I.R.C. § 4911(a) Tax Imposed
I.R.C. § 4911(a)(1) In General —
There is hereby imposed on the excess lobbying expenditures of any organization
to which this section applies a tax equal to 25 percent of the amount of the excess
lobbying expenditures for the taxable year.
I.R.C. § 4911(a)(2) Organizations To Which This Section Applies —
This section applies to any organization with respect to which an election under
section 501(h)[sic][(i)] (relating to lobbying expenditures by
public charities) is in effect for the taxable year.
I.R.C. § 4911(b) Excess Lobbying Expenditures —
For purposes of this section, the term “excess lobbying expenditures” means, for
a taxable year, the greater of—
I.R.C. § 4911(b)(1) —
the amount by which the lobbying expenditures made by the organization during the
taxable year exceed the lobbying nontaxable amount for such organization for such
taxable year, or
I.R.C. § 4911(b)(2) —
the amount by which the grass roots expenditures made by the organization during
the taxable year exceed the grass roots nontaxable amount for such organization for
such taxable year.
I.R.C. § 4911(c) Definitions —
For purposes of this section—
I.R.C. § 4911(c)(1) Lobbying Expenditures —
The term “lobbying expenditures” means expenditures for the purpose of influencing
legislation (as defined in subsection
(d)).
I.R.C. § 4911(c)(2) Lobbying Nontaxable Amount —
The lobbying nontaxable amount for any organization for any taxable year is the
lesser of (A) $1,000,000 or (B) the amount determined under the following table:
If the exempt purpose The lobbying nontaxable
expenditures are-- amount is--
Not over $500,000.................20 percent of the exempt
purpose expenditures.
Over $500,000 but not ............$100,000, plus 15 percent
over $1,000,000 of the excess of the exempt
purpose expenditures over
$500,000.
Over $1,000,000 but not ..........$175,000 plus 10 percent of
over $1,500,000 the excess of the exempt
purpose expenditures over
$1,000,000.
Over $1,500,000...................$225,000 plus 5 percent of
the excess of the exempt
purpose expenditures over
$1,500,000.
I.R.C. § 4911(c)(3) Grass Roots Expenditures —
The term “grass roots expenditures” means expenditures for the purpose of influencing
legislation (as defined in subsection
(d) without regard to paragraph (1)(B) thereof).
I.R.C. § 4911(c)(4) Grass Roots Nontaxable Amount —
The grass roots nontaxable amount for any organization for any taxable year is 25
percent of the lobbying nontaxable amount
(determined under paragraph (2)) for such organization for such taxable year.
I.R.C. § 4911(d) Influencing Legislation
I.R.C. § 4911(d)(1) General Rule —
Except as otherwise provided in paragraph (2), for purposes of this section, the
term “influencing legislation” means—
I.R.C. § 4911(d)(1)(A) —
any attempt to influence any legislation through an attempt to affect the opinions
of the general public or any segment thereof, and
I.R.C. § 4911(d)(1)(B) —
any attempt to influence any legislation through communication with any member or
employee of a legislative body, or with any government official or employee who may
participate in the formulation of the legislation.
I.R.C. § 4911(d)(2) Exceptions —
For purposes of this section, the term “influencing legislation”, with respect to
an organization, does not include—
I.R.C. § 4911(d)(2)(A) —
making available the results of nonpartisan analysis, study, or research;
I.R.C. § 4911(d)(2)(B) —
providing of technical advice or assistance (where such advice would otherwise constitute
the influencing of legislation) to a governmental body or to a committee or other
subdivision thereof in response to a written request by such body or subdivision,
as the case may be;
I.R.C. § 4911(d)(2)(C) —
appearances before, or communications to, any legislative body with respect to a
possible decision of such body which might affect the existence of the organization,
its powers and duties, tax-exempt status, or the deduction of contributions to the
organization;
I.R.C. § 4911(d)(2)(D) —
communications between the organization and its bona fide members with respect to
legislation or proposed legislation of direct interest to the organization and such
members, other than communications described in paragraph (3); and
I.R.C. § 4911(d)(2)(E) —
any communication with a governmental official or employee, other than—
I.R.C. § 4911(d)(2)(E)(i) —
a communication with a member or employee of a legislative body (where such communication
would otherwise constitute the influencing of legislation), or
I.R.C. § 4911(d)(2)(E)(ii) —
a communication the principal purpose of which is to influence legislation.
