I

104TH CONGRESS

1ST SESSION H. R. 2316

To amend the Internal Revenue Code of 1986 to impose an excise tax

on amounts of private excess benefits from certain charitable organizations, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 12, 1995

Mr. STARK (for himself and Mr. HOUGHTON) introduced the following bill;

which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to impose

an excise tax on amounts of private excess benefits from

certain charitable organizations, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Exempt Organization Reform Act of 1995’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment

9 to, or repeal of, a section or other provision, the reference
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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986.

3 SEC. 2. EXCISE TAXES FOR FAILURE BY CERTAIN CHARI4 TABLE ORGANIZATIONS TO MEET CERTAIN

5 QUALIFICATION REQUIREMENTS.

6 (a) IN GENERAL.—Chapter 42 (relating to private

7 foundations and certain other tax-exempt organizations)

8 is amended by redesignating subchapter D as subchapter

9 E and by inserting after subchapter C the following new

10 subchapter:

11 ‘‘Subchapter D—Failure By Certain

12 Charitable Organizations To

13 Meet Certain Qualification Re14 quirements

‘‘Sec. 4958. Taxes on excess benefit transactions.

15 ‘‘SEC. 4958. TAXES ON EXCESS BENEFIT TRANSACTIONS.

16 ‘‘(a) INITIAL TAXES.—

17 ‘‘(1) ON THE DISQUALIFIED PERSON.—There is

18 hereby imposed on each excess benefit transaction a

19 tax equal to 25 percent of the excess benefit. The

20 tax imposed by this paragraph shall be paid by any

21 disqualified person referred to in subsection (f)(1)

22 with respect to such transaction.

23 ‘‘(2) ON THE MANAGEMENT.—In any case in

24 which a tax is imposed by paragraph (1), there is
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1 hereby imposed on any organization manager who

2 participates in the excess benefit transaction, know3 ing that it is such a transaction, a tax equal to 10

4 percent of the excess benefit, unless such participa5 tion is not willful and is due to reasonable cause.

6 The tax imposed by this paragraph shall be paid by

7 any organization manager who participated in the

8 excess benefit transaction.

9 ‘‘(b) ADDITIONAL TAX ON THE DISQUALIFIED PER10 SON.—In any case in which an initial tax is imposed by

11 subsection (a)(1) on an excess benefit transaction and the

12 excess benefit involved in such transaction is not corrected

13 within the taxable period, there is hereby imposed a tax

14 equal to 200 percent of the excess benefit involved. The

15 tax imposed by this subsection shall be paid by any dis16 qualified person referred to in subsection (f)(1) with re17 spect to such transaction.

18 ‘‘(c) EXCESS BENEFIT TRANSACTION; EXCESS BEN19 EFIT.—For purposes of this section—

20 ‘‘(1) EXCESS BENEFIT TRANSACTION.—

21 ‘‘(A) IN GENERAL.—The term ‘excess ben22 efit transaction’ means any transaction in

23 which an economic benefit is provided by an ap24 plicable tax-exempt organization to or for the

25 use of any disqualified person if the value of the
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1 economic benefit provided exceeds the value of

2 the consideration (including the performance of

3 services) received for providing such benefit.

4 ‘‘(B) LOANS AND CERTAIN PRIVATE

5 INUREMENT INCLUDED.—The term ‘excess ben6 efit transaction’ includes—

7 ‘‘(i) any loan of money or other exten8 sion of credit by an applicable tax-exempt

9 organization to or for the use of a disquali10 fied person described in subsection

11 (f)(1)(A)(i), and

12 ‘‘(ii) any transaction in which the

13 amount of any economic benefit provided

14 to or for the use of a disqualified person

15 is determined in whole or in part by the

16 gross or net revenues of 1 or more activi17 ties of the organization but only if such

18 transaction results in inurement not per19 mitted under paragraph (3) or (4) of sec20 tion 501(c), as the case may be.

