An Act to impose an excise tax on the sale of coal by the producer, to establish a Black Lung Disability Trust Fund, and for other purposes.
PL 95-227 (H.R.5322), enacted 02/10/1978

PUBLIC LAW 95-227—FEB. 10, 1978 
92 STAT. 11 
Public Law 95-227 
95th Congress 
An Act 
To impose an excise tax on the sale of coal by the producer, to establish a Black 
Lung Disability Trust Fund, and for other purposes. 
Be it enacted ty the Senate and House of Representatives 
of the 
United States of America in Congress 
assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the "Black Lung Benefits Revenue Act of 
1977". 
SEC. 2. EXCISE TAX ON COAL. 
(a) I N GENERAL.—Chapter 32 of the Internal Revenue Code of 1954 
(relating to manufacturers excise taxes) is amended by inserting after 
subchapter A the following new subchapter: 
"Subchapter B—Coal 
"Sec. 4121. Imposition of tax. 
j 
"SEC. 4121. IMPOSITION OF TAX. 
" (a) TAX IMPOSED.—There is hereby imposed on coal sold by the pro-
ducer a tax at the rates of— 
" (1) 50 cents per ton in the case of coal from underground mines 
located in the United States^ and 
"(2) 25 cents per ton in the case of coal from surface mines 
located in the United States. 
"(b) LIMITATION ON TAX.—The amount of the tax imposed by sub-
section (a) with respect to a ton of coal shall not exceed 2 percent of 
the price at which such ton of coal is sold by the producer. 
"(c) TAX NOT To APPLY TO LIGNITE.—The tax imposed by subsec-
tion (a) shall not apply in the case of lignite. 
" (d) DEFINITIONS.—For purposes of this subchapter— 
"(1) COAL FROM SURFACE MINES.—Coal shall be treated as pro-
duced from a surface mine if all of the geological matter above the 
coal being mined is removed before the coal is extracted from the 
earth. Coal extracted by auger shall be treated as coal from a sur-
face mine. 
"(2) COAL FROM UNDERGROUND MINES.—Coal shall be treated as 
i 
produced from an underground mine if it is not produced from a 
surface mine. 
"(3) UNITED STATES.—The term 'United States' has the mean-
ing given to it by paragraph (1) of section 638. 
" (4) TON.—The term 'ton' means 2,000 pounds.". 
(b) CONFORMING AMENDMENTS.— 
(1) Section 4218(a) of such Code (relating to use by manu-
facturer or importer considered sale) is amended by adding at the 
end thereo.f the following new sentence: "For the purpose of 
applying the first sentence of this subsection to coal taxable 
under section 4121, the words ' (otherwise than as material in the 
! 
manufacture or production of, or as a component part of, another 
article taxable under this chapter to be manufactured or produced 
by him)' shall be disregarded.". 
Feb. 10, 1978 
[H.R. 5322] 
Black Lung 
Benefits Revenue 
Act of 1977. 
26 use 4121 
note. 
26 use 4121. 
26 use 638. 
26 use 4218. 
Supra. 
39-194 O—80—pt. 1 
5 : QL3 
92 STAT. 12 
PUBLIC LAW 95-227—FEB. 10, 1978 
26 use 4221. 
Ante, p. 11. 
26 use 4293. 
26 use 6416. 
26 use 4121 
note. 
Black Lung 
Disability Trust 
Fund. 
30 u s e 934a. 
Trustees. 
Post, p. 21. 
Funds, transfer. 
Post, p. 13. 
Interest rate. 
(2) Section 4221(a) of such Code (relating to certain tax-free 
sales) is amended by inserting "(other than under section 4121)" 
after "this chapter". 
(3) Section 4293 of such Code (relating to exemption for United 
States and possessions) is amended by inserting "(other than the 
tax imposed by section 4121)" after "chapters 31 and 32". 
(4) Subsection (b) of section 6416 (relating to special cases 
in 
which tax payments are considered 
overpayments) 
is 
amended— 
(A) by inserting "(other than coal taxable under section 
4121)" immediately after "in respect of any article" in para-
graph (2), and 
(B) by inserting "(other than coal taxable under section 
4121)" immediately after "with respect to the sale of any 
article" in paragraph (3). 
(c) CLERICAL AMENDMENT.—The table of subchapters for chapter 
32 of such Code is amended by inserting after the item relating to sub-
chapter A the following new item: 
"SUBCHAPTER B . Coal.". 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
apply with respect to sales after March 31,1978. 
SEC. 3. TRUST FUND AND OPERATOR LIABILITY. 
(a) ESTABLISHMENT or F U N D . — 
(1) There is hereby established on the books of the Treasury 
of the United States a trust fund to be known as the Black Lung 
'^^' Disability Trust Fund (to which reference is made elsewhere in 
, 
this section as the "fund"). The fund shall remain available 
-'"' without fiscal year limitation and shall consist of such amounts as 
may be appropriated to it or deposited in it as provided in sub-
section (b). 
(2) The trustees of the fund shall be the Secretary of the 
Treasury, the Secretary of Labor, and the Secretary of Health, 
Education, and Welfare. The Secretary of the Treasury shall be 
the managing trustee and shall hold, operate, and administer 
the fund. 
