- 6 - Revenue Code, provide the statutory framework for the tax laws governing employee benefit plans and generally are administered by the Department of the Treasury. See Rutland v. Commissioner, 89 T.C. 1137, 1143 n.4 (1987). There are many areas where the labor provisions coincide with or overlap the tax provisions. While much of the statutory terminology is similar, there are instances in which the statutes are different. At issue in this case is one of those inconsistencies. Section 4975(a) provides: SEC. 4975(a). Initial Taxes on Disqualified Person.-- There is hereby imposed a tax on each prohibited transaction. The rate of tax shall be equal to 5 percent of the amount involved with respect to the prohibited transaction for each year (or part thereof) in the taxable period. The tax imposed by this subsection shall be paid by any disqualified person who participates in the prohibited transaction (other than a fiduciary acting only as such). The definition of a prohibited transaction includes “any direct or indirect lending of money or other extension of credit between a plan and a disqualified person”. Sec. 4975(c)(1)(B). For our purposes, section 4975(c) is similar to ERISA section 406, 29 U.S.C. section 1106(a)(1)(B), except that the term “disqualified person” is changed to “a party in interest”. A disqualified person and a party in interest are defined as, inter alia, a “fiduciary”. Sec. 4975(e)(2)(A); ERISA sec. 3(14)(A), 29 U.S.C. sec. 1002(14)(A). Section 4975(e)(2)(G) and ERISA section 3(14)(G), 29 U.S.C. 1002(14)(G), further provide that aPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011