B.2. Involuntary Section 507(a)(2) Terminations

(1) For purposes of involuntary terminations under Section 507(a)(2):

a. A “willful and flagrant act (or failure to act)” is one which is voluntarily,

consciously, and knowingly committed in violation of any provision of Chapter 42 (other than Section 4940 or 4948(a)) and which would appear to be a gross violation to a reasonable person. See Treas. Reg. 1.507-1(c)(2).

b. The term “willful repeated acts (or failures to act)” means at least two acts

or failures to act both of which are voluntary, conscious, and intentional. See Treas. Reg. 1.507-1(c)(1).

c. An act (or failure to act) may be treated as an act by the private foundation

for purposes of Section 507(a)(2) even though tax is imposed upon one or more foundation managers and not upon the foundation. See Treas. Reg. 1.507-1(c)(3).

d. A failure to correct an act or acts (or failure or failures to act) which gave

rise to Chapter 42 tax liability by the close of the correction period may be a willful and flagrant act (or failure to act). See Treas. Reg. 1.507-1(c)(4).

e. For an act (or failure to act) to be willful, a motive to avoid the restrictions of

the law or the incurrence of any tax is not necessary. However, there must be knowledge on behalf of the foundation or a manager that an act (or failure to act) is one of self-dealing, a taxable expenditure, or other act (or failure to act) to which Chapter 42 applies. See Treas. Reg. 1.507-1(c)(5) and 53.4945-1(a)(2)(iii).