(b) APPROPRIATIONS ; OTHER RECEIPTS.— 
(1) There are hereby appropriated to the fund, out of any 
money in the Treasury not otherwise appropriated, amounts 
equivalent to the taxes received in the Treasury under section 
' 
4121, and by operation of section 4952, of the Internal Revenue 
Code of 1954. The amounts appropriated by this paragraph shall 
be transferred monthly from the general fund of the Treasury 
to the fund on the basis of estimates made by the Secretary of 
the amounts of such taxes received in the Treasury. Proper adjust-
ment shall be made in the amounts subsequently transferred to 
? the extent prior estimates were in excess of, or less than, the 
amounts required to be transferred. 
(2) There are authorized to be appropriated to the fund, as 
repayable advances, such sums as may from time to time be neces-
sary to meet obligations incurred under subsection (a) of section 
, 
424 of the Federal Coal Mine Health and Safety Act of 1969, 
Advances made pursuant to this paragraph shall be repaid, and 
interest on such advances shall be paid, to the general fund of the 
Treasury when the Secretary of the Treasury determines that 
moneys are available in the fund for such repayments. Interest on 
such advances shall be at a rate equal to the average rate of inter-
PUBLIC LAW 95-227—FEB. 10, 1978 
92 STAT. 13 
30 use 933, 
941. 
Post, p. 101. 
Report to 
Congress. 
est, computed as of the end of the calendar month next preceding 
the date of any such advance, borne by all marketable interest-
bearing obligations of the United States then forming a part of 
the public debt. When such average rate is not a multiple of one-
eighth of 1 percent, the rate of interest on such advances shall be 
the multiple of one-eighth of 1 percent nearest such average rate. 
(3) Amounts paid into the fund by a trust described in section 
501(c) (21) of the Internal Revenue Code of 1954 (other than Post, p. 15. 
amounts paid under subsection (b) of section 424 of the Federal 
Coal Mine Health and Safety Act of 1969) shall be covered into Infra. 
the fund. 
(4) Amounts repaid or recovered under subsection (b) of sec-
tion 424 of the Federal Coal Mine Health and Safety Act of 1969 
shall be covered into the fund as repayments of amounts errone-
ously paid out. 
(5) Amounts paid as fines or penalties, or interest thereon, 
under section 423, 431, or 432 of such Act shall be covered into 
the fund as miscellaneous receipts. 
(c) DUTIES OF THE SECRETARY or THE TREASURY.— 
(1) The Secretary of the Treasury shall hold the fund and 
(after consultation with the other trustees of the fimd) shall 
report to the Congress not later than the last day of March of 
1979, and of each succeeding year, on the financial condition and 
the results of the operations of the fund during the preceding 
fiscal year (including a detailed statement of the expenses paid 
out of the fund under subsection (a) (4) of section 424 of the 
Federal Coal Mine Health and Safety Act of 1969) and on its 
expected condition and operations during the fiscal year in which 
the report is made. The report shall be printed as a House docu-
ment of the session of the Congress to which the report is made. 
(2) It is the duty of the Secretary of the Treasury to invest 
such portion of tlie fund as is not, in his judgment, re(i[uired to 
meet current withdrawals, including the repayment of advances 
made under subst^ction (b)(2). Such investments shall be made 
in public debt secinities with maturities suitable for the needs of 
tlie fund and bearing interest at prevailing market rates. The 
income on such investments shall be credited to and form a part 
of the fund. 
(d) PAYMENTS FROM FuNu.^Section 424 of the Federal Coal Mine 
Health and Safety Act of 1969 is amended to read as follows: 
30 USC 934. 
"SEC. 424. (a) Amounts in the Black Lung Disability Trust Fund 
(referred to in this section as the 'fund') established under section 3 
of the Black Lung Benefits Revenue Act of 1977 shall be available, as ^«^e, p. 12. 
provided by appropriation Acts, for— 
"(1) the payment of benefits under section 422 in any case in 30 USC 932. 
which the Secretary determines that— 
" (A) the operator liable for the payment of such benefits— 
"(i) has not commenced payment of such benefits 
within 30 days after the date of an initial determination 
of eligibility by the Secretary, or 
"(ii) has not made a payment within 30 days a''ter 
that payment is due, 
" (B) there is no operator who is required to secure the 
payment of such benefits, 
" (2) the payment of obligations incurred by the Secretary with 
respect to all claims of miners or their survivors in which the 
Infra. 
Investments. 
92 STAT. 14 
PUBLIC LAW 95-227—FEB. 10, 1978 
Administrative 
expenses. 
30 use 937. 
Post, p. 101. 
Ante, p. 11. 
30 use 932. 
30 use 932, 
933. 
Lien. 
26 use 6323. 
miner's last coal mine employment was before January 1, 1970, 
"(3) the repayment into the Treasury of the United States of 
an amount ecjual to the sum of the amounts expended by the Secre-
tary for claims under this part which were paid before April 1, 
1978, except that the fund shall not be obligated to pay or reim-
burse for benefits paid attributable to periods of eligibility before 
January 1, 1974. 
