- 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 a
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011