
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-16 Section 656(c)]
[CITE: 26USC4979A]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                 Subtitle D--Miscellaneous Excise Taxes
 
               CHAPTER 43--QUALIFIED PENSION, ETC., PLANS
 
Sec. 4979A. Tax on certain prohibited allocations of qualified 
        securities
        

(a) Imposition of tax

    If--
        (1) there is a prohibited allocation of qualified securities by 
    any employee stock ownership plan or eligible worker-owned 
    cooperative, or
        (2) there is an allocation described in section 664(g)(5)(A),

there is hereby imposed a tax on such allocation equal to 50 percent of 
the amount involved.

(b) Prohibited allocation

    For purposes of this section, the term ``prohibited allocation'' 
means--
        (1) any allocation of qualified securities acquired in a sale to 
    which section 1042 applies which violates the provisions of section 
    409(n), and
        (2) any benefit which accrues to any person in violation of the 
    provisions of section 409(n).

(c) Liability for tax

    The tax imposed by this section shall be paid by--
        (1) the employer sponsoring such plan, or
        (2) the eligible worker-owned cooperative,

which made the written statement described in section 664(g)(1)(E) or in 
section 1042(b)(3)(B) (as the case may be).

(d) Special statute of limitations for tax attributable to certain 
        allocations

    The statutory period for the assessment of any tax imposed by this 
section on an allocation described in subsection (a)(2) of qualified 
employer securities shall not expire before the date which is 3 years 
from the later of--
        (1) the 1st allocation of such securities in connection with a 
    qualified gratuitous transfer (as defined in section 664(g)(1)), or
        (2) the date on which the Secretary is notified of the 
    allocation described in subsection (a)(2).

(e) Definitions

    Terms used in this section have the same respective meaning as when 
used in section 4978.

(Added and amended Pub. L. 99-514, title XI, Sec. 1172(b)(2), title 
XVIII, Sec. 1854(a)(9)(A), Oct. 22, 1986, 100 Stat. 2514, 2877; Pub. L. 
101-239, title VII, Sec. 7304(a)(2)(D), Dec. 19, 1989, 103 Stat. 2353; 
Pub. L. 104-188, title I, Sec. 1704(t)(22), Aug. 20, 1996, 110 Stat. 
1888; Pub. L. 105-34, title XV, Sec. 1530(c)(15)-(17), Aug. 5, 1997, 111 
Stat. 1079, 1080.)


                               Amendments

    1997--Subsec. (a). Pub. L. 105-34, Sec. 1530(c)(15), amended heading 
and text of subsec. (a) generally. Prior to amendment, text read as 
follows: ``If there is a prohibited allocation of qualified securities 
by any employee stock ownership plan or eligible worker-owned 
cooperative, there is hereby imposed a tax on such allocation equal to 
50 percent of the amount involved.''
    Subsec. (c). Pub. L. 105-34, Sec. 1530(c)(16), amended heading and 
text of subsec. (c) generally. Prior to amendment, text read as follows: 
``The tax imposed by this section shall be paid by--
        ``(1) the employer sponsoring such plan, or
        ``(2) the eligible worker-owned cooperative,
which made the written statement described in section 1042(b)(3)(B).''
    Subsecs. (d), (e). Pub. L. 105-34, Sec. 1530(c)(17), added subsec. 
(d) and redesignated former subsec. (d) as (e).
    1996--Subsec. (c). Pub. L. 104-188 amended directory language of 
Pub. L. 101-239, Sec. 7304(a)(2)(D)(ii). See 1989 Amendment note below.
    1989--Subsec. (b)(1). Pub. L. 101-239, Sec. 7304(a)(2)(D)(i), struck 
out ``or section 2057'' after ``section 1042''.
    Subsec. (c). Pub. L. 101-239, Sec. 7304(a)(2)(D)(ii), as amended by 
Pub. L. 104-188, struck out ``or section 2057(d)'' after ``section 
1042(b)(3)(B)'' in concluding provisions.
    1986--Subsec. (b)(1). Pub. L. 99-514, Sec. 1172(b)(2)(A), inserted 
reference to section 2057.
    Subsec. (c). Pub. L. 99-514, Sec. 1172(b)(2)(B), inserted reference 
to section 2057(d).


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-34 applicable to transfers made by trusts 
to, or for the use of, an employee stock ownership plan after Aug. 5, 
1997, see section 1530(d) of Pub. L. 105-34, set out as a note under 
section 401 of this title.


                    Effective Date of 1989 Amendment

    Amendment by Pub. L. 101-239 applicable to estates of decedents 
dying after Dec. 19, 1989, see section 7304(a)(3) of Pub. L. 101-239, 
set out as a note under section 409 of this title.


                    Effective Date of 1986 Amendment

    Amendment by section 1172(b)(2) of Pub. L. 99-514 applicable to 
sales after Oct. 22, 1986, with respect to which election is made by 
executor of an estate who is required to file the return of the tax 
imposed by this title on a date (including extensions) after Oct. 22, 
1986, see section 1172(c) of Pub. L. 99-514, set out as a note under 
section 409 of this title.


                             Effective Date

    Section 1854(a)(9)(D) of Pub. L. 99-514 provided that: ``The 
amendments made by this paragraph [enacting this section and amending 
section 1042 of this title] shall apply to sales of securities after the 
date of the enactment of this Act [Oct. 22, 1986].''


           Plan Amendments Not Required Until January 1, 1989

    For provisions directing that if any amendments made by subtitle A 
or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 1800-1899A] of Pub. L. 99-514 require an amendment to any plan, 
such plan amendment shall not be required to be made before the first 
plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. 
L. 99-514, as amended, set out as a note under section 401 of this 
title.

                  Section Referred to in Other Sections

    This section is referred to in sections 409, 664, 1042, 4978 of this 
title.