" (4) the repayment of, and the payment of interest on, advances 
to the fund under subsection (b) (2) of section 3 of the Black 
Lung Benefits Kevenue Act of 1977, 
"(5) the payment of all expenses of operation and administra-
tion on and after the effective date of the Black Lung Benefits 
Reform Act of 1977 (or any other Act determined by the Secre-
tary to contain substantially the same provisions) under this part 
(other than under section 427(a) or 433), inchiding the admin-
j, 
istrative expenses incurred by the Department of Labor under 
this part, the administrative expenses incurred by the Department 
of the Treasury in administering subchapter B of chapter 32 of 
the Internal Revenue Code of 1954 and in carrying out its respon-
sibilities with respect to the fund, and any expenses incurred by 
the Department of Health, Education, and Welfare in connection 
: with the administration of this part, and 
; 
"(6) the reimbursement of operators for amounts paid by such 
operators (other than as penalties or interest) before April 1, 
1978, in satisfaction (in whole or in part) of claims of miners 
whose last employment in coal mines was terminated before 
January 1, 1970. 
"(b)(1) I f -
'' (A) an amount is paid out of the fund to an individual entitled 
to benefits under section 422, and 
"(B) the Secretary determines, under the provisions of sections 
422 and 423, that an operator was required to secure the payment 
of all or a portion of such benefits, 
then the operator is liable to the United States for repayment to the 
fund of the amount of such benefits the payment of which is properly 
attributed to him. No operator or representative of operators may 
bring any proceeding, or intervene in any proceeding, held for the 
purpose of determining claims for benefits to be paid by the fund, 
except that nothing in this section shall affect the rights, duties, or 
liabilities of any operator in proceedings under section 422 or section 
423. In a case where no operator responsibility is assigned pursuant 
to sections 422 and 423, a determination by the Secretary that the fund 
is liable for the payment of benefits shall be final. 
"(2) If any operator liable to the fund under paragraph (1) refuses 
to pay, after demand, the amount of such liability (including interest), 
then there shall be a lien in favor of the United States for such amount 
upon all property and rights to property, whether real or personal, 
belonging to such operator. The lien arises on the date on which such 
liability is finally determined, and continues until it is satisfied or 
becomes unenforceable by reason of lapse of time. 
"(3) (A) Except as otherwise provided under this subsection, the 
})riorit3^ of the lien shall be determined in the same manner as under 
section 6323 of the Internal Revenue Code of 1954. That section shall 
be applied for such purposes— 
"(i) by substituting 'lien imposed by section 424(b) (2) of the 
Federal ^Coal Mine Health and Safety Act of 1969' for 'lien 
imposed by section 6321'; 'operator liability lien' for 'tax lien'; 
PUBLIC LAW 95-227—FEB. 10, 1978 
92 STAT. 15 
'operator' for 'taxpayer'; 'lien arising under section 424(b)(2) 
of the Federal Coal Mine Health and Safety Act of 1969' for Ante, p. 13. 
'assessment of the tax'; 'payment of the liability is made to the 
Black Lung Disability Trust Fund' for 'satisfaction of a levy 
pursuant to section 6332(b)'; and 'satisfaction of operator lia- 26 USC 6332. 
bility' for 'collection of any tax under this title' each place such 
terms appear; and 
"(ii) by treating all references to the 'Secretary' as references 
to the Secretary of Labor. 
"(B) In the case of a bankruptcy or insolvency proceeding, the lien 
imposed under paragraph (2) shall be treated in the same manner as 
a lien for taxes due and owing to the United States for purposes of 
the Bankruptcv Act or section 3466 of the Revised Statutes (31 U.S.C. Post, p. 2549. 
191). 
"(C) For purposes of applying section 6323(a) of the Internal 
Revenue Code of 1954 to determine the priority between the lien 26 USC 6323. 
imposed under paragraph (2) and the P'ederal tax lien, each lien 
shall be treated as a judgment lien arising as of the time notice of 
such lien is filed. 
"(D) For purposes of this subsection, notice of the lien imposed 
under paragraph (2) shall be filed in the same manner as under sub- 
> 
; 
sections (f) and (g) of section 6323 of the Internal Revenue Code 
of 1954. 
"(4) (A) In any case where there has been a refusal or neglect to Civil action, 
pay the liability imposed under paragraph (2), the Secretary may 
bring a civil action in a district court of the United States to enforce 
the lien of the United States under this section with respect to such 
liability or to subject any property, of whatever nature, of the opera-
tor, or in which he has any right, title, or interest, to the payment 
of such liability. 
"(B) The liability imposed by paragraph (1) may be collected at a 
proceeding in court if the proceeding is commenced within 6 years 
after the date on which the liability was finally determined, or before 
• 
the expiration of any period for collection agreed upon in writing by 
the operator and the United States before the expiration of such 6-year 
period. The running of the period of limitation provided under this 
subparagraph shall be suspended for any period during which the 
assets of the operator are in the custody or control of any court of the 
• 
United States, or of any State, or the District of Columbia, and for 
6 months thereafter, and for any period during which the operator is 
.; . 
outside the United States if such period of absence is for a continuous 
period of at least 6 months.". 
(e) EFFECTIVE DATE,—This section shall take effect on April 1, 30 USC 934 note. 
1978. 
SEC. 
4
. 
OPERATOR'S TRUST FOR THE PAYMENT OF BLACK LUNG 
BENEFITS. 
(a) ESTABLISHMENT or TRUST.—Section 501(c) of the Internal Rev-
enue Code of 1954 (relating to list of exempt organizations) is 26 USC 501. 