21 ‘‘(2) EXCESS BENEFIT.—

22 ‘‘(A) IN GENERAL.—Except as provided in

23 subparagraph (B), the term ‘excess benefit’

24 means the excess referred to in paragraph

25 (1)(A).
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1 ‘‘(B) LOANS AND PRIVATE INUREMENT IN2 CLUDED.—The term ‘excess benefit’ means—

3 ‘‘(i) in the case of a loan or extension

4 of credit described in paragraph (1)(B)(i),

5 the amount of the loan or the credit ex6 tended, and

7 ‘‘(ii) in the case of a transaction de8 scribed in paragraph (1)(B)(ii), the

9 amount of the inurement.

10 ‘‘(d) SPECIAL RULES.—For purposes of this sec11 tion—

12 ‘‘(1) JOINT AND SEVERAL LIABILITY.—If more

13 than 1 person is liable for any tax imposed by sub14 section (a) or subsection (b), all such persons shall

15 be jointly and severally liable for such tax.

16 ‘‘(2) LIMIT FOR MANAGEMENT.—With respect

17 to any 1 excess benefit transaction, the maximum

18 amount of the tax imposed by subsection (a)(2) shall

19 not exceed $10,000.

20 ‘‘(e) APPLICABLE TAX-EXEMPT ORGANIZATION.—

21 For purposes of this subchapter, the term ‘applicable tax22 exempt organization’ means any organization which (with23 out regard to any excess benefit) would be described in

24 paragraph (3) or (4) of section 501(c) and exempt from
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1 tax under section 501(a). Such term shall not include a

2 private foundation (as defined in section 509(a)).

3 ‘‘(f) OTHER DEFINITIONS.—For purposes of this sec4 tion—

5 ‘‘(1) DISQUALIFIED PERSON.—The term ‘dis6 qualified person’ means, with respect to any trans7 action—

8 ‘‘(A) any person who was, at any time dur9 ing the 5-year period ending on the date of

10 such transaction—

11 ‘‘(i) an organization manager, or

12 ‘‘(ii) an individual (other than an or13 ganization manager) in a position to exer14 cise substantial influence over the affairs

15 of the organization,

16 ‘‘(B) a member of the family of an individ17 ual described in subparagraph (A), and

18 ‘‘(C) a 35-percent controlled entity.

19 ‘‘(2) ORGANIZATION MANAGER.—The term ‘or20 ganization manager’ means, with respect to any ap21 plicable tax-exempt organization, any officer, direc22 tor, or trustee of such organization (or any individ23 ual having powers or responsibilities similar to those

24 of officers, directors, or trustees of the organiza25 tion).
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1 ‘‘(3) 35-PERCENT CONTROLLED ENTITY.—

2 ‘‘(A) IN GENERAL.—The term ‘35-percent

3 controlled entity’ means—

4 ‘‘(i) a corporation in which persons

5 described in subparagraph (A) or (B) of

6 paragraph (1) own more than 35 percent

7 of the total combined voting power,

8 ‘‘(ii) a partnership in which such per9 sons own more than 35 percent of the

10 profits interest, and

11 ‘‘(iii) a trust or estate in which such

12 persons own more than 35 percent of the

13 beneficial interest.

14 ‘‘(B) CONSTRUCTIVE OWNERSHIP

15 RULES.—Rules similar to the rules of para16 graphs (3) and (4) of section 4946(a) shall

17 apply for purposes of this paragraph.

18 ‘‘(4) FAMILY MEMBERS.—The members of an

19 individual’s family shall be determined under section

20 4946(d); except that such members also shall in21 clude the brothers and sisters (whether by the whole

22 or half blood) of the individual and their spouses.

23 ‘‘(5) TAXABLE PERIOD.—The term ‘taxable pe24 riod’ means, with respect to any excess benefit

25 transaction, the period beginning with the date on
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1 which the transaction occurs and ending on the ear2 liest of—

3 ‘‘(A) the date of mailing a notice of defi4 ciency under section 6212 with respect to the

5 tax imposed by subsection (a)(1), or

6 ‘‘(B) the date on which the tax imposed by

7 subsection (a)(1) is assessed.

8 ‘‘(6) CORRECTION.—The terms ‘correction’ and

9 ‘correct’ mean, with respect to any excess benefit

10 transaction, undoing the excess benefit to the extent

11 possible, establishing safeguards to prevent future

12 such excess benefit, and where fully undoing the ex13 cess benefit is not possible, such additional correc14 tive action as is prescribed by the Secretary by regu15 lations.

