Cases: United States v. Reorganized CF&I Fabricators of Utah, 518 U.S. 213 (1996); D.J. Lee, M.D., Inc. v. Commissioner, 931 F.2d 418 (6th Cir. 1991); Lee Eng'g Supply Co. v. Commissioner, 101 T.C. 189 (1993)
Final rules 1
(a) Initial tax If at any time during any taxable year an employer maintains a plan to which section 412 applies, there is hereby imposed for the taxable year a tax equal to—
Amended 1987, 2006
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 114(e)(1), amended subsecs. (a) and (b) generally. Prior to amendment, subsecs. (a) and (b) read as follows:
- 2006 “(a) Initial tax.—For each taxable year of an employer who maintains a plan to which section 412 applies, there is hereby imposed a tax of 10 percent (5 percent in the case of a multiemployer plan) on the amount of the accumulated funding deficiency under the plan, determined as of the end of the plan year ending with or within such taxable year.
- 2006 “(b) Additional tax.—In any case in which an initial tax is imposed by subsection (a) on an accumulated funding deficiency and such accumulated funding deficiency is not corrected within the taxable period, there is hereby imposed a tax equal to 100 percent of such accumulated funding deficiency to the extent not corrected.”
- 1987 Pub. L. 100-203 Pub. L. 100–203, § 9305(a)(2)(A), struck out at end “The tax imposed by this subsection shall be paid by the employer responsible for contributing to or under the plan the amount described in section 412(b)(3)(A).”
- 1987 Pub. L. 100-203 Pub. L. 100–203, § 9304(c)(1), substituted “10 percent (5 percent in the case of a multiemployer plan)” for “5 percent”.
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(1) in the case of a single-employer plan, 10 percent of the aggregate unpaid minimum required contributions for all plan years remaining unpaid as of the end of any plan year ending with or within the taxable year,
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(2) in the case of a multiemployer plan, 5 percent of the accumulated funding deficiency determined under section 431 as of the end of any plan year ending with or within the taxable year, and
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(3) in the case of a CSEC plan, 10 percent of the CSEC accumulated funding deficiency as of the end of the plan year ending with or within the taxable year.
Amended 2014
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(8)(A), added par. (3).
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(b) Additional tax If—
(1) a tax is imposed under subsection (a)(1) on any unpaid minimum required contribution and such amount remains unpaid as of the close of the taxable period,
Amended 2008
- 2008 Pub. L. 110-458 Pub. L. 110–458, § 101(d)(2)(F)(i), substituted “minimum required” for “required minimum”.
(2) a tax is imposed under subsection (a)(2) on any accumulated funding deficiency and the accumulated funding deficiency is not corrected within the taxable period, or
(3) a tax is imposed under subsection (a)(3) on any CSEC accumulated funding deficiency and the CSEC accumulated funding deficiency is not corrected within the taxable period,
Amended 2014
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(8)(B)(i), added par. (3).
there is hereby imposed a tax equal to 100 percent of the unpaid minimum required contribution, accumulated funding deficiency, or CSEC accumulated funding deficiency, whichever is applicable, to the extent not so paid or corrected.
Amended 1980, 1987, 2006, 2014, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(225), which directed substitution of “minimum required contribution, accumulated funding deficiency, or CSEC accumulated funding deficiency, whichever is applicable” for “minimum required contribution,” and all that followed through “whichever is applicable”, resulted in no change in text of concluding provisions after the probable intent execution of Pub. L. 113–97, § 202(c)(8)(B)(ii). See 2014 Amendment note below. Had the amendment by Pub. L. 113–97 not been executed, amendment by Pub. L. 115–141 would still require execution as the probable intent of Congress because the original text directed to be stricken would have read “minimum required contribution or accumulated funding deficiency, whichever is applicable”, with no comma following “contribution”.
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(8)(B)(ii), which directed substitution of “minimum required contribution, accumulated funding deficiency, or CSEC accumulated funding deficiency” for “minimum required contributions or accumulated funding deficiency”, was executed by making the substitution for “minimum required contribution or accumulated funding deficiency” in concluding provisions, to reflect the probable intent of Congress.