•amended by adding at the end thereof the following new paragraph: 
" (21) A trust or trusts established in writing, created or organ-
ized in the United States, and contributed to by any person 
(except an insurance company) if— 
"(A) the purpose of such trust or trusts is exclusively— 
"(i) to satisfy, in whole or in part, the liability of 
such person for, or with respect to, claims for compen-
92 STAT. 16 
PUBLIC LAW 95-227—FEB. 10, 1978 
sation for disability or death due to pneumoconiosis 
," - 
under Black Lung Acts,• 
"(ii) to pay premiums for insurance exclusively cover-
ing such liability; and 
"(iii) to pay administrative and other incidental 
expenses of such trust (including legal, accounting, actu-
arial, and trustee expenses) in connection witli the oper-
,,.. 
ation of the trust and the processing of claims against 
such person under Black Lung Acts; and 
"(B) no part of the assets of the trust may be used for, 
or diverted to, any purpose other than— 
"(i) the purposes described in subparagraph (A), or 
" (ii) investment (but only to the extent that the trustee 
determines that a portion of the assets is not currently 
needed for the purposes described in subparagraph (A)) 
in— 
" (I) public debt securities of the United States, 
"(II) obligations of a State or local government 
which are not in default as to principal or interest, 
or 
"(III) time or demand deposits in a bank (as 
26 use 581. 
defined in section 581) or an insured credit union 
(within the meaning of section 101 (6) of the Federal 
Credit Union Act, 12 U.S.C. 1752(6)) located in the 
' ' 
' 
United States, or 
'' 
"(iii) payment into the Black Lung Disability Trust 
• 
Fund established under section 3 of the Black Lung 
Benefits Revenue Act of 1977, or into the general fund 
of the United States Treasury (other than in satisfac-
tion of any tax or other civil or criminal liability of tlie 
person who established or contributed to the trust). 
"Black Lung 
For purposes of this paragraph the term 'Black Lung Acts' means 
Acts." 
part C of title IV of the Federal Coal Mine Health and Safey 
30 use 931. 
Act of 1969, and any State law providing compensation for dis-
ability or death due to pneumoconiosis,". 
.1.: 
(b) AxLowANCE OF DEDUCTION.— 
(1) I N GENERAL.—Part VI of subchapter B of chapter 1 of such 
Code (relating to itemized deductions for individuals and cor-
porations) is amended by adding at the end thereof the following 
new section: 
26 use 192. 
"SEC. 192. CONTRIBUTIONS TO BLACK LUNG BENEFIT TRUST. 
"(a) ALLOWANCE OF DEDUCTION.—There is allowed as a deduction 
for the taxable year an amount equal to the sum of the amounts con-
tributed by the taxpayer during the taxable year to or under a trust 
Anu, p. 15. 
or trusts described in section 501 (c) (21). 
"(b) LIMITATION.— 
"(1) I N GENERAL.—The amount of the deduction allowed by 
subsection (a) for any taxable year with respect to any such 
' J- 
- 
trust shall not exceed the amount determined under paragraph 
(2) or (3), whichever is greater. 
" (2) CURRENT YEAR OBLIGATIONS.—The amount determined under 
this paragraph for the taxable year is the amount which, when 
added to the fair market value of the assets of the trust as of the 
beginning of the taxable year, is necessary to carry out the pur-
poses of the trust described in subparagraph (A) of section 501 (c) 
(21) for the taxable year. 
PUBLIC LAW 95-227—FEB. 10, 1978 
92 STAT. 17 
"(3) 
CERTAIN FUTURE OBLIGATIONS.—The amount determined 
under this paragraph for the taxable year is the sum of— 
"(A) the amount which is necessary to meet the expenses of 
the trust described in clause (iii) of section 501(c) (21) (A) 
Ante, p. 15. 
for the taxable year, and 
"(B) the lesser of— 
" (i) the amount which, when added to the fair market 
value of the assets of the trust as of the beginning of the 
taxable year, is necessary to provide all expected future 
payments with respect to black lung benefit claims which 
to v 
•
> ?" 
are approved, including any such claims which have 
been filed and which have not been disapproved, as of the 
end of the taxable year, or 
"(ii) twice the amount which is necessary to provide 
^^^v:. 
all expected future payments with respect to the greater 
of— 
" ( I ) black lung benefit claims filed during the 
• 
taxable year or any one of the 3 immediately preced-
ing taxable years, or 
" ( I I ) such claims approved during any one of 
those 4 taxable years. 
"(c) 
SPECIAL RULES.— 
"(1) DETERMINATION OF EXPECTED FUTURE 
PAYMENTS.—The 
amounts described in subsection (b) shall be determined by using 
reasonable actuarial assumptions which are not inconsistent with 
regulations prescribed by the Secretary. 
"(2) BENEFIT PAYMENTS TAKEN INTO ACCOUNT.—In determin-
ing the amounts described in subsection (b), only those black lung 
benefit claims the payment of which is expected to be made from 
the trust shall be taken into account. 
"(3) T I M E WHEN CONTRIBUTIONS DEEMED MADE.—For purposes 
of this section, a taxpayer shall be deemed to have made a pay-
ment of a contribution on the last day of a taxable year if the pay-
ment is on account of that taxable year and is made not later than 
the time prescribed by law for filing the return for that taxable 
year (including extensions thereof). 
