Exempt Organizations Technical Guide›TG 62: Excise Taxes on Taxable Expenditures – IRC Section 4945›Table of Contents
A.6. Due to Reasonable Cause
Publication 5590 — Exempt Organizations Technical Guide TG 62: Excise Taxes on Taxable Expenditures under IRC 4945 · 2026-10-03 edition · updated 2026-10-04 · United States
(1) A foundation manager is not liable for the 5% first tier tax if his/her agreement to
make the taxable expenditure is due to reasonable cause. Reasonable cause means the foundation manager exercises ordinary business care and prudence on behalf of the private foundation. See Treas. Reg. 53.4945-1(a)(2)(v).
(2) An example of "reasonable cause" is where a foundation manager made a
taxable expenditure based on the advice of counsel. See below for discussion of advice of counsel; see also United States v. Boyle, 469 U.S. 241 (1985) for a general discussion on "reasonable cause."
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