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

Amendments

1997-Subsec. (a). Pub. L. 105–34, §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, §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, §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, §7304(a)(2)(D)(ii). See 1989 Amendment note below.

1989-Subsec. (b)(1). Pub. L. 101–239, §7304(a)(2)(D)(i), struck out "or section 2057" after "section 1042".

Subsec. (c). Pub. L. 101–239, §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, §1172(b)(2)(A), inserted reference to section 2057.

Subsec. (c). Pub. L. 99–514, §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 [§§1101–1147 and 1171–1177] or title XVIII [§§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.