I.R.C. § 4911(d)(3) Communications With Members
I.R.C. § 4911(d)(3)(A) —
A communication between an organization and any bona fide member of such organization
to directly encourage such member to communicate as provided in paragraph (1)(B)
shall be treated as a communication described in paragraph (1)(B).
I.R.C. § 4911(d)(3)(B) —
A communication between an organization and any bona fide member of such organization
to directly encourage such member to urge persons other than members to communicate
as provided in either subparagraph (A) or subparagraph (B) of paragraph
(1) shall be treated as a communication described in paragraph (1)(A).
I.R.C. § 4911(e) Other Definitions And Special Rules —
For purposes of this section—
I.R.C. § 4911(e)(1) Exempt Purpose Expenditures
I.R.C. § 4911(e)(1)(A) In General —
The term “exempt purpose expenditures” means, with respect to any organization for
any taxable year, the total of the amounts paid or incurred by such organization
to accomplish purposes described in section 170(c)(2)(B) (relating to religious, charitable, educational, etc., purposes).
I.R.C. § 4911(e)(1)(B) Certain Amounts Included —
The term “exempt purpose expenditures” includes—
I.R.C. § 4911(e)(1)(B)(i) —
administrative expenses paid or incurred for purposes described in section 170(c)(2)(B), and
I.R.C. § 4911(e)(1)(B)(ii) —
amounts paid or incurred for the purpose of influencing legislation (whether or not
for purposes described in section 170(c)(2)(B)).
I.R.C. § 4911(e)(1)(C) Certain Amounts Excluded —
The term “exempt purpose expenditures” does not include amounts paid or incurred
to or for—
I.R.C. § 4911(e)(1)(C)(i) —
a separate fundraising unit of such organization, or
I.R.C. § 4911(e)(1)(C)(ii) —
one or more other organizations, if such amounts are paid or incurred primarily for
fundraising.
I.R.C. § 4911(e)(2) Legislation —
The term “legislation” includes action with respect to Acts, bills, resolutions,
or similar items by the Congress, any State legislature, any local council, or similar
governing body, or by the public in a referendum, initiative, constitutional amendment,
or similar procedure.
I.R.C. § 4911(e)(3) Action —
The term “action” is limited to the introduction, amendment, enactment, defeat,
or repeal of Acts, bills, resolutions, or similar items.
I.R.C. § 4911(e)(4) Depreciation, Etc., Treated As Expenditures —
In computing expenditures paid or incurred for the purpose of influencing legislation
(within the meaning of subsection
(b)(1) or (b)(2)) or exempt purpose expenditures (as defined in paragraph
(1)), amounts properly chargeable to capital account shall not be taken into account.
There shall be taken into account a reasonable allowance for exhaustion, wear and
tear, obsolescence, or amortization. Such allowance shall be computed only on the
basis of the straight-line method of depreciation. For purposes of this section,
a determination of whether an amount is properly chargeable to capital account shall
be made on the basis of the principles that apply under subtitle A to amounts which
are paid or incurred in a trade or business.
I.R.C. § 4911(f) Affiliated Organizations
I.R.C. § 4911(f)(1) In General —
Except as otherwise provided in paragraph (4), if for a taxable year two or more
organizations described in section 501(c)(3) are members of an affiliated group of organizations as defined in paragraph (2),
and an election under section 501(h) is effective for at least one such organization for such year, then—
I.R.C. § 4911(f)(1)(A) —
the determination as to whether excess lobbying expenditures have been made and the
determination as to whether the expenditure limits of section 501(h)(1) have been exceeded shall be made as though such affiliated group is one organization,
I.R.C. § 4911(f)(1)(B) —
if such group has excess lobbying expenditures, each such organization as to which
an election under section 501(h) is
effective for such year shall be treated as an organization which has excess lobbying
expenditures in an amount which equals such organization's
proportionate share of such group's excess lobbying expenditures,
I.R.C. § 4911(f)(1)(C) —
if the expenditure limits of section 501(h)(1) are exceeded, each such organization as to which an election under section 501(h) is effective for such year shall be treated as an organization which is not described
in section 501(c)(3) by reason of the application of 501(h), and
I.R.C. § 4911(f)(1)(D) —
subparagraphs (C) and (D) of subsection
(d)(2), paragraph (3) or subsection (d), and clause (i) of subsection
(e)(1)(C) shall be applied as if such affiliated group were one organization.