16 ‘‘(g) TREATMENT OF PREVIOUSLY EXEMPT ORGANI17 ZATIONS.—

18 ‘‘(1) IN GENERAL.—For purposes of this sec19 tion, the status of any organization as an applicable

20 tax-exempt organization shall be terminated only

21 if—

22 ‘‘(A)(i) such organization notifies the Sec23 retary (at such time and in such manner as the

24 Secretary may by regulations prescribe) of its

25 intent to accomplish such termination, or
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1 ‘‘(ii) there is a final determination by the

2 Secretary that such status has terminated, and

3 ‘‘(B)(i) such organization pays the tax im4 posed by paragraph (2) (or any portion not

5 abated pursuant to paragraph (3)), or

6 ‘‘(ii) the entire amount of such tax is

7 abated pursuant to paragraph (3).

8 ‘‘(2) IMPOSITION OF TAX.—There is hereby im9 posed on each organization referred to in paragraph

10 (1) a tax equal to the lesser of—

11 ‘‘(A) the amount which the organization

12 substantiates by adequate records or other cor13 roborating evidence as the aggregate tax benefit

14 resulting from its exemption from tax under

15 section 501(a), or

16 ‘‘(B) the value of the net assets of such or17 ganization.

18 ‘‘(3) ABATEMENT OF TAX.—The Secretary may

19 abate the unpaid portion of the assessment of any

20 tax imposed by paragraph (2), or any liability in re21 spect thereof, if the applicable tax-exempt organiza22 tion distributes all of its net assets to 1 or more or23 ganizations each of which has been in existence, and

24 described in section 501(c)(3), for a continuous pe25 riod of at least 60 calendar months. If the distribut-
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1 ing organization is described in section 501(c)(4),

2 the preceding sentence shall be applied by treating

3 the reference to section 501(c)(3) as including a ref4 erence to section 501(c)(4).

5 ‘‘(4) CERTAIN RULES MADE APPLICABLE.—

6 Rules similar to the rules of subsections (d), (e), and

7 (f) of section 507 shall apply for purposes of this

8 subsection.’’

9 (b) APPLICATION OF PRIVATE INUREMENT RULE TO

10 TAX-EXEMPT ORGANIZATIONS DESCRIBED IN SECTION

11 501(c)(4).—Paragraph (4) of section 501(c) is amended

12 by inserting ‘‘(A)’’ after ‘‘(4)’’ and by adding at the end

13 the following:

14 ‘‘(B) Subparagraph (A) shall not apply to an

15 entity unless no part of the net earnings of such en16 tity inures to the benefit of any private shareholder

17 or individual.’’

18 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

19 (1) Subsection (e) of section 4955 is amend20 ed—

21 (A) by striking ‘‘SECTION 4945’’ in the

22 heading and inserting ‘‘SECTIONS 4945 and

23 4958’’, and

24 (B) by inserting before the period ‘‘or an

25 excess benefit for purposes of section 4958’’.
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1 (2) Subsections (a), (b), and (c) of section 4963

2 are each amended by inserting ‘‘4958,’’ after

3 ‘‘4955,’’.

4 (3) Subsection (e) of section 6213 is amended

5 by inserting ‘‘4958 (relating to private excess bene6 fit),’’ before ‘‘4971’’.

7 (4) Paragraphs (2) and (3) of section 7422(g)

8 are each amended by inserting ‘‘4958,’’ after

9 ‘‘4955,’’.

10 (5) Subsection (b) of section 7454 is amended

11 by inserting ‘‘or whether an organization manager

12 (as defined in section 4958(f)(2)) has ‘knowingly’

13 participated in an excess benefit transaction (as de14 fined in section 4958(c)),’’ after ‘‘section 4912(b),’’.

15 (6) The table of subchapters for chapter 42 is

16 amended by striking the last item and inserting the

17 following:

‘‘Subchapter D. Failure by certain charitable organizations to

meet certain qualification requirements.

‘‘Subchapter E. Abatement of first and second tier taxes in certain cases.’’

