§4963 Definitions

Summary

Names and explains key words used to enforce certain penalty taxes. It tells which taxes are "first tier" and "second tier," what counts as a "taxable event," what "correct" means, and how long the "correction period" lasts. First-tier tax: the tax in subsection (a) of these sections — 4941, 4942, 4943, 4944, 4945, 4951, 4952, 4955, 4958, 4966, 4967, 4971, and 4975. Second-tier tax: the tax in subsection (b) of these sections — 4941, 4942, 4943, 4944, 4945, 4951, 4952, 4955, 4958, 4971, and 4975. Taxable event: any act or failure that makes someone liable for tax under the listed sections. Correct: usually means what the second-tier rule says, except for these three specific meanings — for 4942(b) make undistributed income zero, for 4943(b) make excess business holdings zero, and for 4944 remove the investment from jeopardy. Correction period: starts when the taxable event occurs and ends 90 days after a notice of deficiency is mailed under section 6212 for the second-tier tax, extended by any time a deficiency cannot be assessed under section 6213(a) (ignoring the last sentence of section 4961(b)) and by any other period the Secretary finds reasonable to allow correction. For timing, a failure to distribute under 4942 is treated as occurring on the first day of the year involved, excess business holdings under 4943 on the first day they exist, an accumulated funding deficiency under 4971 on the last day of the plan year, and otherwise on the actual date of the event.