I.R.C. § 4911(f)(2) Definition Of Affiliation —
For purposes of paragraph (1), two organizations are members of an affiliated group
of organizations but only if—
I.R.C. § 4911(f)(2)(A) —
the governing instrument of one such organization requires it to be bound by decisions
of the other organization on legislative issues, or
I.R.C. § 4911(f)(2)(B) —
the governing board of one such organization includes persons who—
I.R.C. § 4911(f)(2)(B)(i) —
are specifically designated representatives of another such organization or are members
of the governing board, officers, or paid executive staff members of such other organization,
and
I.R.C. § 4911(f)(2)(B)(ii) —
by aggregating their votes, have sufficient voting power to cause or prevent action
on legislative issues by the first such organization.
I.R.C. § 4911(f)(3) Different Taxable Years —
If members of an affiliated group of organizations have different taxable years,
their expenditures shall be computed for purposes of this section in a manner to
be prescribed by regulations promulgated by the Secretary.
I.R.C. § 4911(f)(4) Limited Control —
If two or more organizations are members of an affiliated group of organizations
(as defined in paragraph (2) without regard to subparagraph (B) thereof), no two
members of such affiliated group are affiliated (as defined in paragraph (2) without
regard to subparagraph
(A) thereof), and the governing instrument of no such organization requires it to
be bound by decisions of any of the other such organizations on legislative issues
other than as to action with respect to Acts, bills, resolutions, or similar items
by the Congress, then—
I.R.C. § 4911(f)(4)(A) —
in the case of any organization whose decisions bind one or more members of such
affiliated group, directly or indirectly, the determination as to whether such organization
has paid or incurred excess lobbying expenditures and the determination as to whether
such organization has exceeded the expenditure limits of section 501(h)(1)
shall be made as though such organization has paid or incurred those
amounts paid or incurred by such members of such affiliated group to influence legislation
with respect to Acts, bills, resolutions, or similar items by the Congress, and
I.R.C. § 4911(f)(4)(B) —
in the case of any organization to which subparagraph (A) does not apply, but which
is a member of such affiliated group, the determination as to whether such organization
has paid or incurred excess lobbying expenditures and the determination as to whether
such organization has exceeded the expenditure limits of section 501(h)(1)
shall be made as though such organization is not a member of such
affiliated group.
(Added Pub. L. 94-455, title XIII, 1307(b), Oct. 4,
1976, 90 Stat. 1723, and amended Pub. L. 95-600, title VII, 703(g)(1),
Nov. 6, 1978, 92 Stat. 2940.)
BACKGROUND NOTES
Amendments to Chapter
1987--Pub. L. 100-203, title X, 10714(d), Dec. 22, 1987, 101 Stat. 1330-471, added
item 4912.
AMENDMENTS
1978--Subsec. (c)(2). Pub. L. 95-600 substituted “exempt purpose expenditures” for “proposed
expenditures” in heading of table.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by Pub. L. 95-600 effective Oct. 4, 1976, see section 703(r) of Pub. L.
95-600, set out as a note under section 46 of this title.
PRIOR PROVISIONS
The provisions of a prior chapter 41, Interest Equalization Tax, were set out as follows:
Subchapter A, Acquisitions of foreign stock and debt obligations, comprising sections
4911 to 4920.
Subchapter B, Acquisition by commercial banks, comprising section 4931.
Prior sections 4911 to 4922 and 4931 were repealed by Pub. L. 94-455, 1904(a)(21)(A),
Oct. 4, 1976, 90 Stat. 1814, effective with respect to acquisitions of stock and debt
obligations made after June 30, 1974. See section 1904(a)(21)(B), set out as an Effective
Date of Repeal of Prior Provisions note below.
The subject matter of the prior provisions is as follows:
Section 4911, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat. 809, and amended
Pub. L. 89-243, 2, 3(a)(1), (b), Oct. 9, 1965, 79 Stat. 954;
Pub. L. 90-59, 2, 3(a), July 31, 1967, 81 Stat. 145; Pub. L. 91-50, Aug. 2, 1969,
83 Stat. 86; Pub. L. 91-65, 2, Aug. 25, 1969, 83 Stat. 105; Pub. L. 91-128, 2, 3,
Nov. 26, 1969, 83 Stat. 261, 262; Pub. L. 92-9, 2, Apr. 1, 1971, 85 Stat. 13; Pub.