18 (d) EFFECTIVE DATES.—

19 (1) IN GENERAL.—The amendments made by

20 this section (other than subsection (b)) shall apply

21 to excess benefit transactions occurring on or after

22 September 6, 1995.
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1 (2) BINDING CONTRACTS FOR PERSONAL SERV2 ICES.—The amendments referred to in paragraph

3 (1) shall not apply to any transaction pursuant to

4 any written contract for the performance of personal

5 services which was binding on September 6, 1995,

6 and at all times thereafter before such transaction

7 occurred.

8 (3) APPLICATION OF PRIVATE INUREMENT

9 RULE TO TAX-EXEMPT ORGANIZATIONS DESCRIBED

10 IN SECTION 501(c)(4).—

11 (A) IN GENERAL.—The amendment made

12 by subsection (b) shall apply to inurement oc13 curring on or after September 6, 1995.

14 (B) BINDING CONTRACTS.—The amend15 ment made by subsection (b) shall not apply to

16 any inurement occurring before July 1, 1996,

17 pursuant to a written contract which was bind18 ing on September 6, 1995, and at all times

19 thereafter before such inurement occurred.

20 SEC. 3. REPORTING OF CERTAIN EXCISE TAXES.

21 (a) REPORTING BY ORGANIZATIONS DESCRIBED IN

22 SECTION 501(c)(3).—Subsection (b) of section 6033 (re23 lating to certain organizations described in section

24 501(c)(3)) is amended by striking ‘‘and’’ at the end of

25 paragraph (9), by redesignating paragraph (10) as para-
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1 graph (12), and by inserting after paragraph (9) the fol2 lowing new paragraphs:

3 ‘‘(10) the respective amounts (if any) of the

4 taxes paid by the organization during the taxable

5 year under the following provisions:

6 ‘‘(A) section 4911 (relating to tax on ex7 cess expenditures to influence legislation),

8 ‘‘(B) section 4912 (relating to tax on dis9 qualifying lobbying expenditures of certain or10 ganizations),

11 ‘‘(C) section 4955 (relating to taxes on po12 litical expenditures of section 501(c)(3) organi13 zations),

14 ‘‘(D) section 4958 (relating to taxes on

15 private excess benefit from certain charitable

16 organizations),

17 ‘‘(11) such information as the Secretary may

18 require with respect to any excess benefit trans19 action (as defined in section 4958), and’’.

20 (b) ORGANIZATIONS DESCRIBED IN SECTION

21 501(c)(4).—Section 6033 is amended by redesignating

22 subsection (f) as subsection (g) and by inserting after sub23 section (e) the following new subsection:

24 ‘‘(f) CERTAIN ORGANIZATIONS DESCRIBED IN SEC25 TION 501(c)(4).—Every organization described in section
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1 501(c)(4) which is subject to the requirements of sub2 section (a) shall include on the return required under sub3 section (a) the information referred to in paragraphs (10)

4 and (11) of subsection (b) with respect to such organiza5 tion.’’

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to returns for taxable years begin8 ning after the date of the enactment of this Act.

9 SEC. 4. EXEMPT ORGANIZATIONS REQUIRED TO PROVIDE

10 COPY OF RETURN.

11 (a) GENERAL RULE.—

12 (1) Subparagraph (A) of section 6104(e)(1) (re13 lating to public inspection of annual returns) is

14 amended to read as follows:

15 ‘‘(A) IN GENERAL.—During the 3-year pe16 riod beginning on the filing date—

17 ‘‘(i) a copy of the annual return filed

18 under section 6033 (relating to returns by

19 exempt organizations) by any organization

20 to which this paragraph applies shall be

21 made available by such organization for in22 spection during regular business hours by

23 any individual at the principal office of

24 such organization and, if such organization

25 regularly maintains 1 or more regional or
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1 district offices having 3 or more employees,

2 at each such regional or district office, and

3 ‘‘(ii) upon request of an individual

4 made at such principal office or such a re5 gional or district office, a copy of such an6 nual return shall be provided to such indi7 vidual without charge other than a reason8 able fee for any reproduction and mailing

9 costs.

