Part III - Questionnaire

General Instructions

The Black Lung Benefits Revenue Act of 1977 imposes excise taxes and penalties on acts of self-dealing between trusts and disqualified persons, and on taxable expenditures made by the trusts. These taxes and penalties apply to the trust (section 4952), trustees (sections 4951 and 4952), and self-dealers (section 4951). The purpose of the questions is to determine whether there is any initial tax due under either of these two sections.

Definitions

Self-dealing (Section 4951)

Self-dealing.   For purposes of section 4951, the term self-dealing means any direct or indirect:

1. Sale, exchange, or leasing of real or personal property between a trust described in section 501(c)(21) and a disqualified person;
2. Lending of money or other extension of credit between such a trust and a disqualified person;
3. Furnishing of goods, services, or facilities between such a trust and a disqualified person;
4. Payment of compensation (or payment or reimbursement of expenses) by such a trust to a disqualified person; and
5. Transfers to, or use by or for the benefit of, a disqualified person of the income or assets of such a trust.

Special Rules.   For purposes of section 4951:

1. The transfer of personal property by a disqualified person to such a trust is treated as a sale or exchange if the property is subject to a mortgage or similar lien;
2. If a bank or an insured credit union is a trustee of the trust or otherwise is a disqualified person with respect to the trust, any amount invested in checking accounts, savings accounts, certificates of deposit, or other time or demand deposits in that bank or credit union constitutes a lending of money;
3. The furnishing of goods, services, or facilities by a disqualified person to such a trust is not an act of self-dealing if the furnishing is without charge and if the goods, services, or facilities so furnished are used exclusively for the purposes specified in section 501(c)(21)(A); and
4. The payment of compensation (and the payment or reimbursement of expenses) by such a trust to a disqualified person for personal services that are reasonable and necessary to carry out the exempt purpose of the trust is not an act of self-dealing if the compensation (or payment or reimbursement) is not excessive. See Regulations section 53.4951-1 for additional information.

Taxable Period.   The term taxable period means, with respect to any act of self-dealing, the period beginning with the date on which the act of self-dealing occurs and ending on the earliest of:

1. The date of mailing of a notice of deficiency under section 6212, with respect to the tax imposed by section 4951(a)(1), or
2. The date on which the tax imposed by section 4951(a)(1) is assessed, or
3. The date on which correction of the act of self-dealing is completed.

Amount Involved.   The term amount involved means, for any act of self-dealing, the greater of the amount of money and the fair market value (FMV) of the other property given or the amount of money and the FMV of the other property received. However, in the case of services described in section 4951(d)(2)(C), the amount involved is only the excess compensation. For purposes of the preceding sentence, the FMV:

1. For the initial taxes imposed by section 4951(a), is determined as of the date on which the act of self-dealing occurs; and
2. For additional taxes imposed by section 4951(b), is the highest FMV during the taxable period.

Correction.   The terms correction and correct mean, for any act of self-dealing, undoing the transaction to the extent possible, but in any case placing the trust in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards.

Disqualified Person.   The term disqualified person means, for a trust described in section 501(c)(21), a person who is:

1. A contributor to the trust,
2. A trustee of the trust,
3. An owner of more than 10% of:
   1. The total combined voting power of a corporation,
   2. The profits interest of a partnership, or
   3. The beneficial interest of a trust or unincorporated enterprise, which is a contributor to the trust,
4. An officer, director, or employee of a person who is a contributor to the trust,
5. The spouse, ancestor, lineal descendant, or spouse of a lineal descendant of an individual described in 1, 2, 3, or 4,
6. A corporation of which persons described in 1, 2, 3, 4, or 5 own more than 35% of the total combined voting power,
7. A partnership in which persons described in 1, 2, 3, 4, or 5 own more than 35% of the profits interest, or
8. A trust or estate in which persons described in 1, 2, 3, 4, or 5 hold more than 35% of the beneficial interest.

For purposes of 3a and 6, indirect stockholdings are taken into account if they would be taken into account under section 267(c), except that, for purposes of this paragraph, section 267(c)(4) is treated as providing that the members of the family of an individual are only those individuals described in 5. For purposes of 3b and c, 7, and 8, the ownership of profits or beneficial interests is determined by the rules for constructive ownership of stock provided in section 267(c) (other than paragraph (3)), except that section 267(c)(4) is treated as providing that the members of the family of an individual are only those individuals described in 5.

Payment of Benefits.   For purposes of section 4951, a payment out of assets or income of a trust described in section 501(c)(21) for the purposes described in sections 501(c)(21)(A)(i)(I) and 501(c)(21)(A)(i)(IV) is not considered an act of self-dealing.

