IRS written determination 201528038

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document.

Internal Revenue Service
Number: 201528038
Release Date: 7/10/2015
Index Number: 4976.01-00
Legend:
Taxpayer=
Trust=
Plan=
Year 1 =
Year 2
=
Date
X=
Dear
Department of the Treasury
Washington, DC 20224
Third Party Communication: None
Date
of Communication: Not Applicable
Person To Contact:
Telephone Number:
Refer Reply To:
CC:TEGE: EB: HW
PLR-T-103505-15
Date:
March 30, 2015
This responds to your letter dated December 23, 2014, and subsequent
correspondence, requesting a ruling regarding the tax consequences under
section 4976
of the Internal Revenue Code (Code) of the termination of Trust and the
distribution of Trust assets to participants.
Taxpayer represents that it is exempt from federal income tax as
an organization
described in section
501 (c)(12) of the Code. Taxpayer established Trust in Year 1 and
Plan in Year
2. Taxpayer represents that Trust is a voluntary employees' beneficiary
association under section
501 (c)(9). Trust holds assets that are used to provide
medical benefits to eligible retirees and their dependents in accordance with the terms
of Plan. Taxpayer represents that it has contributed to Trust since Year 1 and that it
treated all contributions to Trust as contributions to a welfare benefit fund within the
meaning of section 419(e) of the Code. Taxpayer further represents that it has never
taken a deduction under section 419 for any contributions to Trust.

PLR-T-103505-15
2
Taxpayer
will dissolve completely by Date
X. Taxpayer proposes that, in connection
with its dissolution and after payment
of all administrative expenses of Plan and Trust
and existing claims
of Plan, Trust assets will be distributed as taxable lump sum
payments among the participants (retirees and dependents).
RULING REQUESTED
Taxpayer has requested a ruling that neither the termination
of Trust in connection with
the dissolution
of Taxpayer, nor the distribution of Trust assets as taxable lump sum
payments to participants,
will cause a reversion to Taxpayer within the meaning
of
section 4976(b)(1 )(C) of the Code that is subject to the excise tax under
section 4976(a).
LAW
Section 4976(a)
of the Code imposes a 100 percent excise tax if an employer maintains
a welfare benefit fund and there
is a disqualified benefit provided during any taxable
year.
Section 4976(b)(1)(C) defines "disqualified benefit" to include any portion
of a welfare
benefit fund reverting to the benefit
of the employer.
Section 4976(b)(3) provides an exception for nondeductible contributions. Specifically,
section 4976(b)(3) provides that section 4976(b)(1)(C) does not apply to any amount
attributable to a contribution to the fund which is not allowable as a deduction under
section 419 for the taxable year or any prior taxable year (and such contribution will not
be included
in any carryover under section 419(d)).
ANALYSIS AND CONCLUSION
Taxpayer represents that it is exempt from federal income tax as
an organization
described in section
501 (c)(12) of the Code. As a tax-exempt entity described in
section 501(c)(12), the contributions Taxpayer made to Trust generally would not have
been
allowable as a deduction under section 419. Further, Taxpayer represents that it
did not deduct any contributions to Trust under section 419. Under section 4976(b )(3),
section 4976(b)(1 )(C) does not apply to amounts attributable to contributions to a fund
that were not
allowable as a deduction under section 419. Consequently, neither the
termination
of Trust in connection with the dissolution of Taxpayer, nor the distribution of
Trust assets as taxable lump sum payments to participants, will result in a "disqualified
benefit" within the meaning
of section 4976(b)(1)(C), and will not, in and of itself, cause
Taxpayer to be liable for the excise tax imposed by section 4976.

PLR-T-103505-15
3
Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences
of any aspect of any transaction or item discussed or referenced in
this letter.
This ruling is directed only to the taxpayer requesting
it. Section 6110(k)(3) of the Code
provides that it may not
be used or cited as precedent.
The rulings contained
in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty
of perjury statement executed
by an appropriate party.
While this office has not verified any
of the material submitted
in support of the request for rulings, it is subject to verification on examination.
cc:
Sincerely,
Janet A. Laufer
Senior Technician
Reviewer
Health
& Welfare Branch
Office
of Associate Chief Counsel
(Tax Exempt & Government Entities)