26 U.S.C. § 4968 — Excise tax based on investment income of

Page 3054 TITLE 26—INTERNAL REVENUE CODE § 4967 (ii) any organization which is described in subparagraph (B) or (C) if— (I) the donor or any person designated by the donor for the purpose of advising with respect to distributions from a donor advised fund (and any related par- ties) directly or indirectly controls a supported organization (as defined in section 509(f)(3)) of such organization, or (II) the Secretary determines by regu- lations that a distribution to such orga- nization otherwise is inappropriate. (B) Type I and type II supporting organiza- tions An organization is described in this sub- paragraph if the organization meets the re- quirements of subparagraphs (A) and (C) of section 509(a)(3) and is— (i) operated, supervised, or controlled by one or more organizations described in paragraph (1) or (2) of section 509(a), or (ii) supervised or controlled in connec- tion with one or more such organizations. (C) Functionally integrated type III sup- porting organizations An organization is described in this sub- paragraph if the organization is a function- ally integrated type III supporting organiza- tion (as defined under section 4943(f)(5)(B)). (Added Pub. L. 109–280, title XII, § 1231(a), Aug. 17, 2006, 120 Stat. 1095.) 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. § 4967. Taxes on prohibited benefits (a) Imposition of taxes (1) On the donor, donor advisor, or related per- son 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 para- graph shall be paid by any person described in subsection (d) who advises as to the distribu- tion or who receives such a benefit as a result of the distribution. (2) On the fund management There is hereby imposed on the agreement of any fund manager to the making of a distribu- tion, 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) Exception 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) Special rules For purposes of subsection (a)— (1) Joint and several liability If more than one person is liable under para- graph (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) Limit for management With respect to any one distribution de- scribed in subsection (a), the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $10,000. (d) Person described A person is described in this subsection if such person is described in section 4958(f)(7) with re- spect to a donor advised fund. (Added Pub. L. 109–280, title XII, § 1231(a), Aug. 17, 2006, 120 Stat. 1097.) 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. Subchapter H—Excise Tax Based on Invest- ment Income of Private Colleges and Univer- sities Sec. 4968. Excise tax based on investment income of pri- vate colleges and universities. § 4968. Excise tax based on investment income of private colleges and universities (a) Tax imposed There is hereby imposed on each applicable educational institution for the taxable year a tax equal to 1.4 percent of the net investment income of such institution for the taxable year. (b) Applicable educational institution For purposes of this subchapter— (1) In general The term ‘‘applicable educational institu- tion’’ means an eligible educational institu- tion (as defined in section 25A(f)(2))— (A) which had at least 500 tuition-paying students during the preceding taxable year, (B) more than 50 percent of the tuition- paying students of which are located in the United States, (C) which is not described in the first sen- tence of section 511(a)(2)(B) (relating to State colleges and universities), and (D) the aggregate fair market value of the assets of which at the end of the preceding taxable year (other than those assets which are used directly in carrying out the institu- tion’s exempt purpose) is at least $500,000 per student of the institution. (2) Students For purposes of paragraph (1), the number of students of an institution (including for pur- Page 3055 TITLE 26—INTERNAL REVENUE CODE § 4968 1 Section repealed by Pub. L. 105–34 without corresponding amendment of chapter analysis. poses of determining the number of students at a particular location) shall be based on the daily average number of full-time students at- tending such institution (with part-time stu- dents taken into account on a full-time stu- dent equivalent basis). (c) Net investment income For purposes of this section, net investment income shall be determined under rules similar to the rules of section 4940(c). (d) Assets and net investment income of related organizations (1) In general For purposes of subsections (b)(1)(C) and (c), assets and net investment income of any re- lated organization with respect to an edu- cational institution shall be treated as assets and net investment income, respectively, of the educational institution, except that— (A) no such amount shall be taken into ac- count with respect to more than 1 edu- cational institution, and (B) unless such organization is controlled by such institution or is described in section 509(a)(3) with respect to such institution for the taxable year, assets and net investment income which are not intended or available for the use or benefit of the educational in- stitution shall not be taken into account. (2) Related organization For purposes of this subsection, the term ‘‘related organization’’ means, with respect to an educational institution, any organization which— (A) controls, or is controlled by, such in- stitution, (B) is controlled by 1 or more persons which also control such institution, or (C) is a supported organization (as defined in section 509(f)(3)), or an organization de- scribed in section 509(a)(3), during the tax- able year with respect to such institution. (Added Pub. L. 115–97, title I, § 13701(a), Dec. 22, 2017, 131 Stat. 2167; amended Pub. L. 115–123, div. D, title II, § 41109(a), Feb. 9, 2018, 132 Stat. 159.) Editorial Notes AMENDMENTS 2018—Subsec. (b)(1)(A). Pub. L. 115–123, § 41109(a)(1), in- serted ‘‘tuition-paying’’ after ‘‘500’’. Subsec. (b)(1)(B). Pub. L. 115–123, § 41109(a)(2), inserted ‘‘tuition-paying’’ after ‘‘50 percent of the’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2018 AMENDMENT Pub. L. 115–123, div. D, title II, § 41109(b), Feb. 9, 2018, 132 Stat. 159, provided that: ‘‘The amendments made by this section [amending this section] shall apply to tax- able years beginning after December 31, 2017.’’ EFFECTIVE DATE Pub. L. 115–97, title I, § 13701(c), Dec. 22, 2017, 131 Stat. 2168, provided that: ‘‘The amendments made by this section [enacting this section] shall apply to taxable years beginning after December 31, 2017.’’ CHAPTER 43—QUALIFIED PENSION, ETC., PLANS Sec. 4971. Taxes on failure to meet minimum funding standards. Sec. 4972. Tax on nondeductible contributions to quali- fied employer plans. 4973. Tax on excess contributions to certain tax-fa- vored accounts and annuities. 4974. Excise tax on certain accumulations in quali- fied retirement plans. 4975. Tax on prohibited transactions. 4976. Taxes with respect to funded welfare benefit plans. 4977. Tax on certain fringe benefits provided by an employer. 4978. Tax on certain dispositions by employee stock ownership plans and certain coopera- tives. [4978A, 4978B. Repealed.] 4979. Tax on certain excess contributions. 4979A. Tax on certain prohibited allocations of qualified securities. 4980. Tax on reversion of qualified plan assets to employer. 4980A. Tax on excess distributions from qualified re- tirement plans.1 4980B. Failure to satisfy continuation coverage re- quirements of group health plans. 4980C. Requirements for issuers of qualified long- term care insurance contracts. 4980D. Failure to meet certain group health plan re- quirements. 4980E. Failure of employer to make comparable Ar- cher MSA contributions. 4980F. Failure of applicable plans reducing benefit accruals to satisfy notice requirements. 4980G. Failure of employer to make comparable health savings account contributions. 4980H. Shared responsibility for employers regarding health coverage. [4980I. Repealed.] Editorial Notes AMENDMENTS 2019—Pub. L. 116–94, div. N, title I, § 503(b)(3), Dec. 20, 2019, 133 Stat. 3120, struck out item 4980I ‘‘Excise tax on high cost employer-sponsored health coverage’’. 2010—Pub. L. 111–148, title I, § 1513(b), title IX, § 9001(b), Mar. 23, 2010, 124 Stat. 256, 853, added items 4980H and 4980I. 2003—Pub. L. 108–173, title XII, § 1201(d)(4)(B), Dec. 8, 2003, 117 Stat. 2478, added item 4980G. 2002—Pub. L. 107–147, title IV, § 417(17)(B), Mar. 9, 2002, 116 Stat. 56, substituted ‘‘Archer MSA contributions’’ for ‘‘medical savings account contributions’’ in item 4980E. 2001—Pub. L. 107–16, title VI, § 659(a)(2), June 7, 2001, 115 Stat. 139, added item 4980F. 1998—Pub. L. 105–206, title VI, § 6023(18)(B), July 22, 1998, 112 Stat. 825, substituted ‘‘certain tax-favored ac- counts and annuities’’ for ‘‘individual retirement ac- counts, certain section 403(b) contracts, and certain in- dividual retirement annuities’’ in item 4973. 1996—Pub. L. 104–191, title III, §§ 301(c)(4)(B), 326(b), title IV, § 402(b), Aug. 21, 1996, 110 Stat. 2050, 2066, 2087, added items 4980C, 4980D, and 4980E. Pub. L. 104–188, title I, § 1602(b)(5)(B), Aug. 20, 1996, 110 Stat. 1834, struck out item 4978B ‘‘Tax on disposition of employer securities to which section 133 applied’’. 1989—Pub. L. 101–239, title VII, §§ 7301(d)(2), 7304(a)(2)(C)(iii), Dec. 19, 1989, 103 Stat. 2348, 2353, struck out item 4978A ‘‘Tax on certain dispositions of em- ployer securities to which section 2057 applied’’ and added item 4978B. 1988—Pub. L. 100–647, title I, § 1011A(g)(1)(B), title III, § 3011(c), Nov. 10, 1988, 102 Stat. 3479, 3625, redesignated item 4981A as 4980A and added item 4980B. 1987—Pub. L. 100–203, title X, § 10413(b)(2), Dec. 22, 1987, 101 Stat. 1330–438, added item 4978A.