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88 STAT. 948 Ante, pp. 925,

914.

26 USC 7701.

Ante, p. 946.

Ante, p. 947.

26 USC 6059 note.

Ante, p. 841.

26 USC 6057 note.

Ante, p. 943.

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414(g) of each defined benefit plan to which section 412 applies, for the first plan year for which section 412 applies to the plan and for each third plan year thereafter (or more frequently if the Secretary or his delegate determines that more frequent reports are necessary). "(b) ACTUARIAL REPORT.-The actuarial report of a plan required by subsection (a) shall be prepared and signed by an enrolled actuary (within the meaning of section 7701(a) (35)) and shall contain

"(1) a description of the funding method and actuarial assumptions used to determine costs under the plan,

"(2) a certification of the contribution necessary to reduce the accumulated funding deficiency (as defined in section 412(a)) to zero,

"(3) a statement

"(A) that to the best of his knowledge the report is complete and accurate, and

"(B) the requirements of section 412 (c) (relating to reasonable actuarial assumptions) have been complied with, "(4) such other information as may be necessary to fully and fairly disclose the actuarial position of the plan, and

"(5) such other information regarding the plan as the Secretary or his delegate may by regulations require.

"(c) TIME AND MANNER OF FILING.-The actuarial report and statement required by this section shall be filed at the time and in the manner provided by regulations prescribed by the Secretary or his delegate.

"(d) CROSS REFERENCE.

"For coordination between the Department of the Treasury and the Department of Labor with respect to the report required to be filed under this section, see section 3004 of title III of the Employee Retire. ment Income Security Act of 1974.".

(b) ASSESSABLE PENALTIES.-Subchapter B of chapter 68 (relating to assessable penalties) is amended by adding at the end thereof the following new section:

"SEC. 6692. FAILURE TO FILE ACTUARIAL REPORT.

"The plan administrator (as defined in section 414(g)) of each defined benefit plan to which section 412 applies who fails to file the report required by section 6059 at the time and in the manner required by section 6059, shall pay a penalty of $1,000 for each such failure unless it is shown that such failure is due to reasonable cause."

(c) CONSOLIDATION OF ACTUARIAL REPORTS.-The Secretary of the Treasury and the Secretary of Labor shall take such steps as may be necessary to assure coordination to the maximum extent feasible between the actuarial reports required by section 6059 of the Internal Revenue Code of 1954 and by section 103 (d) of title I of the Employee Retirement Income Security Act of 1974.

(d) CLERICAL AMENDMENT.-The table of sections for subchapter B of chapter 68 is amended by adding at the end thereof the following new item:

"Sec. 6692. Failure to file actuarial report.". SEC. 1034. EFFECTIVE DATES.

This part shall take effect upon the date of the enactment of this Act; except that—

(1) the requirements of section 6059 of the Internal Revenue Code of 1954 shall apply only with respect to plan years to which part I of this title applies,

(2) the requirements of section 6057 of such Code shall apply only with respect to plan years beginning after December 31, 1975,

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(3) the requirements of section 6058 (a) of such Code shall apply only with respect to plan years beginning after the date of the enactment of this Act, and

(4) the amendments made by section 1032 shall take effect on January 1, 1978.

PART 4-DECLARATORY JUDGMENTS

RELATING TO

QUALIFICATION OF CERTAIN RETIREMENT PLANS

SEC. 1041. TAX COURT PROCEDURE.

Ante, p. 945.

(a) IN GENERAL.-Subchapter C of chapter 76 (relating to the Tax 26 USC 7441. Court, is amended by adding at the end thereof the following new part:

"PART IV-DECLARATORY JUDGMENTS RELATING TO QUALIFICATION OF CERTAIN RETIREMENT PLANS

"Sec. 7476. Declaratory judgments.

"SEC. 7476. DECLARATORY JUDGMENTS.

"(a) CREATION OF REMEDY.-In a case of actual controversy involving

"(1) a determination by the Secretary or his delegate with respect to the initial qualification or continuing qualification of a retirement plan under subchapter D of chapter 1, or

"(2) a failure by the Secretary or his delegate to make a determination with respect to

(A) such initial qualification, or

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"(B) such continuing qualification if the controversy arises from a plan amendment or plan termination,

upon the filing of an appropriate pleading, the United States Tax Court may make a declaration with respect to such initial qualification or continuing qualification. Any such declaration shall have the force and effect of a decision of the Tax Court and shall be reviewable as such.

