(a) Imposition of tax
In the case of an employer to whom an election under this section applies for any calendar year, there is hereby imposed a tax for such calendar year equal to 30 percent of the excess fringe benefits.
(b) Excess fringe benefits
For purposes of subsection (a), the term “excess fringe benefits” means, with respect to any calendar year—
(1) the aggregate value of the fringe benefits provided by the employer during the calendar year which were not includible in gross income under paragraphs (1) and (2) of section 132(a), over
(2) 1 percent of the aggregate amount of compensation—
(A) which was paid by the employer during such calendar year to employees, and
(B) was includible in gross income for purposes of chapter 1.
(c) Effect of election on section 132(a)
(1) an election under this section is in effect with respect to an employer for any calendar year, and
(2) at all times on or after January 1, 1984, and before the close of the calendar year involved, substantially all of the employees of the employer were entitled to employee discounts on goods or services provided by the employer in 1 line of business,
for purposes of paragraphs (1) and (2) of section 132(a) (but not for purposes of section 132(h)), all employees of any line of business of the employer which was in existence on January 1, 1984, shall be treated as employees of the line of business referred to in paragraph (2).
(d) Period of election
An election under this section shall apply to the calendar year for which made and all subsequent calendar years unless revoked by the employer.
(e) Treatment of controlled groups
All employees treated as employed by a single employer under subsection (b), (c), or (m) of section 414 shall be treated as employed by a single employer for purposes of this section.
(f) Section to apply only to employment within the United States
Except as otherwise provided in regulations, this section shall apply only with respect to employment within the United States.
(Added Pub. L. 98–369, div. A, title V, §531(e)(1), July 18, 1984, 98 Stat. 885; amended Pub. L. 99– 4, title XVIII, §1853(c)(1), (2), Oct. 22, 1986, 100 Stat. 2871; Pub. L. 103–66, title XIII, §13213(d)(3)(D), Aug. 10, 1993, 107 Stat. 474; Pub. L. 104–188, title I, §1704(t)(66), Aug. 20, 1996, 110 Stat. 1890.)
1996—Subsec. (c). Pub. L. 104–188 substituted “section 132(h)” for “section 132(i)(2)” in closing provisions.
1993—Subsec. (c). Pub. L. 103–66 substituted “section 132(i)(2)” for “section 132(g)(2)” in closing provisions.
1986—Subsec. (c)(2). Pub. L. 99– 4, §1853(c)(1), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “as of January 1, 1984, substantially all of the employees of the employer were entitled to employee discounts or services provided by the employer in 1 line of business,”.
Subsec. (f). Pub. L. 99– 4, §1853(c)(2), added subsec. (f).
Effective Date of 1993 Amendment
Amendment by Pub. L. 103–66 applicable to reimbursements or other payments in respect of expenses incurred after Dec. 31, 1993, see section 13213(e) of Pub. L. 103–66, set out as a note under section 62 of this title.
Effective Date of 1986 Amendment
Amendment by Pub. L. 99– 4 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99– 4, set out as a note under section 48 of this title.
Section effective Jan. 1, 1985, see section 531(h) of Pub. L. 98–369, set out as a note under section 132 of this title.
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of Pub. L. 99– 4 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99– 4, as amended, set out as a note under section 401 of this title.
Application of Subsection (c) of this Section to Agricultural Cooperatives Incorporated in 1964
Section 1853(c)(3) of Pub. L. 99– 4 provided that: “For purposes of determining whether the requirements of section 4977(c) of the Internal Revenue Code of 1954 [now 1986] are met in the case of an agricultural cooperative incorporated in 1964, there shall not be taken into account employees of a member of the same controlled group as such cooperative which became a member during July 1980.”