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 114(e)(1), amended subsecs. (a) and (b) generally. Prior to amendment, subsecs. (a) and (b) read as follows:
- 2006 “(a) Initial tax.—For each taxable year of an employer who maintains a plan to which section 412 applies, there is hereby imposed a tax of 10 percent (5 percent in the case of a multiemployer plan) on the amount of the accumulated funding deficiency under the plan, determined as of the end of the plan year ending with or within such taxable year.
- 2006 “(b) Additional tax.—In any case in which an initial tax is imposed by subsection (a) on an accumulated funding deficiency and such accumulated funding deficiency is not corrected within the taxable period, there is hereby imposed a tax equal to 100 percent of such accumulated funding deficiency to the extent not corrected.”
- 1987 Pub. L. 100-203 Pub. L. 100–203, § 9305(a)(2)(B), struck out at end “The tax imposed by this subsection shall be paid by the employer described in subsection (a).”
- 1980 Pub. L. 96-596 Pub. L. 96–596, § 2(a)(1)(J), substituted “taxable period” for “correction period”.
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(c) Definitions For purposes of this section—
Amended 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing.
(1) Accumulated funding deficiency The term “accumulated funding deficiency” has the meaning given to such term by section 431.
Amended 1980, 2006
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 114(e)(2)(A), substituted “section 431” for “the last two sentences of section 412(a)”.
- 1980 Pub. L. 96-364 Pub. L. 96–364, § 204(1), substituted “last two sentences” for “last sentence”.
(2) Correct The term “correct” means, with respect to an accumulated funding deficiency or CSEC accumulated funding deficiency, the contribution, to or under the plan, of the amount necessary to reduce such accumulated funding deficiency or CSEC accumulated funding deficiency as of the end of a plan year in which such deficiency arose to zero.
Amended 2014
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(8)(C)(i), substituted “accumulated funding deficiency or CSEC accumulated funding deficiency” for “accumulated funding deficiency” in two places.
(3) Taxable period The term “taxable period” means, with respect to an accumulated funding deficiency, CSEC accumulated funding deficiency, or unpaid minimum required contribution, whichever is applicable, the period beginning with the end of the plan year in which there is an accumulated funding deficiency, CSEC accumulated funding deficiency, or unpaid minimum required contribution, whichever is applicable, and ending on the earlier of—
Amended 1980, 2008, 2014, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(226), substituted “applicable, and ending” for “applicable and ending” in introductory provisions.
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(8)(C)(ii), substituted “accumulated funding deficiency, CSEC accumulated funding deficiency, or unpaid minimum required contribution” for “accumulated funding deficiency or unpaid minimum required contribution” in two places in introductory provisions.
- 2008 Pub. L. 110-458 Pub. L. 110–458, § 101(d)(2)(F)(ii), inserted “or unpaid minimum required contribution, whichever is applicable” after “accumulated funding deficiency” in two places in introductory provisions.
- 1980 Pub. L. 96-596 Pub. L. 96–596, § 2(a)(2)(H), substituted provision defining taxable period as the period beginning with the end of the plan year in which there is an accumulated funding deficiency and ending on the earlier of the date of mailing of a notice of deficiency with respect to the tax imposed by subsec. (a) of this section or the date on which the tax imposed by subsec. (a) of this section is assessed for provision defining correction period as the period beginning with the end of a plan year in which there is an accumulated funding deficiency and ending 90 days after the date of mailing of a notice of deficiency under section 6212 of this title with respect to the tax imposed by subsec. (b) of this section, extended by any period in which a deficiency cannot be assessed under section 6213(a) of this title and by any other period which the Secretary determines reasonable and necessary to permit a reduction of the accumulated funding deficiency to zero.
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(A) the date of mailing of a notice of deficiency with respect to the tax imposed by subsection (a), or
(B) the date on which the tax imposed by subsection (a) is assessed.
(4) Unpaid minimum required contribution
Amended 2006
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 114(e)(2)(B), added par. (4).
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(A) In general The term “unpaid minimum required contribution” means, with respect to any plan year, any minimum required contribution under section 430 for the plan year which is not paid on or before the due date (as determined under section 430(j)(1)) for the plan year.