"(4) CONTRIBUTIONS TO BE I N CASH OR CERTAIN OTHER ITEMS.— 
No deduction shall be allowed under subsection (a) with respect 
to any contribution to a trust described in section 501(c) (21) 
other than a contribution in cash or in items in which such trust 
may invest under clause (ii) of section 501(c) (21) (B). 
" ( d ) 
CARRYOVER OF EXCESS CONTRIBUTIONS.—If the amount of the 
deduction determined under subsection (a) for the taxable year (with-
out regard to the limitation imposed by subsection (b)) with respect 
to a trust exceeds the limitation imposed by subsection (b) for the 
taxable year, the excess shall be carried over to the succeeding taxable 
year and treated as contributed to the trust during that year. 
" (e) DEFINITION OF BLACK LUNG BENEFIT CLAIM.—For purposes of 
this section, the term 'black lung benefit claim' means a claim for com-
pensation for disability or death due to pneumoconiosis under part C 
of title I V of the Federal Coal Mine Health and Safety Act of 1969 
30 USC 931. 
or under any State law providing for such compensation.". 
(2) CLERICAL AMENDMENT.—The table of sections for such part 
is amended by adding at the end thereof the following new item: 
"Sec. 192. Contributions to black lung benefit trust.". 
92 STAT. 18 
PUBLIC LAW 95-227—FEB. 10, 1978 
(c) EXCISE TAXES ON ACTS OF SELF-DEALING, TAXABLE EXPENDI-
TURES, AND EXCESS CONTRIBUTIONS.— 
(1) I N GENERAL.—Chapter 42 of such Code (relating to private 
. 1 
foundations) is amended by adding at the end thereof the follow-
ing new subchapter: 
"Subchapter B—Black Lung Benefit Trusts 
"Sec. 4951. Taxes on self-dealing. 
"Sec. 4952. Taxes on taxable expenditures. 
"Sec. 4953. Tax on excess contributions to black lung benefit trusts. 
26 use 4951. 
"SEC. 4951. TAXES ON SELF-DEALING. 
"(a) INITIAL TAXES.— 
" (1) O N SELF-DEALER.—There is hereby imposed a tax on each act 
of self-dealing between a disqualified person and a trust described 
Ante, p. 15. 
in section 501(c) (21). The rate of tax shall be equal to 10 per-
cent of the amount involved with respect to the act of self-dealing 
for each year (or part thereof) in the taxable period. The tax 
imposed by this paragraph shall be paid by any disqualified per-
son (other than a trustee acting only as a trustee of the trust) who 
participates in the act of self-dealing. 
"(2) O N TRUSTEE.—In any case in which a tax is imposed by 
paragraph (1), there is hereby imposed on the participation of 
any trustee of such a trust in an act of self-dealing between a 
disqualified person and the trust, knowing that it is such an act, a 
tax equal to 2i/^ percent of the amount involved with respect to 
the act of self-dealing for each year (or part thereof) in the tax-
able period, unless such participation is not willful and is due to 
reasonable cause. The tax imposed by this paragraph shall be paid 
by any such trustee who participated in the act of self-dealing. 
"(b) ADDITIONAL TAXES.— 
"(1) O N SELF-DEALER.—In any case in which an initial tax is 
imposed by subsection (a) (1) on an act of self-dealing by a dis-
qualified person with a trust described in section 501(c) (21) and 
in which the act is not corrected within the correction period, there 
is hereby imposed a tax equal to 100 percent of the amount 
involved. The tax imposed by this paragraph shall be paid by any 
disqualified pereon (other than a trustee acting only as a trustee 
of such a trust) who participated in the act of self-dealing. 
"(2) O N TRUSTEE.—In any case in which an additional tax is 
imposed by paragraph (1), if a trustee of such a trust refused to 
agree to part or all of the correction, there is hereby imposed a 
tax e{|ual to 50 percent of the amount involved. The tax imposed 
by this paragraph shall be paid by any such trustee who refused to 
agree to part or all of the correction. 
*'(c) JOINT AND SEVERAL LIABILITY.—If more than one person is 
liable under any paragraph of subsection (a) or (b) with respect to 
any one act of self-dealing, all such persons shall be jointly and sev-
erally liable under such paragraph with respect to such act. 
" ( d ) SELF-DEALING.— 
"(1) I N GENERAL.—For purposes of this section, the term 'self-
dealing' means any direct or indirect— 
r? 
' t r 
" ( A ) sale, exchange, or leasing of real or personal prop-
erty between a trust described in section 501(c) (21) and a 
disqualified person; 
PUBLIC LAW 95-227—FEB. 10, 1978 
92 STAT. 19 
"(B) lending of money or other extension of credit 
between such a trust and a disqualified person; 
"(C) furnishing of goods, services, or facilities between 
such a trust and a disqualified person; 
"(D) payment of compensation (or payment or reimburse-
ment of expenses) by such a trust to a disqualified person; 
and 
- 
i 
"(E) transfer to, or use by or for the benefit of, a disquali- 
- *• 
' 
fied 
person of the income or assets of such a trust. 