Taxable Expenditures (Section 4952)

Taxable expenditure.   For purposes of section 4952, the term taxable expenditure means any amount paid or incurred by a trust described in section 501(c)(21) other than for a purpose specified in that section.

Correction.   The terms correction and correct mean, with respect to any taxable expenditure, placing the trust in a financial position not worse than that in which it would have been if the taxable expenditure had not been made:

1. By recovering all or part of the expenditure to the extent recovery is possible; and
2. When full recovery is not possible, by contributions by the person or persons whose liabilities for black lung benefit claims (as defined in section 192(e)) are to be paid out of the trust.

Taxable Period.   The term taxable period means, with respect to any taxable expenditure, the period beginning with the date on which the taxable expenditure occurs and ending on the earlier of:

1. The date of mailing a notice of deficiency under section 6212 with respect to the tax imposed by section 4952(a)(1), or
2. The date on which the tax imposed by section 4952(a)(1) is assessed.

Specific Instructions

Line 22.   A conformed copy is one that agrees with the original document, and all amendments to it. If the copies are not signed, they must be accompanied by a written declaration signed by an officer authorized to sign for the organization certifying that they are complete and accurate copies of the original documents.

Chemically or photographically reproduced copies of articles of incorporation showing the certification of an appropriate State official need not be accompanied by such a declaration. See Rev. Proc. 68-14, 1968-1 C.B. 768, for additional information.

Line 23.   If you answered Yes to 23a(1), (2), (3), (4), or (5) and No to 23b, notify each self-dealer and trustee who may be liable for initial taxes under section 4951 of the requirement to file a return for each year (or part of a year) and pay the applicable tax. The trust must also furnish the information required by Schedule A (Form 990-BL), Part I, Section A (other than columns (g) and (h)) on its own return.

For exceptions to the self-dealing rules, see Special Rules and Payment of Benefits on this page.

Line 24.   If you answered Yes, complete Part I, Section B (other than column (h)) and Part II of Schedule A (Form 990-BL). The trust must also notify any trustees who may be liable for initial taxes under section 4952 of the requirement to file Form 990-BL, Schedule A (Form 990-BL), and to pay the tax.

Line 25.   If you answered No, or if there were multiple acts or transactions giving rise to Chapter 42 taxes and all of them were not corrected, attach an explanation of each uncorrected act including the names of all parties to the act, the date of the act, the amount involved, why the act has not been corrected, and the date you expect correction to be made.

Line 26.   List each of the organization's officers, directors, trustees, and other persons having responsibilities or powers similar to those of officers, directors, or trustees. List all of these persons even if they did not receive any compensation from the organization. Show all forms of compensation received by each listed officer, etc. Enter -0- in columns (c), (d) and (e) if none was paid.

Note:   If you pay any other person, such as a management service company, for the services provided by any of your officers, directors, trustees, or key employees, report the compensation and other items on line 26 as if you had paid the officer, etc. directly.

Column (b).   In column (b), a numerical estimate of average hours per week devoted to the position is required for a complete answer. Phrases such as as needed or as required are unacceptable.

Column (c).   Include all forms of deferred compensation (whether or not funded and whether or not the deferred compensation plan is a qualified plan under section 401(a)) and payments to welfare benefit plans on behalf of the officers, etc.

Column (d).   Enter expense allowances or reimbursements that the recipients must report as income on their separate income tax returns. Examples include amounts for which the recipient did not account to the organization or allowances that were more than the payee spent on serving the organization. Include payments made under indemnification arrangements, the value of the personal use of housing, automobiles, or other assets owned or leased by the organization (or provided for the organization's use without charge), as well as any other taxable and nontaxable fringe benefits. Get Pub. 525, Taxable and Nontaxable Income, for details.

Column (e).   Enter salary, fees, bonuses, and severance payments received by each person listed.

Black lung benefit trusts that pay salaries, wages, or other compensation to officers or other employees are generally liable for filing Forms 941 and 940 to report social security, withholding, and Federal unemployment taxes.

Part IV - Statement With Respect to Contributors, etc.

Note:   This part is not open for public inspection.

Line 1.   List the names and addresses of all persons whose contributions during the tax year totaled $5,000 or more.

In determining whether a person has contributed $5,000 or more, include only contributions of $1,000 or more from such person. Separate and independent contributions need not be included if less than $1,000. If a contribution is in the form of property and the fair market value is readily ascertainable, the description and fair market value must be submitted. If the fair market value of the property is not readily ascertainable, you may submit an estimated value.

The term person includes individuals, fiduciaries, partnerships, corporations, associations, trusts, and exempt organizations.