(B) Ordering rule Any payment to or under a plan for any plan year shall be allocated first to unpaid minimum required contributions for all preceding plan years on a first-in, first-out basis and then to the minimum required contribution under section 430 for the plan year.
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(5) CSEC accumulated funding deficiency The term “CSEC accumulated funding deficiency” means the accumulated funding deficiency determined under section 433.
Amended 2014
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(8)(C)(iii), added par. (5).
(d) Notification of the Secretary of Labor Before issuing a notice of deficiency with respect to the tax imposed by subsection (a) or (b), the Secretary shall notify the Secretary of Labor and provide him a reasonable opportunity (but not more than 60 days)—
Amended 1976, 1980, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(44), struck out concluding provisions which read as follows: “In the case of a multiemployer plan which is in reorganization under section 418, the same notice and opportunity shall be provided to the Pension Benefit Guaranty Corporation.”
- 1980 Pub. L. 96-364 Pub. L. 96–364, § 204(2), inserted provisions relating to a multiemployer plan in reorganization.
- 1976 Pub. L. 94-455 Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing.
(1) to require the employer responsible for contributing to or under the plan to eliminate the accumulated funding deficiency, CSEC accumulated funding deficiency, or unpaid minimum required contribution, whichever is applicable, or
Amended 2008, 2014
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(8)(D), substituted “accumulated funding deficiency, CSEC accumulated funding deficiency, or unpaid minimum required contribution” for “accumulated funding deficiency or unpaid minimum required contribution”.
- 2008 Pub. L. 110-458 Pub. L. 110–458, § 101(d)(2)(F)(ii), inserted “or unpaid minimum required contribution, whichever is applicable” after “accumulated funding deficiency”.
(2) to comment on the imposition of such tax.
(e) Liability for tax
Amended 1987
- 1987 Pub. L. 100-203 Pub. L. 100–203, § 9305(a)(1), added subsec. (e) and redesignated former subsec. (e) as (f).
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(1) In general Except as provided in paragraph (2), the tax imposed by subsection (a), (b), or (f) shall be paid by the employer responsible for contributing to or under the plan the amount described in section 412(a)(2).
Amended 1994, 2006, 2008
- 2008 Pub. L. 110-458 Pub. L. 110–458, § 101(d)(2)(F)(iii), substituted “section 412(a)(2)” for “section 412(a)(1)(A)”.
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 114(e)(3), substituted “section 412(a)(1)(A)” for “section 412(b)(3)(A)”.
- 1994 Pub. L. 103-465 Pub. L. 103–465, § 751(a)(9)(B)(i), substituted “(a), (b), or (f)” for “(a) or (b)”.
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(2) Joint and several liability where employer member of controlled group
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(A) In general If an employer referred to in paragraph (1) is a member of a controlled group, each member of such group shall be jointly and severally liable for the tax imposed by subsection (a), (b), (f), or (g).
Amended 1994, 2006, 2008
- 2008 Pub. L. 110-458 Pub. L. 110–458, § 102(b)(3)(A), amended directory language of Pub. L. 109–280, § 212(b)(2). See 2006 Amendment note below.
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 212(b)(2), as amended by Pub. L. 110–458, § 102(b)(3)(A), substituted “If an” for “In the case of a plan other than a multiemployer plan, if the” and “(f), or (g)” for “or (f)”.
- 1994 Pub. L. 103-465 Pub. L. 103–465, § 751(a)(9)(B)(i), substituted “(a), (b), or (f)” for “(a) or (b)”.
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(B) Controlled group For purposes of subparagraph (A), the term “controlled group” means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414.
(f) Failure to pay liquidity shortfall
Amended 1987, 1994
- 1994 Pub. L. 103-465 Pub. L. 103–465, § 751(a)(9)(B)(ii), added subsec. (f) and redesignated former subsec. (f) as (g).
- 1987 Pub. L. 100-203 Pub. L. 100–203, § 9305(a)(1), added subsec. (e) and redesignated former subsec. (e) as (f).
