USC Subchapter E

in effect

26 U.S.C. § 4961 Abatement of second tier taxes where there is correction

(a) General ruleIf any taxable event is corrected during the correction period for such event, then any second tier tax imposed with respect to such event (including interest, additions to the tax, and additional amounts) shall not be assessed, and if assessed the assessment shall be abated, and if collected shall be credited or refunded as an overpayment. (b) Supplemental proceedingIf the determination by a court that the taxpayer is liable for a second tier tax has become final, such court shall have jurisdiction to conduct any necessary supplemental proceeding to determine whether the taxable event was corrected during the correction period. Such a supplemental proceeding may be begun only during the period which ends on the 90th day after the last day of the correction period. Where such a supplemental proceeding has begun, the reference in the second sentence of section 6213(a) to a final decision of the Tax Court shall be treated as including a final decision in such supplemental proceeding. (c) Suspension of period of collection for second tier tax(1) Proceeding in District Court or United States Court of Federal ClaimsIf, not later than 90 days after the day on which the second tier tax is assessed, the first tier tax is paid in full and a claim for refund of the amount so paid is filed, no levy or proceeding in court for the collection of the second tier tax shall be made, begun, or prosecuted until a final resolution of a proceeding begun as provided in paragraph (2) (and of any supplemental proceeding with respect thereto under subsection (b)). Notwithstanding section 7421(a), the collection by levy or proceeding may be enjoined during the time such prohibition is in force by a proceeding in the proper court. (2) Suit must be brought to determine liabilityIf, within 90 days after the day on which his claim for refund is denied, the person against whom the second tier tax was assessed fails to begin a proceeding described in section 7422 for the determination of his liability for such tax, paragraph (1) shall cease to apply with respect to such tax, effective on the day following the close of the 90-day period referred to in this paragraph. (3) Suspension of running of period of limitations on collectionThe running of the period of limitations provided in section 6502 on the collection by levy or by a proceeding in court with respect to any second tier tax described in paragraph (1) shall be suspended for the period during which the Secretary is prohibited from collecting by levy or a proceeding in court. (4) Jeopardy collectionIf the Secretary makes a finding that the collection of the second tier tax is in jeopardy, nothing in this subsection shall prevent the immediate collection of such tax.

26 U.S.C. § 4962 Abatement of first tier taxes in certain cases

(a) General ruleIf it is established to the satisfaction of the Secretary that—(1) a taxable event was due to reasonable cause and not to willful neglect, and (2) such event was corrected within the correction period for such event, then any qualified first tier tax imposed with respect to such event (including interest) shall not be assessed and, if assessed, the assessment shall be abated and, if collected, shall be credited or refunded as an overpayment. (b) Qualified first tier taxFor purposes of this section, the term “qualified first tier tax” means any first tier tax imposed by subchapter A, C, D, or G of this chapter, except that such term shall not include the tax imposed by section 4941(a) (relating to initial tax on self-dealing). (c) Special rule for tax on political expenditures of section 501(c)(3) organizationsIn the case of the tax imposed by section 4955(a), subsection (a)(1) shall be applied by substituting “not willful and flagrant” for “due to reasonable cause and not to willful neglect”.

26 U.S.C. § 4963 Definitions

(a) First tier taxFor purposes of this subchapter, the term “first tier tax” means any tax imposed by subsection (a) of section 4941, 4942, 4943, 4944, 4945, 4951, 4952, 4955, 4958, 4966, 4967, 4971, or 4975. (b) Second tier taxFor purposes of this subchapter, the term “second tier tax” means any tax imposed by subsection (b) of section 4941, 4942, 4943, 4944, 4945, 4951, 4952, 4955, 4958, 4971, or 4975. (c) Taxable eventFor purposes of this subchapter, the term “taxable event” means any act (or failure to act) giving rise to liability for tax under section 4941, 4942, 4943, 4944, 4945, 4951, 4952, 4955, 4958, 4966, 4967, 4971, or 4975. (d) CorrectFor purposes of this subchapter—(1) In generalExcept as provided in paragraph (2), the term “correct” has the same meaning as when used in the section which imposes the second tier tax. (2) Special rulesThe term “correct” means—(A) in the case of the second tier tax imposed by section 4942(b), reducing the amount of the undistributed income to zero, (B) in the case of the second tier tax imposed by section 4943(b), reducing the amount of the excess business holdings to zero, and (C) in the case of the second tier tax imposed by section 4944, removing the investment from jeopardy. (e) Correction periodFor purposes of this subchapter—(1) In generalThe term “correction period” means, with respect to any taxable event, the period beginning on the date on which such event occurs and ending 90 days after the date of mailing under section 6212 of a notice of deficiency with respect to the second tier tax imposed on such taxable event, extended by—(A) any period in which a deficiency cannot be assessed under section 6213(a) (determined without regard to the last sentence of section 4961(b)), and (B) any other period which the Secretary determines is reasonable and necessary to bring about correction of the taxable event. (2) Special rules for when taxable event occursFor purposes of paragraph (1), the taxable event shall be treated as occurring—(A) in the case of section 4942, on the first day of the taxable year for which there was a failure to distribute income, (B) in the case of section 4943, on the first day on which there are excess business holdings, (C) in the case of section 4971, on the last day of the plan year in which there is an accumulated funding deficiency, and (D) in any other case, the date on which such event occurred.