§ 4979A.
(a)
Imposition of tax
If—
(1)
there is a prohibited allocation of qualified securities by any employee stock ownership plan or eligible worker-owned cooperative,
(2)
there is an allocation described in section 664(g)(5)(A),
(3)
there is any allocation of employer securities which violates the provisions of section 409(p), or a nonallocation year described in subsection (e)(2)(C) with respect to an employee stock ownership plan, or
(4)
any synthetic equity is owned by a disqualified person in any nonallocation year,
there is hereby imposed a tax on such allocation or ownership equal to 50 percent of the amount involved.
(b)
Prohibited allocation
For purposes of this section, the term “prohibited allocation” means—
(1)
any allocation of qualified securities acquired in a sale to which section 1042 applies which violates the provisions of section 409(n), and
(2)
any benefit which accrues to any person in violation of the provisions of section 409(n).
(c)
Liability for tax
The tax imposed by this section shall be paid—
(1)
in the case of an allocation referred to in paragraph (1) or (2) of subsection (a), by—
(A)
the employer sponsoring such plan, or
(B)
the eligible worker-owned cooperative,
which made the written statement described in section 664(g)(1)(E) or in section 1042(b)(3)(B) (as the case may be), and
(2)
in the case of an allocation or ownership referred to in paragraph (3) or (4) of subsection (a), by the S corporation the stock in which was so allocated or owned.
(d)
Special statute of limitations for tax attributable to certain allocations
The statutory period for the assessment of any tax imposed by this section on an allocation described in subsection (a)(2) of qualified employer securities shall not expire before the date which is 3 years from the later of—
(1)
the 1st allocation of such securities in connection with a qualified gratuitous transfer (as defined in section 664(g)(1)), or
(2)
the date on which the Secretary is notified of the allocation described in subsection (a)(2).
(e)
Definitions and special rules
For purposes of this section—
(2)
Special rules relating to tax imposed by reason of paragraph (3) or (4) of subsection (a)
(A)
Prohibited allocations
(C)
Special rule during first nonallocation year
(D)
Statute of limitations
The statutory period for the assessment of any tax imposed by this section by reason of paragraph (3) or (4) of subsection (a) shall not expire before the date which is 3 years from the later of—
(i)
the allocation or ownership referred to in such paragraph giving rise to such tax, or
(ii)
the date on which the Secretary is notified of such allocation or ownership.
(Added and amended [Pub. L. 99–514, title XI, § 1172(b)(2)], title XVIII, § 1854(a)(9)(A), Oct. 22, 1986, [100 Stat. 2514], 2877; [Pub. L. 101–239, title VII, § 7304(a)(2)(D)], Dec. 19, 1989, [103 Stat. 2353]; [Pub. L. 104–188, title I, § 1704(t)(22)], Aug. 20, 1996, [110 Stat. 1888]; [Pub. L. 105–34, title XV, § 1530(c)(15)]–(17), Aug. 5, 1997, [111 Stat. 1079], 1080; [Pub. L. 107–16, title VI, § 656(c)], June 7, 2001, [115 Stat. 134].)