10 If the request under clause (ii) is made in per11 son, such copy shall be provided immediately

12 and, if made other than in person, shall be pro13 vided within 30 days. If the organization deter14 mines that a request under clause (ii) is part of

15 a harassment campaign, the requirement of

16 clause (ii) shall be treated as met if the organi17 zation places a copy of such return on a pub18 licly available electronic network.’’

19 (2) Clause (ii) of section 6104(e)(2)(A) is

20 amended by inserting before the period at the end

21 thereof the following: ‘‘(and, upon request of an in22 dividual made at such principal office or such a re23 gional or district office, a copy of the material re24 quired to be available for inspection under this sub25 paragraph shall be provided (in accordance with the
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1 last sentence of paragraph (1)(A)) to such individual

2 without charge other than a reasonable fee for any

3 reproduction and mailing costs)’’.

4 (3) Subsection (e) of section 6104 is amended

5 by adding at the end the following new paragraph:

6 ‘‘(3) LIMITATION.—Paragraph (1)(A)(ii) (and

7 the corresponding provision of paragraph (2)) shall

8 not apply to any request if the Secretary determines,

9 upon application by an organization, that such re10 quest is part of a harassment campaign and that

11 compliance with such request is not in the public in12 terest.’’

13 (b) ADVERTISEMENTS ETC., REQUIRED TO DIS14 CLOSE AVAILABILITY OF ANNUAL RETURN.—

15 (1) Paragraph (1) of section 6104(e) is amend16 ed by adding at the end thereof the following new

17 subparagraph:

18 ‘‘(E) ADVERTISEMENTS ETC., REQUIRED

19 TO DISCLOSE AVAILABILITY OF ANNUAL RE20 TURN.—In the case of an organization required

21 by subparagraph (A) to provide a copy of its

22 annual return under section 6033 upon request

23 to individuals, each advertisement or solicitation

24 by (or on behalf of) such organization shall con25 tain an express statement (in a conspicuous and
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1 easily recognizable format) that such return

2 shall be provided to individuals upon request.’’

3 (2) Section 6716, as added by section 5 of this

4 Act, is amended—

5 (A) by striking ‘‘section 6116’’ each place

6 it appears and inserting ‘‘section 6116 or sec7 tion 6104(e)(1)(E)’’,

8 (B) by striking ‘‘$1,000’’ in subsection (a)

9 and inserting ‘‘$1,000 ($100 in the case of a

10 failure to meet the requirements of

11 6104(e)(1)(E))’’, and

12 (C) by inserting before the period at the

13 end of the section heading ‘‘; FAILURE OF

14 CERTAIN EXEMPT ORGANIZATIONS TO DIS15 CLOSE AVAILABILITY OF ANNUAL RE16 TURN’’.

17 (3) Subparagraph (C) of section 6652(c)(1) is

18 amended by striking ‘‘(e)(1)’’ and inserting ‘‘(e)(1)

19 (other than subparagraph (E))’’, by striking ‘‘$10’’

20 and inserting ‘‘$20’’, and by striking ‘‘$5,000’’ and

21 inserting ‘‘$10,000’’.

22 (4) Subparagraph (D) of section 6652(c)(1) is

23 amended by striking ‘‘$10’’ and inserting ‘‘$20’’.

24 (5) The item relating to section 6716 in the

25 table of sections for part I of subchapter B of chap-
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1 ter 68 is amended by inserting before the period ‘‘;

2 failure of certain exempt organizations to disclose

3 availability of annual return’’.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall take effect on January 1, 1996 (or, if

6 later, the 90th day after the date of the enactment of this

7 Act).

8 SEC. 5. CERTAIN ORGANIZATIONS REQUIRED TO DIS9 CLOSE NONEXEMPT STATUS.

10 (a) GENERAL RULE.—Subchapter B of chapter 61

11 (relating to miscellaneous provisions) is amended by redes12 ignating section 6116 as section 6117 and by inserting

13 after section 6115 the following new section:

14 ‘‘SEC. 6116. CERTAIN ORGANIZATIONS REQUIRED TO DIS15 CLOSE NONEXEMPT STATUS.