' 
"(2) SPECIAL RULES.—For purposes of paragraph (1)— 
"(A) the transfer of personal property by a disqualified 
person to such a trust shall be treated as a sale or exchange if 
the property is subject to a mortgage or similar lien; 
' 
"(B) the furnishing of goods, services, or facilities by a 
disqualified person to such a trust shall not be an act of self-
dealing if the furnishing is without charge and if the goods, 
services, or facilities so furnished are used exclusively for the 
purposes specified in section 501(c) (21) (A); and 
Ante, p. 15. 
"(C) the payment of compensation (and the payment or 
• ' 
reimbursement of expenses) by such a trust to a disqualified 
person for personal services which are reasonable and neces-
sary to carrying out the exempt purpose of the trust shall 
not be an act of self-dealing if the compensation (or payment 
or reimbursement) is not excessive. 
" (e) DEFINITIONS.—For purposes of this section— 
"(1) TAXABLE PERIOD.—The term 'taxable period' means, with 
respect to any act of self-dealing, the period beginning with the 
date on which the act of self-dealing occurs and ending on the 
earlier of— 
"(A) the date of mailing of a notice of deficiency with 
respect to the tax imposed by subsection (a) (1) under section 
6212, or 
"(B) the date on which correction of the act of self-
dealing is completed. 
"(2) AMOUNT INVOLVED.—The term 'amount involved' means, 
with respect to any act of self-dealing, the greater of the amount 
of money and the fair market value of the other property given 
or the amount of money and the fair market value of the other 
, 
?- ' /^ 
property received; except that in the case of services described in 
subsection (d)(2)(C), the amount involved shall be only the 
excess compensation. For purposes of the preceding sentence, the 
fair market value— 
"(A) in the case of the taxes imposed by subsection (a), 
shall be determined as of the date on which the act of self-
dealing occurs; and 
"(B) in the case of taxes imposed by subsection (b), shall 
be the highest fair market value during the correction period. 
"(3) CORRECTION.—The terms 'correction' and 'correct' mean, 
with respect to any act of self-dealing, undoing the transaction to 
the extent possible, but in any case placing the trust in a financial 
position not worse than that in which it would be if the disquali-
fied person were dealing under the highest fiduciary standards. 
92 STAT. 20 
PUBLIC LAW 95-227—FEB. 10, 1978 
26 use 6212. 
26 use 6213. 
Ante, p. 15. 
26 use 267. 
"(4) CORRECTION PERIOD.—The term 'correction period* means, 
with respect to any act of self-dealing, the period beginning with 
the date on which the act of self-dealing occurs and endih.!; 90 
days after the date of mailing of a notice of deticionoy under 
section 6212 with respect to the tax imposed by subsection (b)(1), 
extended by— 
"(A) any period in which a deficiency cannot be assessed 
under section 6213 (a), and 
"(B) any other period which the Secretary detenuines is 
reasonable and necessary to bring about correction of the act 
of self-dealing. 
"(6) DISQUALIFIED PERSON.—The term 'disqualified person' 
means, with respect to a trust described in section 501 (c) (21), a 
person who is— 
" (A) a contributor to the trust, 
"(B) a trustee of the trust, 
"(C) an owner of more than 10 percent of— 
" (i) the total combined voting power of a corporation, 
"(ii) the profits interest of a partnership, or 
"(iii) the beneficial interest of a trust or unincorpo-
rated enterprise, 
which is a contributor to the trust, 
"(D) an officer, director, or employee of a person who is 
a contributor to the trust, 
"(E) the spouse, ancestor, lineal descendant, or spouse of a 
lineal descendant of an individual described in subparagiaph 
( A ) , ( B ) , ( C ) , o r ( D ) , 
, 
_ 
"(F) a corporation of which persons described in sub-
paragraph (A), (B), (C), (D), or (E) own more than 35 
percent of the total combined voting power, 
"(G) a partnership in which persons described in nub-
paragraph (A), (B), (C), (D), or (E), own more than 35 
percent of the profits interest, or 
"(H) a trust or estate in which persons describe! in sub-
paragraph (A), (B), (C), (D), or (E), hold more than 35 
percent of the laeneficial interest. 
For purposes of subparagraphs (C) (i) and (F), there shall be 
taken into account indirect stockholdings which would be taken 
into account under section 267(c), except that, for purposes of 
this paragraph, section 267(c)(4) shall be treated as providing 
that the members of the family of an individual are only those 
individuals described in subparagraph (E) of this paragraph. 
For purposes of subparagraphs (C) (ii) and (iii), (G),and (H), 
the ownership of profits or beneficial interests shall be determined 
in accordance with the rules for constructive ownership of stock 
provided in section 267(c) (other than paragraph (3) thereof), 
except that section 267(c) (4) shall be treated as providing that 
the members of the family of an individual are only those indi-
viduals described in subparagraph (E) of this para*rraph, 
"(f) PAYMENTS OF BENEFITS.—For purposes of this section, n 'pay-
ment, out of assets or income of a trust described in section 501 ^c) 
(21), for the purposes described in clause (i) of section 501(c) (21) (A) 
snail not be considered an act of self-dealing. 
^-^c-'i^^^f^l^^fe^-i' 
• 
PUBLIC LAW 95-227—FEB. 10, 1978 
92 STAT. 21 
"SEC. 4952. TAXES ON TAXABLE EXPENDITURES. 