L. 93-17, 2, Apr. 10, 1973, 87 Stat. 12, imposed a tax on each acquisition by a United
States person of stock of a foreign issuer or a debt obligation of a foreign obligor,
if such obligation had a period remaining to maturity of 1 year or more and provided
for modification of tax rate by executive order, rate tables, rates during interim
period, rules and regulations, persons liable for tax, and termination date, that
no tax shall be imposed on any acquisition made after June 30, 1974.
Section 4912, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat. 810, and amended
Pub. L. 89-243, 4(m)(3), Oct. 9, 1965, 79 Stat. 963; Pub. L. 90-59, 5(a)(1), July
31, 1967, 81 Stat. 157; Pub. L. 91-128, 4(a)(1), Nov. 26, 1969, 83 Stat. 263; Pub.
L. 92-9, 3(a)(1), Apr. 1, 1971, 85 Stat. 14; Pub. L. 93-17, 3(e), Apr. 10, 1973, 87
Stat. 17, defined term “acquisition” and provided special rules to be applied to certain
transfers to foreign trusts, foreign corporations and partnerships, foreign branches,
acquisitions from domestic corporations or partnerships formed or availed of to obtain
funds for foreign issuer or obligor, and reorganization exchanges.
Section 4913, added Pub. L. 88-563, 2(a), Sept. 12, 1964, 78 Stat. 812, imposed general
and special limitations on tax on certain acquisitions relating to stock or debt obligations
acquired by surrender, extensions, renewals, and exercises, transfers which are deemed
acquisitions and acquisitions by certain domestic corporations and partnerships.
Section 4914, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat. 813, and amended
Pub. L. 89-44, title IV, 405(d), June 21, 1965, 79 Stat. 149;
Pub. L. 89-243, 3(a)(2), (3), 4(a)(1)-(3), (b)-(f)(2), (g), (h)(1), Oct. 9, 1965,
79 Stat. 954, 956-960; Pub. L. 89-809, title II, 213(a),
(b)(1), 214(a), Nov. 13, 1966, 80 Stat. 1585; Pub. L. 90-59, 5(b)(1),
(c)(1), (2), (d)(1), (e)(1), (f)(1), July 31, 1967, 81 Stat. 157, 158; Pub. L. 91-128,
4(b)(1), (c)(1), (2), (i)(1), (2), Nov. 26, 1969, 83 Stat. 263, 264, 268; Pub. L.
92-9, 3(b)(1), (2), (c)(1), (d)(1),
(2), Apr. 1, 1971, 85 Stat. 15-17; Pub. L. 93-17, 3(f), Apr. 10, 1973, 87 Stat. 17,
provided exclusions for certain acquisitions including:
transactions not considered acquisitions; export credit, etc., transactions;
loans to assure raw materials sources; acquisitions by insurance companies doing business
in foreign countries; acquisitions by certain tax-exempt organizations such as labor,
fraternal, and similar organizations having foreign branches or chapters; sale or
liquidation of foreign subsidiary or sale of foreign branch; certain debt obligations
secured by United States mortgages, etc.; acquisitions of stock of foreign issuers
investing exclusively in the United States, and loss of entitlement to exclusion in
case of certain subsequent transfers or acquisitions of stock or debt obligations
in connection with nationalization, expropriation, etc.
Section 4915, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat. 824, and amended
Pub. L. 90-59, 5(h)(3), July 31, 1967, 81 Stat. 163; Pub. L. 91-128, 4(e)(3), Nov.
26, 1969, 83 Stat. 267; Pub. L. 92-9, 3(e)(1), Apr. 1, 1971, 85 Stat. 17; Pub. L.
93-17, 3(g)(1), Apr. 10, 1973, 87 Stat. 18, related to exclusions for direct investments
and provided for excluded acquisitions, overpayment with respect to certain taxable
acquisitions, special rule for government-controlled enterprises, exception for foreign
corporations or partnerships formed or availed of for tax avoidance, exception for
acquisitions made with intent to sell to United States persons, and special rule for
investments in certain lending and financial corporations.
Section 4916, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat. 827, and amended
Pub. L. 89-243, 4(i), Oct 9, 1965, 79 Stat. 960; Pub. L. 90-59, 5(g)(1), July 31,
1967, 81 Stat. 159; Pub. L. 92-9, 3(b)(3), Apr. 1, 1971, 85 Stat. 16; Pub. L. 93-17,
3(b), Apr. 10, 1973, 87 Stat. 13, related to exclusion for investment in less developed
countries, provided special rules applicable to such investments, subsequent tax liability
in certain cases, the repeal of exclusion for issues after Jan. 29, 1973, in the case
of less developed country shipping companies, and defined term “less developed country”.
