Rev. Proc. 81-44

SECTION 1. PURPOSE

The purpose of this revenue procedure is to outline the procedure for requesting a waiver of the 100 percent tax imposed under section 4971(b) of the Internal Revenue Code on a pension plan that fails to meet the minimum funding standards.

SEC. 2. BACKGROUND INFORMATION

.01 Section 4971(a) of the Code provides for the imposition of an initial tax of 5 percent on the amount of the accumulated funding deficiency under a plan which fails to meet the minimum funding standards of section 412.

.02 Section 4971(b) of the Code provides for an additional tax equal to 100 percent of any uncorrected accumulated funding deficiency already taxed under section 4971(a).

.03 Section 3002(b) of the Employee Retirement Income Security Act of 1974, Pub. L. 93-406, 1974-3 C.B. 1, 166, (ERISA) provides that the Secretary of the Treasury may waive the imposition of the tax imposed under section 4971(b) of the Code in appropriate cases.

.04 Rev. Proc. 80-24, 1980-1 C.B. 658, sets forth the procedures of the Internal Revenue Service for issuing rules.

SEC. 3. REQUESTS FOR WAIVERS OF EXCISE TAX UNDER SECTION 4971(b)

.01 Who may submit--Only a taxpayer or the taxpayer's authorized representative may make a request for a waiver of the imposition of the tax imposed under section 4971(b) of the Code.

.02 Where to submit--Such requests should be submitted to the Commissioner of Internal Revenue, Attention: E:A, 1111 Constitution Avenue, N.W., Washington, D.C. 20224.

.03 Procedural rules--Any such request must be signed by the taxpayer liable for the tax or the taxpayer's authorized representative in accordance with section 6.10 of Rev. Proc. 80-24. Because a request for a waiver of the 100 percent tax constitutes a request for a ruling, and because a ruling constitutes a written determination within the meaning of section 6110 of the Code, compliance with section 6110 is required with respect to such request. Sections 6.08, 6.09, 6.20, and 6.21 of Rev. Proc. 80-24 furnishes specific instructions to taxpayers for complying with section 6110. The taxpayer liable for the tax must sign a declaration which reads as follows:

Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and to the best of my knowledge and belief, the facts presented in support of the requested ruling are true, correct and complete.

.04 Information required--Generally, the applicant must furnish evidence that imposition of the 100% tax under section 4971(b) would be a substantial business hardship and would be adverse to the interest of plan participants in the aggregate. What constitutes appropriate evidence will depend on the facts and circumstances of each case. Generally, such evidence should include the following items. For purposes of this subsection, the term "employer" includes any related corporation, or other trade or business, described in section 414(b) or (c) of the Code, that also maintains the plan.

(1) Basis of the request.

A statement of the reasons why a waiver of the 100 percent tax should be granted.

(2) General facts concerning the employer.

A brief statement concerning the history of the employer, its primary business, the ownership of the employer, and any recent or contemplated changes (such as acquisition, mergers, discontinuances of operations) which might have a bearing on the employer's organization or financial condition.

(3) The financial condition of the employer.

The annual financial report of the employer for each of the last five years should be submitted. This submission should include at least the balance sheet and profit and loss statement for each year. Recent interim financial reports, if available, should also be submitted. If the employer submits 10K reports to the Securities and Exchange Commission, a copy of the most recent report should be included. Preferably, the financial report should be a certified financial report. If a certified financial report has not been prepared, an uncertified report is acceptable. If neither of these reports is available, copies of the employer's Federal income tax returns, including all of the supporting schedules, may be submitted.

(4) Facts concerning the pension plan.

For each pension plan for which a waiver is requested, the following information should be supplied:

(a) The name of the plan and the plan's identification number.

(b) The plan year (or years) for which the waiver is requested.

(c) A copy of the completed Annual Return/Report of Employee Benefit Plan (Form 5500, 5500C, 5500K, or 5500R) for each of the plan years involved, and in the case of a defined benefit plan, a copy of the corresponding Actuarial Information Schedule (Schedule B of Form 5500). The applicant need not resubmit these copies if they were previously submitted in connection with a request for a waiver of the minimum funding standards, approval of a reduction in accrued benefits, or extension of an amortization period for minimum funding.

(d) A statement detailing the circumstances which resulted in the accumulated funding deficiency, including an outline of any steps taken (such as a request for a waiver of the minimum funding standard) to avoid or to correct the deficiency.

(e) If a request for a waiver of the minimum funding standard was not made, a statement of the reasons for not submitting such request.

(f) A statement as to whether the plan has been, or is about to be terminated.

(g) A statement as to whether or not the 5% tax imposed under section 4971(a) of the Code has been paid.

(h) A copy of any notice of deficiency issued to the employer by the Service and copies of any other correspondence between the employer and the Service relating to the possible imposition of the 100% excise tax under section 4971(b) of the Code.

(i) A list of any rulings issued to the plan within the last 15 plan years which granted or denied requests for (i) waivers of the minimum funding standard pursuant to section 412(d) of the Code, (ii) approval of a retroactive plan amendment in accordance with section 412(c)(8), or (iii) extension of the amortization period for any unfunded liability of the plan in accordance with section 412(e). For each such ruling, a statement as to whether such request was approved or denied and, if approved, whether any special conditions were attached to the approval. A copy of each such ruling may be submitted to satisfy this requirement.

(5) Other pension, profit-sharing, or stock bonus plans.

If the employer maintains more than one plan, an outline of the essential facts for each such plan should be submitted. This should include:

(a) A brief description of the plan, including the name of the plan and its plan year.

(b) The number of employees covered.

(c) The classes of employees covered.

(d) The approximate annual contribution required.

(e) The amount of contributions that have been made, or are intended to be made, for any plan year of such other plan commencing in, or ending in, the plan year for which the waiver is requested.

(f) A statement as to whether a minimum funding waiver request is contemplated for the plan.

(6) Other information.

(a) Describe the nature of any matters pertaining to the plan which are concurrently pending or about to be submitted to Internal Revenue Service, Department of Labor or the Pension Benefit Guaranty Corporation.

(b) Furnish details of any existing litigation or court procedure which involves the plan.

(c) Also state which Internal Revenue Service District Office maintains files concerning the plan.

(7) In certain cases some of the material described in subsections (1) through (6) may be inappropriate or burdensome to furnish. In such cases, the applicant should furnish a statement indicating why such material is either inappropriate or burdensome.

SEC. 4. GENERAL.

Employers who may have difficulty in furnishing the information specified in this Revenue Procedure may call or write the Actuarial Division, E:A, for guidance. In some instances, preliminary conferences will be afforded in addition to conferences available under Rev. Proc. 80-24. In any event the material described in section 3.03 shall be furnished.

SEC. 5. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 80-24 is modified to the extent it is inconsistent with this ruling.

SEC. 6. EFFECTIVE DATE

This revenue procedure is effective October 5, 1981.