II 

108TH CONGRESS 

1ST SESSION S. 1857

To amend the Internal Revenue Code of 1986 to provide procedural fairness 

in the application of the controlled group provisions to employers who 

contribute to multiemployer pension plans and who engage in bona fide 

corporate transactions. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 13, (legislative day, NOVEMBER 12), 2003

Mr. LOTT (for himself and Mr. SMITH) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL

To amend the Internal Revenue Code of 1986 to provide 

procedural fairness in the application of the controlled 

group provisions to employers who contribute to multiemployer pension plans and who engage in bona fide corporate transactions.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Multiemployer Pension 

5 Plan Procedural Fairness Act of 2003’’. 
2

•S 1857 IS 

1 SEC. 2. AMENDMENT TO THE INTERNAL REVENUE CODE OF 

2 1986. 

3 (a) IN GENERAL.—Section 414(f) of the Internal 

4 Revenue Code of 1986 is amended—

5 (1) by striking paragraph (2) and inserting the 

6 following: 

7 ‘‘(2) COMMON CONTROL.—

8 ‘‘(A) IN GENERAL.—For purposes of this 

9 subsection and subtitle E of title IV of the Em10 ployee Retirement Income Security Act of 1974 

11 (29 U.S.C. 1381 et seq.), all trades or busi12 nesses (whether or not incorporated) which are 

13 under common control within the meaning of 

14 subsection (c) are considered a single employer. 

15 ‘‘(B) PRINCIPAL PURPOSE TEST.—If a 

16 principal purpose of any transaction is to evade 

17 or avoid liability under subtitle E of title IV of 

18 the Employee Retirement Income Security Act 

19 of 1974 (29 U.S.C. 1381 et seq.), then, subject 

20 to paragraph (6), the determination of whether 

21 one or more trades or businesses are under 

22 common control for purposes of such subtitle 

23 shall be made without regard to such trans24 action.’’, and 

25 (2) by adding at the end the following: 
3

•S 1857 IS 

1 ‘‘(6) DETERMINATION OF COMMON CONTROL

2 MORE THAN 5 YEARS FOLLOWING A TRANSACTION.—

3 ‘‘(A) IN GENERAL.—If—

4 ‘‘(i) a plan sponsor of a plan deter5 mines that—

6 ‘‘(I) a complete or partial with7 drawal of an employer has occurred, 

8 or 

9 ‘‘(II) an employer is liable for 

10 withdrawal liability payments with re11 spect to the complete or partial with12 drawal of an employer from the plan, 

13 ‘‘(ii) such determination is based in 

14 whole or in part on a finding by the plan 

15 sponsor that a principal purpose of any 

16 transaction was to evade or avoid liability 

17 under subtitle E of title IV of the Em18 ployee Retirement Income Security Act of 

19 1974 (29 U.S.C. 1381 et seq.), and 

20 ‘‘(iii) such transaction occurred at 

21 least 5 years before the date of the com22 plete or partial withdrawal, 

23 then the special rules under subparagraph (B) 

24 shall be used in applying section 4219(c) and 

25 section 4221(a) of the Employee Retirement In-
4

•S 1857 IS 

1 come Security Act of 1974 (29 U.S.C. 1399(c) 

2 and 1401(a)) to the employer. 

3 ‘‘(B) SPECIAL RULES.—

4 ‘‘(i) DETERMINATION.—Notwith5 standing section 4221(a)(3) of the Em6 ployee Retirement Income Security Act of 

7 1974 (29 U.S.C. 1401(a)(3))—

8 ‘‘(I) a determination by the plan 

9 sponsor under subparagraph (A)(i) 

10 shall not be presumed to be correct, 

11 and 

12 ‘‘(II) the plan sponsor shall have 

13 the burden to establish, by a prepon14 derance of the evidence, each and 

15 every element of the claim for with16 drawal liability. 

17 ‘‘(ii) PROCEDURE.—Notwithstanding 

18 section 4219(c) and section 4221(d) of the 

19 Employee Retirement Income Security Act 

20 of 1974 (29 U.S.C. 1399(c) and 1401(d)), 

21 if an employer contests the plan sponsor’s 

22 determination under subparagraph (A)(i) 

23 through an arbitration proceeding pursu24 ant to section 4221(a) of such Act (29 

25 U.S.C. 1401(a)), or through a claim 
5

•S 1857 IS 

1 brought in a court of competent jurisdic2 tion, the employer shall not be obligated to 

3 make any withdrawal liability payments 

4 until a final decision in the arbitration, or 

5 in court, upholds the plan sponsor’s deter6 mination.’’. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to any employer that receives a 

9 notification under section 4219(b)(1) of the Employee Re10 tirement Income Security Act of 1974 (29 U.S.C. 

11 1399(b)(1)) after October 31, 2003.

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