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(1) In general In the case of a plan to which section 430(j)(4) or 433(f) applies, there is hereby imposed a tax of 10 percent of the excess (if any) of—
Amended 2006, 2014
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(8)(E)(i), substituted “430(j)(4) or 433(f)” for “430(j)(4)” in introductory provisions.
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 114(e)(4), substituted “section 430(j)(4)” for “section 412(m)(5)” in introductory provisions and “section 430(j)” for “section 412(m)” in subpar. (B).
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(A) the amount of the liquidity shortfall for any quarter, over
(B) the amount of such shortfall which is paid by the required installment under section 430(j) or 433(f), whichever is applicable, for such quarter (but only if such installment is paid on or before the due date for such installment).
Amended 2014, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(227), substituted “applicable, for” for “applicable for”.
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(8)(E)(ii), substituted “430(j) or 433(f), whichever is applicable” for “430(j)”.
(2) Additional tax If the plan has a liquidity shortfall as of the close of any quarter and as of the close of each of the following 4 quarters, there is hereby imposed a tax equal to 100 percent of the amount on which tax was imposed by paragraph (1) for such first quarter.
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(3) Definitions and special rule
(A) Liquidity shortfall; quarter For purposes of this subsection, the terms “liquidity shortfall” and “quarter” have the respective meanings given such terms by section 430(j) or 433(f), whichever is applicable.
Amended 2014
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(8)(E)(iii), substituted “430(j) or 433(f), whichever is applicable” for “412(m)(5)”.
(B) Special rule If the tax imposed by paragraph (2) is paid with respect to any liquidity shortfall for any quarter, no further tax shall be imposed by this subsection on such shortfall for such quarter.
(4) Waiver by Secretary If the taxpayer establishes to the satisfaction of the Secretary that—
(A) the liquidity shortfall described in paragraph (1) was due to reasonable cause and not willful neglect, and
“Reasonable” implies facts and circumstances. No regulation cites this provision (eCFR, Oct 19, 2026)
(B) reasonable steps have been taken to remedy such liquidity shortfall,
“Reasonable” implies facts and circumstances. No regulation cites this provision (eCFR, Oct 19, 2026)
the Secretary may waive all or part of the tax imposed by this subsection.
Amended 1996
- 1996 Pub. L. 104-188 Pub. L. 104–188 added par. (4).
(g) Multiemployer plans in endangered or critical status
Amended 1994, 2006
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 212(b)(1), added subsec. (g) and redesignated former subsec. (g) as (h).
- 1994 Pub. L. 103-465 Pub. L. 103–465, § 751(a)(9)(B)(ii), added subsec. (f) and redesignated former subsec. (f) as (g).
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(1) In general Except as provided in this subsection—
(A) no tax shall be imposed under this section for a taxable year with respect to a multiemployer plan if, for the plan years ending with or within the taxable year, the plan is in critical status pursuant to section 432, and
(B) any tax imposed under this subsection for a taxable year with respect to a multiemployer plan if, for the plan years ending with or within the taxable year, the plan is in endangered status pursuant to section 432 shall be in addition to any other tax imposed by this section.
(2) Failure to comply with funding improvement or rehabilitation plan
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(A) In general If any funding improvement plan or rehabilitation plan in effect under section 432 with respect to a multiemployer plan requires an employer to make a contribution to the plan, there is hereby imposed a tax on each failure of the employer to make the required contribution within the time required under such plan.
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(B) Amount of tax The amount of the tax imposed by subparagraph (A) shall be equal to the amount of the required contribution the employer failed to make in a timely manner.
(C) Liability for tax The tax imposed by subparagraph (A) shall be paid by the employer responsible for contributing to or under the rehabilitation plan which fails to make the contribution.
(3) Failure to meet requirements for plans in endangered or critical status If—
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(A) a plan which is in seriously endangered status fails to meet the applicable benchmarks by the end of the funding improvement period, or
(B) a plan which is in critical status either—
(i) fails to meet the requirements of section 432(e) by the end of the rehabilitation period, or
(ii) has received a certification under section 432(b)(3)(A)(ii) for 3 consecutive plan years that the plan is not making the scheduled progress in meeting its requirements under the rehabilitation plan,
the plan shall be treated as having an accumulated funding deficiency for purposes of this section for the last plan year in such funding improvement, rehabilitation, or 3-consecutive year period (and each succeeding plan year until such benchmarks or requirements are met) in an amount equal to the greater of the amount of the contributions necessary to meet such benchmarks or requirements or the amount of such accumulated funding deficiency without regard to this paragraph.
