§4952 Taxes on taxable expenditures

Summary

A tax applies when a trust described in section 501(c)(21) spends money for something other than the allowed purposes. The trustee must pay 10% of any such taxable expenditure. If a trustee agrees to make the taxable expenditure knowing it is taxable, that trustee must pay 2½% of the amount unless the agreement was not willful and was for a reasonable cause. If the taxable expenditure is not fixed within the taxable period, the trustee must pay an extra tax equal to 100% of the expenditure. If that extra tax is imposed and a trustee refused to agree to part or all of the fix, that refusing trustee must pay an additional 50%. If more than one person is responsible for the 2½% or 50% taxes, they are all jointly and severally liable. A “taxable expenditure” means any payment by the 501(c)(21) trust that is not for the purposes listed in that section. To “correct” a taxable expenditure means to recover some or all of the money if possible, or if full recovery is impossible, to have the persons who owe black lung benefit liabilities (see section 192(e)) put in enough money so the trust is no worse off than if the expenditure had not happened. The “taxable period” runs from the date of the expenditure until the earlier of the date a notice of deficiency is mailed under section 6212 or the date the tax is assessed.