Line 2.   If the trust receives contributions that are more than what the contributor can deduct under section 192, the person making the excess contributions may be required to file Form 6069, Return of Excise Tax on Excess Contributions to Black Lung Benefit Trust Under Section 4953 and Computation of Section 192 Deduction, and pay the tax imposed by section 4953(a).

Instructions for Schedule A (Form 990-BL)

Initial Excise Taxes on Black Lung Benefit Trusts and Certain Related Persons

General Instructions

Schedule A (Form 990-BL) is not open for public inspection. If you attach any exhibits to Schedule A (Form 990-BL), be sure to label them and write Not open for public inspection on them.

Paperwork Reduction Act Notice

Purpose of Form.   Use Schedule A (Form 990-BL) only to report initial taxes under section 4951 or 4952. Schedule A (Form 990-BL) must be attached to a completed Form 990-BL. It cannot be filed separately. If no taxes are due under section 4951 or 4952, do not file Schedule A (Form 990-BL).

Specific Instructions

See Who Must File in the General Instructions and the Specific Instructions of Form 990-BL for completing the identification area of this schedule.

When Filer Is a Trust.   A trust filing this schedule for a year in which there are initial taxes due under section 4951 or 4952 completes Part I as follows:

Section A (Section 4951).   Enter the information required in columns (b) through (f). Enter N/A in columns (g) and (h).

Section B (Section 4952).   Enter the information required in columns (b) through (g). Enter N/A in column (h).

When Filer Is a Self-dealer, Section A Only.   A self-dealer liable for initial taxes under section 4951 completes this schedule by entering the information required by columns (b) through (g) of Section A, Part I. Enter N/A in column (h). Enter only the prorated portion of column (g) on line 1 of Part II.

When Filer Is a Trustee, Sections A and B.   A trustee liable for initial taxes under sections 4951 and 4952 completes this schedule by entering the required information in columns (b) through (h) (other than (g)) of Section A and/or Section B, Part I. For Section A, enter the prorated portion of column (h) on line 2 of Part II. For Section B, enter the prorated portion of column (h) on line 4 of Part II.

Part I - Initial Taxes on Self-dealing and Taxable Expenditures

Disqualified persons and trustees who participate in acts of self-dealing with a section 501(c)(21) trust and who have tax years different from the trust should use their own tax years to figure the initial tax and file the return.

Initial Section 4951 Taxes on Self-dealer.   An initial tax of 10% of the amount involved is imposed for each act of self-dealing between a disqualified person and a section 501(c)(21) trust, for each year (or part of a year) in the taxable period. The tax is paid by any disqualified person (other than a trustee acting only as such) who participated in the act of self-dealing.

Initial Section 4951 Taxes on Trustee.   When a tax is imposed on an act of self-dealing, any trustee who knowingly participated in such an act must pay a tax of 2½% of the amount involved in the act of self-dealing for each year or part of a year in the taxable period unless participation in the act was not willful and was due to reasonable cause.

Initial Section 4952 Taxes on Trust.   An initial tax of 10% of the amount of the expenditure is imposed on each taxable expenditure from the assets of a section 501(c)(21) trust. The tax is paid by the trustee out of the assets of the trust.

Initial Section 4952 Taxes on Trustee.   When a tax is imposed on the trust for a taxable expenditure, any trustee who knowingly agreed to the expenditure must pay a tax of 21/2% of the amount of the taxable expenditure unless such agreement was not willful and was due to reasonable cause.

Liability for Tax.   A person's liability for tax as a self-dealer or trustee under sections 4951 and 4952 is joint and several. Therefore, if more than one person is liable for tax on an act of self-dealing as a self-dealer or trustee, they may prorate the tax among themselves. The IRS may assess a deficiency against one or more self-dealers or trustees liable for the tax under section 4951 or 4952, regardless of the apportionment of tax shown on the return, if the amount paid by all those who are liable for a particular transaction, is less than the total tax due for that transaction.

Part II - Summary of Taxes

Generally, no more than three lines in Part II will be completed on any return. However, when a trustee is liable for section 4951 initial taxes both as a trustee and as a self-dealer and is also liable for section 4952 initial taxes because of taxable expenditure involvement, enter the section 4951 taxes on lines 1 and 2 and enter the section 4952 tax on line 4, with a total of the tax due on line 5. Pay in full with the return. Make the check or money order payable to the United States Treasury. In all other instances, follow Specific Instructions given above.

The payment of section 4951 tax for the tax year will not necessarily satisfy the entire initial tax liability for an act of self-dealing. A self-dealer who is liable for tax under section 4951 must file Form 990-BL, Schedule A (Form 990-BL) and must pay the tax for each year (or part of a year) in the taxable period.

Previous | First

Instructions Index | 2002 Tax Help Archives | Tax Help Archives | Home