26 U.S.C. § 504

Status after organization ceases to qualify for exemption under section 501(c)(3) because of substantial lobbying or because of political activities

Read at: OLRCuscode.house.gov CornellLII GovInfogovinfo.gov JustiaTitle 26 CasesGoogle Scholar

(a) General ruleAn organization which—(1) was exempt (or was determined by the Secretary to be exempt) from taxation under section 501(a) by reason of being an organization described in section 501(c)(3), and(2) is not an organization described in section 501(c)(3)—(A) by reason of carrying on propaganda, or otherwise attempting, to influence legislation, or(B) by reason of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office,shall not at any time thereafter be treated as an organization described in section 501(c)(4).(b) Regulations to prevent avoidance

The Secretary shall prescribe such regulations as may be necessary or appropriate to prevent the avoidance of subsection (a), including regulations relating to a direct or indirect transfer of all or part of the assets of an organization to an organization controlled (directly or indirectly) by the same person or persons who control the transferor organization.

Subsection (a) shall not apply to any organization which is a disqualified organization within the meaning of section 501(h)(5) (relating to churches, etc.) for the taxable year immediately preceding the first taxable year for which such organization is described in paragraph (2) of subsection (a).

(Added Pub. L. 94–455, title XIII, § 1307(a)(2), Oct. 4, 1976, 90 Stat. 1721; amended Pub. L. 100–203, title X, § 10711(b)(1), (2)(A), Dec. 22, 1987, 101 Stat. 1330–464.)Editorial NotesPrior Provisions

A prior section 504, acts Aug. 16, 1954, ch. 736, 68A Stat. 168; Oct. 22, 1968, Pub. L. 90–630, § 6(a), 82 Stat. 1330, related to denial of exemption, prior to repeal by Pub. L. 91–172, title I, § 101(j)(15), Dec. 30, 1969, 83 Stat. 527. For effective date of repeal, see section 101(k)(2)(B) of Pub. L. 91–172, set out as an Effective Date note under section 4940 of this title.

Amendments

1987—Pub. L. 100–203, § 10711(b)(2)(A), substituted “substantial lobbying or because of political activities” for “substantial lobbying” in section catchline.

Subsec. (a)(2). Pub. L. 100–203, § 10711(b)(1), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “is not an organization described in section 501(c)(3) by reason of carrying on propaganda, or otherwise attempting, to influence legislation,”.

Statutory Notes and Related SubsidiariesEffective Date of 1987 Amendment

Amendment by Pub. L. 100–203 applicable with respect to activities after Dec. 22, 1987, see section 10711(c) of Pub. L. 100–203, set out as a note under section 170 of this title.

Construction of Amendment

Pub. L. 94–455, title XIII, § 1307(a)(3), Oct. 4, 1976, 90 Stat. 1722, provided that: “It is the intent of Congress that enactment of this section [amending section 501 and enacting section 504 of this title] is not to be regarded in any way as an approval or disapproval of the decision of the Court of Appeals for the Tenth Circuit in Christian Echoes National Ministry, Inc. versus United States, 470 F.2d 849 (1972), or of the reasoning in any of the opinions leading to that decision.”

Notes of Decisions

Cited in 7 cases, 1950–2019 · leading case: The Erie Endowment v. United States, 316 F.2d 151 (3rd Cir. 1963).

Sort: Relevance Newest Treatment

The Erie Endowment v. United States, 316 F.2d 151 (3rd Cir. 1963). · cites it 2× “Exemption under § 501(c) 3) is to be denied to charitable organizations which accumulate sums “out of income during the taxable year or any prior taxable year and not actually paid out by the end of the taxable year — [which] (1) are unreasonable in amount or duration * * 26…”

Flores v. Town of Islip, 382 F. Supp. 3d 197 (E.D.N.Y 2019). “NYCC is an organization registered under 26 U.S.C. § 504 (c)(4). Its mission is to use "direct action to defend and uplift its members' communities and fight back against racist structures and economic policies that continue *208 to extract wealth from its members' communities…”

Rockefeller v. United States, 572 F. Supp. 9 (E.D. Ark. 1982). “See, 26 U.S.C. § 504 (Repealed 1969). However, Congress observed that there were many abuses in the enforcement and utilization of § 503.”

Jud. Watch, Inc. v. Rossotti, 317 F.3d 401 (4th Cir. 2003). “(requiring that qualifying organizations refrain from “carrying on propaganda, or otherwise attempting, to influence legislation .”

Genesee Valley Gas Co. v. Comm'r of Internal Revenue, 180 F.2d 41 (D.C. Cir. 1950). “Code, § 504, 26 U.S.C.A. § 504 . It is conceded, however, that income was undistributed during the years 1941 and 1942, and that for those years personal holding company surtax returns should have been filed and the tax paid.”

Int'l Bedaux Co., Inc. v. Comm'r of Internal Revenue, 204 F.2d 870 (2d Cir. 1953). “§ 504, 26 U.S. C. § 504, of $38,771.51, with a dividends paid credit of $39,200, which resulted in a showing of no “undistributed subchapter A net income.”

Erie Endowment v. United States, 202 F. Supp. 580 (W.D. Pa. 1961). “The resulting ruling held that the plaintiff was not such as described in Section 501(e) (4) and that it was such as described in Section 501(c) (3), but denying exemption for violation of the accumulation provision of Section 504, 26 U.S.C.A. § 504 . The Erie Endowment filed…”

Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.