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ERISA and the Code provide for interagency communication and
coordination between the DOL and the IRS regarding prohibited
transactions. ERISA section 3003(a), 29 U.S.C. section 1203(a)
(1988), provides that
Unless the Secretary of the Treasury finds that the
collection of a tax is in jeopardy, in carrying out the
provisions of section 4975 of Title 26 (relating to tax
on prohibited transactions) the Secretary of the
Treasury shall, in accordance with the provisions of
subsection (h) of such section, notify the Secretary of
Labor before sending a notice of deficiency with
respect to the tax imposed by subsection (a) or (b) of
such section, and, in accordance with the provisions of
subsection (h) of such section, afford the Secretary an
opportunity to comment on the imposition of the tax in
any case.
A corresponding coordination provision is contained in section
4975(h), which requires that before sending a notice of
deficiency, the Secretary of the Treasury must notify the
Secretary of Labor and provide him with a reasonable opportunity
to obtain a correction of the prohibited transaction or to
comment on the imposition of the tax.
In the provisions of section 4975(h) and ERISA section 3003,
there is no statement that the DOL must first determine that
there was a prohibited transaction before the IRS can determine a
section 4975 excise tax. Rather, the IRS, before sending a
notice of deficiency in section 4975 excise tax, is to notify the
DOL and to provide the DOL with an opportunity to correct the
prohibited transaction or to comment on the imposition of the
tax.
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