section (b)(1).
(B) Post-transaction determination
If any tax-exempt entity described in para-
graph (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 enti-
ty approves such entity as (or otherwise
causes such entity to be) a party to a prohib-
ited tax shelter transaction at any time dur-
ing 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 provi
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 4965
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