- 55 -
Excess 5,164,000
III. Excise Taxes Under Section 4958
Section 4958, the provisions of which are set forth in the
appendix to this report, was added to the Internal Revenue Code
by the Taxpayer Bill of Rights 2, Pub. L. 104-168, sec. 1311(a),
110 Stat. 1452, 1475 (1996).11 Section 4958 is patterned after
section 4941, which applies to acts of self-dealing between
private foundations and disqualified persons. Section 4958
applies to public charities and social welfare organizations
which are exempt from Federal income taxes.12
Section 4958 was enacted to impose penalty excise taxes as
“intermediate” sanctions in cases where organizations exempt from
tax under section 503(c) engage in “excess benefit transactions.”
H. Rept. 104-506, at 56 (1996), 1996-3 C.B. 49, 104. An excess
11 No regulations apply to the transactions at issue. The
Treasury Department published proposed regulations under sec.
4958 on Aug. 4, 1998, secs. 53.4958-1 through 53.4958-7, Proposed
Excise Tax Regs., 63 Fed. Reg. 41486 (Aug. 4, 1998), which were
revised and replaced by temporary regulations effective Jan. 10,
2001, secs. 53.4958-1T through 53.4958-8T, Temporary Excise Tax
Regs., 66 Fed. Reg. 2144 (Jan. 10, 2001). On Jan. 23, 2002, the
Treasury Department removed the temporary regulations and
published final regulations effective Jan. 23, 2002. Secs.
53.4958-0 through 53.4958-8, Excise Tax Regs., T.D. 8978, 2002-7
I.R.B. 500.
12 Sec. 4958 is generally effective for transactions
occurring after Sept. 13, 1995. At trial, the parties directed
considerable attention to the effective date of the transfers at
issue. On brief, however, petitioners did not argue that the
transfers were effective on or before Sept. 13, 1995, and we deem
that argument to have been abandoned.
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