' 
26 USC 4952. 
" ( a ) TAX IMPOSED.— 
"(1) O N THE FUND.—There is hereby imposed on each taxable 
expenditure (as defined in subsection (d)) from the assets or 
income of a trust described in section 501(e) (21) a tax equal to Ante, p. 15. 
10 percent of the amount thereof. The tax imposed by this para-
graph shall be paid by the trustee out of the assets of the trust. 
"(2) O N THE TRUSTEE.—There is hereby imposed on the agree-
ment of any trustee of such a trust to the making of an expendi-
ture, knowing that it is a taxable expenditure, a tax equal to 2i^ 
percent of the amount thereof, unless such agreement is not will-
ful and is due to reasonable cause. The tax imposed by this para-
graph shall be paid by the trustee who agreed to the making of 
. 
-
the expenditure. 
"(b) ADDITIONAL TAXES.— 
"(1) O N THE FUND.—In any case in which an initial tax is 
imposed by subsection (a)(1) on a taxable expenditure and such 
expenditure is not corrected within the correction period, there 
is hereby imposed a tax equal to 100 percent of the amount of the 
expenditure. The tax imposed by this paragraph shall be paid 
by the trustee out of the assets of the trust. 
"(2) O N THE TRUSTEE.—In any case in which an additional 
tax is imposed by paragraph (1), if a trustee refused to agree to 
a part or all of the correction, there is hereby imposed a tax equal 
to 50 percent of the amount of the taxable expenditure. The tax 
imposed by this paragraph shall be paid by any trustee who 
refused to agree to part or all of the correction. 
"(c) JOINT AND SEVERAL LIABILITY.—For purposes of subsections 
(a) and (b), if more than one person is liable under subsection (a) (2) 
or (b) (2) with respect to the making of a taxable expenditure, all 
such persons shall be jointly and severally liable under such para-
graph with respect to such expenditure. 
"(d) TAXABLE EXPENDITURE.—For purposes of this section, the "Taxable 
term 'taxable expenditure' means any amount paid or incurred by a 
expenditure." 
trust described in section 501 (c) (21) other than for a purpose specified 
in such section. 
"(e) 
DEFINITIONS.— 
"(1) CORRECTION.—The terms 'correction' and 'correct' mean, 
with respect to any taxable expenditure, recovering part or all or 
the expenditure to the extent recovery is possible, and where full 
recovery is not possible, contributions by the person or persons 
whose liabilities for black lung benefit claims (as defined in sec-
tion 192(e)) are to be paid out of the trust to the extent necessary 
Ante, p. 16. 
to place the trust in a financial position not worse than that in 
which it would be if the taxable expenditure had not been made. 
"(2) CORRECTION PERIOD.—The term 'correction period' means, 
with respect to any taxable expenditure, the period beginning with 
the date on which the taxable expenditure occurs and ending 90 
days after the date of mailing of a notice of deficiency under sec-
tion 6212 with respect to the tax imposed by subsection (b) (1), 
26 USC 6212. 
extended by— 
• 
"(A) any period in which a deficiency cannot be assessed 
under section 6213 (a), and 
* 
26 USC 6213. 
" ( B ) any other period whicn the Secretary determines is 
reasonable and necessary to bring about correction of the 
taxable expenditure. 
92 STAT. 22 
PUBLIC LAW 95-227—FEB. 10, 1978 
26 use 4953. 
"SEC. 4953. TAX ON EXCESS CONTRIBUTIONS TO BLACK LUNG BENE-
FIT TRUSTS. 
"(a) TAX IMPOSED.—There is hereby imposed for each taxable year 
a tax in an amount equal to 5 percent of the amount of the excess con-
tributions made by a person to or under a trust or trusts described in 
Anu, p. 15. 
section 501(c) (21). The tax imposed by this subsection shall be paid 
by the person making the excess contribution. 
"Excess 
"(b) EXCESS CONTRIBUTION.—For purposes of this section, the 
contribution." 
teiin 'excess contribution' means the sum of— 
"(1) the amount by which the amount contributed for the tax-
able year to a trust or trusts described in section 501(c) (21) 
exceeds the amount of the deduction allowable to such person for 
Ante, p. 16. 
such contributions for the taxable year under section 192, and 
"(2) the amount determined under this subsection for the pre-
ceding taxable year, reduced by the sum of— 
"(A) the excess of the maximum amount allowable as a 
deduction under section 192 for the taxable year over the 
amount contributed to the trust or trusts for the taxable year, 
and 
; - 
"(B) amounts distributed from the trust to the contributor 
which were excess contributions for the preceding taxable 
year, 
"(c) 
TREATMENT OF WITHDRAWAL OF EXCESS CONTRIBUTIONS.— 
Amounts distributed during the taxable year from a trust described in 
section 501(c) (21) to the contributor thereof the sum of which does 
not exceed the amount of the excess contribution made by the contrib-
utor shall not be treated as— 
"(1) an act of self-dealing (within the meaning of section 
4951), 
"(2) a taxable expenditure (within the meaning of section 
4952), or 
"(3) an act contrary to the purposes for which the trust is 
'-'"•'^"'' 
exempt from taxation under section 501(a).". 
