The initial tax on the foundation managers is imposed only in cases when the following circumstances are present:
- The initial tax on taxable expenditures is imposed on the private foundation making the expenditure,
- The foundation manager agrees to the making of the expenditure knowing that it is a taxable expenditure, and
- The foundation manager's agreement is willful, and
- The foundation manager's agreement is not due to reasonable cause.
The tax on any particular expenditure applies only to agreements of:
- Foundation managers with authority to approve, or to exercise discretion in recommending approval of, the expenditure, and
- Foundation managers who are members of a group authorized to approve or recommend the making of the expenditure, such as the foundation's board of directors or trustees.