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Tax Court: Private foundation’s excise tax liability for radio messages

Private foundation’s excise tax liability

The U.S. Tax Court today issued an opinion finding that a private foundation and the foundation’s manager were liable for excise taxes under provisions of section 4945 for expenditures made to produce and broadcast radio messages that were found to be “attempts to influence legislation.”


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The case is: Parks v. Commissioner, 145 T.C. No. 12 (November 17, 2015). Read the 109-page Tax Court opinion [PDF 357 KB]


A private foundation that was exempt from tax under section 501(c)(3) made expenditures during tax years 1997 through 2000, to produce and broadcast 30-second and 60-second radio messages that generally concerned ballot measures relating to Oregon’s criminal system and the state’s finances. The foundation’s manager approved the expenditures. 

The IRS determined that these expenditures were “attempts to influence legislation” and were therefore taxable expenditures. Thus, the private foundation and its manager were assessed excises taxes under section 4945(a)(1) and (2), and because the taxable expenditures were not timely correct, they were also liable for excise taxes under section 4945(b)(1) and (2).

The Tax Court agreed with the IRS’s determination with respect to certain of the radio broadcasts at issue. The court looked to the regulations under section 4945 to find that a “communication” refers to a ballot measure if it either refers to the measure by name or, without naming the ballot measure, refers to it by a term widely used in connection with the measure or that describes the content or the effect of the measures. 

The Tax Court further found that the application of section 4945 does not violate the First Amendment to the U.S. Constitution. 


For more information, contact the Managing Director-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group:

D. Greg Goller | +1 (703) 286-8391 |

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