rp-00-17.pdf

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26 CFR 601.201: Rulings and determination letters.
(Also Part I, §§412, 4971.)

Rev. Proc. 2000-17

# Section 1. Purpose

This revenue procedure provides for a waiver of the 100 percent tax imposed
under § 4971(b) of the Internal Revenue Code (the "Code") on an employer who
maintains a pension plan for which there is an accumulated funding deficiency under
§ 412. The waiver is applicable to certain terminated single-employer defined benefit
plans if specific conditions are satisfied.

# Section 2. Background

.01 Section 4971(a) provides for the imposition of an initial tax of ten percent
(five percent in the case of a multiemployer plan) on the amount of the accumulated
funding deficiency under a plan as determined under § 412.

.02 Section 4971(b) provides for an additional tax equal to 100 percent of any
uncorrected accumulated funding deficiency on which an initial tax is imposed under
§ 4971(a).

.03 Section 3002(b) of the Employee Retirement Income Security Act of 1974
("ERISA"), Pub. L. 93-406, 1974-3 C.B. 166, 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. Rul. 79-237, 1979-2 C.B. 190, provides that in the year of termination
of a plan, the tax imposed by § 4971(b) applies unless the accumulated funding
deficiency, as of the end of the plan year in which the plan is terminated, is reduced to
zero.

.05 Rev. Proc. 81-44, 1981-2 C.B. 618, outlines the procedure for requesting a
waiver of the tax imposed under § 4971(b).

# Section 3. Conditions for Waiver

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The tax imposed on an employer under § 4971(b) for failure to meet the
minimum funding standards with respect to a defined benefit plan is waived for all
applicable years, if the four conditions enumerated below are satisfied:

.01 The plan is subject to Title IV of ERISA and is terminated in a standard
termination under section 4041 of ERISA.

.02 Plan participants are not entitled to any portion of residual assets remaining
after all liabilities of the plan to participants and their beneficiaries have been satisfied.

.03 Excise taxes that have been or could be imposed under § 4971(a) of the
Code have been paid for all taxable years, including the taxable year related to the
year of plan termination.

.04 All applicable forms in the 5500 series, including Schedules B (Actuarial
Information), have been filed for the plan for all plan years including the year of plan
termination.

# Section 4. Effective Date

This procedure applies to the excise taxes under § 4971(b) of the Code with
respect to plans terminating with termination dates under section 4041 of ERISA that
occur on or after January 1, 2000.

## Drafting Information

The principal author of this revenue procedure is Bill Kerr of the Tax Exempt and
Government Entities Division. For further information regarding this revenue
procedure, call Employee Plans Taxpayer Assistance at (202) 622-6076 (not a toll free
number) between 2:30 and 3:30 Eastern time, Monday through Thursday. Mr. Kerr's
number is (202) 622-8055 (also not a toll free number).