Section 4917, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat. 830, and amended
Pub. L. 89-243, 4(j), (k), Oct. 9, 1965, 79 Stat. 960; Pub. L. 90-59, 5(h)(1), July
31, 1967, 81 Stat. 159, related to exclusion for original or new issues where required
for international monetary stability.
Section 4918, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat. 831, and amended
Pub. L. 89-809, title II, 213(b)(2), Nov. 13, 1966, 80 Stat. 1585; Pub. L. 90-59,
4(a), July 31, 1967, 81 Stat. 148; Pub. L. 90-73, 2(a)-(c), Aug. 29, 1967, 81 Stat.
175, 176; Pub. L. 93-17, 3(h)(1), Apr. 10, 1973, 87 Stat. 18, related to exemption
for prior American ownership and compliance, proof of such ownership or compliance,
issuance of IET clean confirmation by participating firm, sales effected by participating
firms in connection with exempt acquisitions, filing of transition inventory, transfer
of custody certificate, certain debt obligations arising out of loans to assure raw
material sources, regulations, and definitions of “participating firm,” and “participating
custodian”.
Section 4919, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat. 833, and amended
Pub. L. 89-243, 4(1), Oct. 9, 1965, 79 Stat. 961; Pub. L. 90-59, 5(i)(1), (2), July
31, 1967, 81 Stat. 159, 160; Pub. L. 91-128, 4(d)(1), Nov. 26, 1969, 83 Stat. 264;
Pub. L. 92-9, 3(f)(1), (2), Apr. 1, 1971, 85 Stat. 20; Pub. L. 93-17, 3(i)(1), Apr.
10, 1973, 87 Stat. 19, related to credit or refund on sales by underwriters and dealers
to foreign persons, evidence needed to support such credit or refund, and defined
terms “underwriter”, “dealer”, and “persons other than United States persons”.
Section 4920, added Pub. L. 88-563, 2(a), Sept. 2, 1964, 78 Stat. 835, and amended
Pub. L. 89-243, 3(a)(4), 4(m)(1), (2)(A), (n), Oct. 9, 1965, 79 Stat. 954, 961-963;
Pub. L. 90-59, 4(f), 5(j)-(k)(2), July 31, 1967, 81 Stat. 156, 160-163; Pub. L. 91-128,
4(e)(1), (2), (i)(3), Nov. 26, 1969, 83 Stat. 264, 269; Pub. L. 92-9, 3(e)(2), (3),
(g)(1),
(h)(1), Apr. 1, 1971, 85 Stat. 18, 20, 21; Pub. L. 93-17, 3(g)(2)(j), Apr. 10, 1973,
87 Stat. 18, 19, related to definitions and special rules.
Section 4921, added Pub. L. 92-9, 3(i)(1), Apr. 1, 1971, 85 Stat. 21, related to standby
authority of the President to impose tax on debt obligations of foreign obligors having
a period remaining to maturity of less than 1 year and provided that such authority
may be extended by Executive order.
Section 4922, added Pub. L. 93-17, 3(d)(1), Apr. 10, 1973, 87 Stat. 15, related to
exclusion for certain issues to finance new or additional direct investment in the
United States, qualification for exclusion, and loss of entitlement to exclusion by
subsequent noncompliance.
Section 4931, added Pub. L 88-563, 2(a), Sept. 2, 1964, 78 Stat. 839, and amended
Pub. L. 89-243, 3(e)(1), 4(a)(4), (o), Oct. 9, 1965, 79 Stat. 955, 956, 964; Pub.
L. 89-809, title II, 215(a), Nov. 13, 1966, 80 Stat. 1587, Pub. L. 90-59, 3(b)(1),
July 31, 1967, 81 Stat. 145, related to the standby authority of the President to
impose, by Executive order, tax on acquisitions by commercial banks of debt obligations
of foreign obligors, made provision for exclusions concerning export loans, foreign
currency loans by foreign branches, preexisting commitments, and provided for prescription
of regulations by the Secretary.
Effective Date of Repeal of Prior Provisions
Section 1904(a)(21)(B) of Pub. L. 94-455 provided that: “The repeal made by subparagraph
(A) [repealing sections 4911 through 4922 and section 4931 of this title] shall apply
with respect to acquisitions of stock and debt obligations made after June 30, 1974.”