(4) Failure to adopt rehabilitation plan
(A) In general In the case of a multiemployer plan which is in critical status, there is hereby imposed a tax on the failure of such plan to adopt a rehabilitation plan within the time prescribed under section 432.
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(B) Amount of tax The amount of the tax imposed under subparagraph (A) with respect to any plan sponsor for any taxable year shall be the greater of—
(i) the amount of tax imposed under subsection (a) for the taxable year (determined without regard to this subsection), or
(ii) the amount equal to $1,100 multiplied by the number of days during the taxable year which are included in the period beginning on the day following the close of the 240-day period described in section 432(e)(1)(A) and ending on the day on which the rehabilitation plan is adopted.
Amended 2008
- 2008 Pub. L. 110-458 Pub. L. 110–458, § 102(b)(2)(I)(i), substituted “day following the close of” for “first day of”.
(C) Liability for tax
(i) In general The tax imposed by subparagraph (A) shall be paid by each plan sponsor.
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(ii) Plan sponsor For purposes of clause (i), the term “plan sponsor” has the meaning given such term by section 432(j)(9).
Amended 2008, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(228), substituted “section 432(j)(9)” for “section 432(i)(9)”.
- 2008 Pub. L. 110-458 Pub. L. 110–458, § 102(b)(2)(I)(ii), added cl. (ii) and struck out former cl. (ii). Prior to amendment, text read as follows: “For purposes of clause (i), the term ‘plan sponsor’ in the case of a multiemployer plan means the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan.”
(5) Waiver In the case of a failure described in paragraph (2) or (3) which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by this subsection. For purposes of this paragraph, reasonable cause includes unanticipated and material market fluctuations, the loss of a significant contributing employer, or other factors to the extent that the payment of tax under this subsection with respect to the failure would be excessive or otherwise inequitable relative to the failure involved.
(6) Terms used in section 432 For purposes of this subsection, any term used in this subsection which is also used in section 432 shall have the meaning given such term by section 432.
(h) Failure of a CSEC plan sponsor to adopt funding restoration plan
Amended 2006, 2014
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(9), added subsec. (h) and redesignated former subsec. (h) as (i).
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 212(b)(1), added subsec. (g) and redesignated former subsec. (g) as (h).
(1) In general In the case of a CSEC plan that is in funding restoration status (within the meaning of section 433(j)(5)(A)), there is hereby imposed a tax on the failure of such plan to adopt a funding restoration plan within the time prescribed under section 433(j)(3).
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(2) Amount of tax The amount of the tax imposed under paragraph (1) with respect to any plan sponsor for any taxable year shall be the amount equal to $100 multiplied by the number of days during the taxable year which are included in the period beginning on the day following the close of the 180-day period described in section 433(j)(3) and ending on the day on which the funding restoration plan is adopted.
(3) Waiver by Secretary In the case of a failure described in paragraph (1) which the Secretary determines is due to reasonable cause and not to willful neglect, the Secretary may waive a portion or all of the tax imposed by such paragraph.
(4) Liability for tax The tax imposed by paragraph (1) shall be paid by the plan sponsor (within the meaning of section 433(j)(5)(E)).
(i) Cross references For disallowance of deduction for taxes paid under this section, see section 275.
For liability for tax in case of an employer party to collective bargaining agreement, see section 413(b)(6).
For provisions concerning notification of Secretary of Labor of imposition of tax under this section, waiver of the tax imposed by subsection (b), and other coordination between Secretary of the Treasury and Secretary of Labor with respect to compliance with this section, see section 3002(b) of title III of the Employee Retirement Income Security Act of 1974.
Amended 2014
- 2014 Pub. L. 113-97 Pub. L. 113–97, § 202(c)(9), added subsec. (h) and redesignated former subsec. (h) as (i).