[Code of Federal Regulations]
[Title 26, Volume 17]
[Revised as of April 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR54.4975-14]

[Page 272]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 54_PENSION EXCISE TAXES--Table of Contents
 
Sec.  54.4975-14  Election to pay an excise tax for certain pre-1975 
prohibited transactions.

    (a) In general. Section 2003(c)(1)(B) of the Employee Retirement 
Income Security Act of 1974 (88 Stat. 978) provides an election to pay 
an excise tax by certain persons involved prior to 1975 in prohibited 
transactions within the meaning of section 503 (b) or (g).
    (b) Effect of election. If a valid election is made under this 
section with respect to a particular transaction, any loss of exemption 
under section 501(a) because of a prohibited transaction within the 
meaning of section 503 (b) or (g) shall not apply. Instead, the person 
who made the election referred to in this section shall be subject to 
the taxes which would have been imposed by section 4975 (a) or (b) as 
though section 4975 had imposed a tax in respect of the transaction. 
(However, section 4975(f)(1), relating to joint and several liability, 
shall not apply to any person who has not made an election under this 
section, and interest for late payment of tax shall not begin to accrue 
until after the date of the election.) Such an election is irrevocable. 
However, the making of the election does not affect the application of 
section 6501 for purposes of assessment and collection of tax and 
section 6511 for purposes of filing a claim for credit or refund with 
respect to taxpayers and to taxable years of taxpayers whose tax 
liability is or may be affected by reason of the nonapplication of a 
denial of exempt status.
    (c) Method of election. A person shall make the election referred to 
in this section by filing the form issued for such purpose by the 
Internal Revenue Service, including therein the information required by 
such form and the instructions issued with respect thereto, and by 
paying the tax which the taxpayer indicates is due at the time the 
return is filed. To be valid the election must be made prior to the 
later of December 6, 1976, or 120 days after the date of notification 
referred to in Sec.  1.503(a)-1(b) of this chapter (Income Tax 
Regulations), relating to loss of exemption for certain prohibited 
transactions. If there has been no notification of loss of exemption, 
the election may be made at any time. However, these limitations do not 
preclude an agreement between the disqualified person and the district 
director to extend the time within which the election is permitted.
    (d) Computation of section 4975 excise tax. To the extent 
applicable, and solely for purposes associated with the payment of a 
section 4975 excise tax under the election referred to in this section, 
Sec.  53.4941(e)-1 of this chapter (Foundation Excise Tax Regulations) 
is controlling.

(Sec. 2003(c)(1)(B) of the Employee Retirement Income Security Act of 
1974 (88 Stat. 978))

[T.D. 7489, 42 FR 27882, June 1, 1977]