Exempt Organizations Technical Guide›TG 62: Excise Taxes on Taxable Expenditures – IRC Section 4945›Table of Contents
B.1. Second Tier Taxes on Private Foundations
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) Section 4945(b)(1) imposes on a private foundation an additional excise tax equal
to 100% of the amount of the taxable expenditure if it failed to correct the taxable expenditure within the taxable period (subject to abatement if there is subsequent correction within the correction period). The private foundation must pay the second tier excise tax.
(2) Both first tier and second tier taxes are properly asserted at the same time when
issuing a notice of deficiency. See Allan H. Applestein Foundation Trust v. Commissioner, T.C. Memo. 1981-650, and Howell v. Commissioner, 77 T.C. 916 (1981). The second tier tax is then abated if there is subsequent correction within the correction period.
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