'" " ' 
(2) CLERICAL AMENDMENTS.— 
<
• ' • 
(A) Chapter 42 of such Code is amended by striking out 
the chapter heading and inserting in lieu thereof the follow-
ing: 
^ 
^
^
^
^
^
_
^
^
^
^ _
^
^
^
^
^ , 
"CHAPTER 42—PRIVATE FOUNDATIONS; BLACK LUNG 
BENEFIT TRUSTS 
"SUBCHAPTER A. Private foundations. 
"SUBCHAPTER B. Black lung benefit trusts. 
"Subchapter A—Private Foundations**. 
(B) Subsections (a)(1) and (b) of section 4946 of such 
26 use 4946. 
Code are each amended by striking out "For purposes of this 
chapter" and inserting in lieu thereof "For purposes of this 
subchapter". 
(C) The table of chapters for subtitle T> of such Code is 
amended by striking out the item relating to chapter 42 and 
< 
inserting in lieu thereof the following: 
"CHAPTER 42. Private foundations, black lung benefit trusts.". 
PUBLIC LAW 95-227—FEB. 10, 1978 
92 STAT. 23 
(d) TECHNICAL, AMENDMENTS.— 
(1) (A) Section 6213(e) of such Code (relating to suspension 26 USC 6213. 
of filing period for certain excise taxes) is amended— 
(i) by inserting ", 4951 (relating to taxes on self-dealing), 
. .^ 
or 4952 (relating to taxes on taxable expenditures)" after 
"4945 (relating to taxes on taxable expenditures)", 
(ii) by inserting "4951(e)(4), 4952(e)(2)," after "4945 
(i)(2),"and 
(iii) by striking out "4975(f)(4)" and inserting in lieu 
thereof "4975(fH6)". 
(2) Section 6213 (^f) of such Code is amended by striking out 
"or chapter 42 or 43" each place it appears and inserting in lieu 
thereof "or chapter 41,42,43, or 44". 
(3) Section 6405(a) of such Code is amended by striking out 26 USC 6405. 
"private foundations and pension plans under chapters 42 and 43" 
and inserting in lieu thereof "public charities, private founda-
tions, operators' trust funds, pension plans, or real estate invest-
ment trusts under chapter 41,42,43, or 44". 
(4) Section 6501(e)(3) of such Code is amended by striking 26 USC 6501. 
out "or 43" and inserting in lieu thereof "43, or 44". 
(5) Section 6501 (n) of such Code is amended— 
(A) by striking out "CHAPTER 42 TAXES" in the caption and 
inserting in lieu thereof "CHAPTER 42 AND SIMILAR TAXES", 
and 
(B) by striking out the first sentence of paragraph (1) and 
inserting in lieu thereof the following: "For purposes of any 
tax imposed by chapter 42 (other than section 4940) or by 26 USC 4940 et 
section 4975, the return referred to in this section shall be the **9-
return filed by the private foundation, plan, or trust (as the 26 USC 4975. 
case may be) for the year in which the act (or failure to act) 
giving rise to liability for such tax occurred.". 
"(6) (A) Section 6503(g) of such Code is amended by striking 26 USC 6503. 
"or section 507 or section 4971 or section 4975" and inserting in 
lieu thereof "or section 507, 4971, 4975, 4985, or 4986". 
(B) Section 6503(g) of such Code is amended by striking out 
"or 4975(f) (4)" and inserting in lieu thereof "4975(f) (6), 4985 
(e)(4), or 4986(e) (2)". 
(7) Section 7454(b) of such Code is amended by inserting "or 26 USC 7454. 
whether the trustee of a trust described in section 502(c) (21) has 
'knowingly' participated in an act of self-dealing (within the 
meaning of section 4951) or agreed to the making of a taxable 
expenditure (within the meaning of section 4952)," after "section 
4945),". 
(e) PUBLICITY or INFORMATION.—Section 6104 of such Code (relat- 26 USC 6104. 
ing to publicity of information required from certain exempt organi-
zations and certain trusts) is amended— 
(1) by inserting " (other than in paragraph (21) thereof)" after 
"section 501 (c)" in subsection (a) (1) (A), and 
(2) by adding at the end of subsection (b) thereof the follow-
ing sentence: "This subsection shall not apply to information 
required to be furnished by a trust described in section 501(c) 
(21).". 
92 STAT. 24 
PUBLIC LAW 95-227—FEB. 10, 1978 
26 u s e 192 note. 
26 u s e 4121 
HOte. 
(f) ErFEC?nvE DATE.—^The amendments made by this section shall 
apply with respect to contributions, acts, and expenditures made after 
December 31,1977, in and for taxable years beginning after such date. 
SEC. 5. GENERAL EFFECTIVE DATE RESERVATION. 
Notwithstanding any other provision of this Act to the contrary, no 
provision of this Act (including any amendment made by any such pro-
vision) shall take effect or apply unless an Act, enacted after the date of 
enactment of this Act, contains a provision, explicitly in satisfaction 
of the requirements of this section, which states that it is the intent of 
the Congress that the provisions of this Act shall take effect. 
Approved February 10, 1978. 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 95-438 (Comm. on Ways and Means). 
SENATE REPORT No. 95-572 (Comm. on Finance). 
CONGRESSIONAL RECORD: 
Vol. 123 (1977): July 18, considered and passed House. 
Dec. 15, considered and passed Senate, amended. 
Vol. 124 (1978): Jan. 24, House concurred in Senate amendments.