16 ‘‘(a) IN GENERAL.—If—

17 ‘‘(1) in an advertisement or solicitation by (or

18 on behalf of) an organization, such organization is

19 referred to as being nonprofit, and

20 ‘‘(2) such organization is not exempt from tax

21 under subtitle A,

22 such advertisement or solicitation shall contain an express

23 statement (in a conspicuous and easily recognizable for24 mat) that such organization is not exempt from Federal

25 income taxes.
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1 ‘‘(b) CROSS REFERENCE.—

‘‘For penalties for violation of subsection (a), see

section 6716.’’

2 (b) PENALTY.—Part I of subchapter B of chapter 68

3 is amended by adding at the end thereof the following new

4 section:

5 ‘‘SEC. 6716. FAILURE TO DISCLOSE NONEXEMPT STATUS.

6 ‘‘(a) IMPOSITION OF PENALTY.—If there is a failure

7 to meet the requirements of section 6116 with respect to

8 any advertisement or solicitation by (or on behalf of) an

9 organization, such organization shall pay a penalty of

10 $1,000 for each day on which such a failure occurred. The

11 maximum penalty imposed under this subsection on fail12 ures by any organization during any calendar year shall

13 not exceed $10,000.

14 ‘‘(b) REASONABLE CAUSE EXEMPTION.—No penalty

15 shall be imposed under this section with respect to any

16 failure if it is shown that such failure is due to reasonable

17 cause.

18 ‘‘(c) $10,000 LIMITATION NOT TO APPLY WHERE

19 INTENTIONAL DISREGARD.—If any failure to which sub20 section (a) applies is due to intentional disregard of the

21 requirements of section 6116—

22 ‘‘(1) the penalty under subsection (a) for the

23 day on which failure occurred shall be the greater

24 of—
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1 ‘‘(A) $1,000, or

2 ‘‘(B) 50 percent of the aggregate cost of

3 the advertisements and solicitations which oc4 curred on such day and with respect to which

5 there was such failure,

6 ‘‘(2) the $10,000 limitation of subsection (a)

7 shall not apply to any penalty under subsection (a)

8 for the day on which such failure occurred, and

9 ‘‘(3) such penalty shall not be taken into ac10 count in applying such limitation to other penalties

11 under subsection (a).

12 ‘‘(d) DAY ON WHICH FAILURE OCCURS.—For pur13 poses of this section, rules similar to the rules of section

14 6710(d) shall apply in determining the day on which any

15 failure occurs.’’

16 (c) CLERICAL AMENDMENTS.—

17 (1) The table of sections for subchapter B of

18 chapter 61 is amended by striking the item relating

19 to section 6116 and inserting the following:

‘‘Sec. 6116. Certain organizations required to disclose

nonexempt status.

‘‘Sec. 6117. Cross reference.’’

20 (2) The table of sections of part I of subchapter

21 B of chapter 68 is amended by adding at the end

22 thereof the following new item:

‘‘Sec. 6716. Failure to disclose nonexempt status.’’
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on January 1, 1996 (or, if

3 later, the 90th day after the date of the enactment of this

4 Act).

5 SEC. 6. INCREASE IN PENALTIES ON EXEMPT ORGANIZA6 TIONS FOR FAILURE TO FILE COMPLETE AND

7 TIMELY ANNUAL RETURNS.

8 (a) IN GENERAL.—Subparagraph (A) of section

9 6652(c)(1) (relating to annual returns under section

10 6033) is amended by striking ‘‘$10’’ and inserting ‘‘$20’’

11 and by striking ‘‘$5,000’’ and inserting ‘‘$10,000’’.

12 (b) LARGER PENALTY ON ORGANIZATIONS HAVING

13 GROSS RECEIPTS IN EXCESS OF $1,000,000.—Subpara14 graph (A) of section 6652(c)(1) is amended by adding at

15 the end the following new sentence: ‘‘In the case of an

16 organization having gross receipts exceeding $1,000,000

17 for any year, with respect to the return required under

18 section 6033 for such year, the first sentence of this sub19 paragraph shall be applied by substituting ‘$100’ for ‘$20’

20 and, in lieu of applying the second sentence of this sub21 paragraph, the maximum penalty under this subparagraph

22 shall not exceed $50,000.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to returns for taxable years ending

3 on or after December 31, 1995.

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