"(b) LIMITATIONS.—

"(1) PETITIONER.-A pleading may be filed under this section only by a petitioner who is the employer, the plan administrator, an employee who has qualified under regulations prescribed by the Secretary or his delegate as an interested party for purposes of pursuing administrative remedies within the Internal Revenue Service, or the Pension Benefit Guaranty Corporation.

"(2) NOTICE. For purposes of this section, the filing of a pleading by any petitioner may be held by the Tax Court to be premature, unless the petitioner establishes to the satisfaction of the court that he has complied with the requirements prescribed by regulations of the Secretary or his delegate with respect to notice to other interested parties of the filing of the request for a determination referred to in subsection (a).

"(3) EXHAUSTION OF ADMINISTRATIVE REMEDIES.-The Tax Court shall not issue a declaratory judgment or decree under this section in any proceeding unless it determines that the petitioner has exhausted administrative remedies available to him within the Internal Revenue Service. A petitioner shall not be deemed to have exhausted his administrative remedies with respect to a failure by the Secretary or his delegate to make a determination with respect to initial qualification or continuing qualification of a retirement plan before the expiration of 270 days after the request for such determination was made.

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88 STAT. 950

26 USC 401. 26 USC 403. 26 USC 405.

26 USC 7451.

Ante, p. 949.

Pub. Law 93-406

122

September 2, 1974

"(4) PLAN PUT INTO EFFECT.-No proceeding may be maintained under this section unless the plan (and, in the case of a controversy involving the continuing qualification of the plan because of an amendment to the plan, the amendment) with respect to which a decision of the Tax Court is sought has been put into effect before the filing of the pleading. A plan or amendment shall not be treated as not being in effect merely because under the plan the funds contributed to the plan may be refunded if the plan (or the plan as so amended) is found to be not qualified.

"(5) TIME FOR BRINGING ACTION.-If the Secretary or his delegate sends by certified or registered mail notice of his determination with respect to the qualification of the plan to the persons referred to in paragraph (1) (or, in the case of employees referred to in paragraph (1), to any individual designated under regulations prescribed by the Secretary or his delegate as a representative of such employee), no proceeding may be initiated under this section by any person unless the pleading is filed before the ninety-first day after the day after such notice is mailed to such person (or to his designated representative, in the case of an employee).

"(c) COMMISSIONERS.---The chief judge of the Tax Court may assign proceedings under this section to be heard by the commissioners of the court, and the court may authorize a commissioner to make the decision of the court with respect to such proceeding, subject to such conditions and review as the court may by rule provide.

"(d) RETIREMENT PLAN.-For purposes of this section, the term ‘retirement plan' means—

"(1) a pension, profit-sharing, or stock bonus plan described in section 401(a) or a trust which is part of such a plan, "(2) an annuity plan described in section 403 (a), or "(3) a bond purchase plan described in section 405 (a). "(e) CROSS REFERENCE.—

"For provisions concerning intervention by Pension Benefit Guaranty Corporation and Secretary of Labor in actions brought under this section and right of Pension Benefit Guaranty Corporation to bring action, see section 3001(c) of subtitle A of title III of the Employee Retirement Income Security Act of 1974."

(b) TECHNICAL AND CONFORMING AMENDMENTS.——

(1) FEE FOR FILING PETITION.-Section 7451 (relating to fee for filing petition) is amended by striking out "deficiency" and inserting in lieu thereof "deficiency or for a declaratory judgment under part IV of this subchapter".

(2) DATE OF DECISION.-Section 7459 (c) (relating to date of decision) is amended by inserting before the period at the end of the first sentence the following: "or, in the case of a declaratory judgment proceeding under part IV of this subchapter, the date of the court's order entering the decision”.

(3) VENUE FOR APPEAL OF DECISION.

(A) Section 7482(b)(1) (relating to venue) is amended by striking out the period at the end of subparagraph (B) and inserting in lieu thereof ", or" and by inserting after subparagraph (B) the following new subparagraph:

"(C) in the case of a person seeking a declaratory decision under section 7476, the principal place of business, or principal office or agency of the employer."

(B) Section 7482(b) (1) is further amended--

(i) by striking out "neither subparagraph (A) nor (B) applies" and inserting in lieu thereof “subparagraph (A), (B), and (C) do not apply"; and

September 2, 1974

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Pub. Law 93-406

88 STAT. 951

(ii) by inserting before the period at the end of the last sentence thereof the following: "or as of the time the petition seeking a declaratory decision under section 7476 was filed with the Tax Court".

(c) CLERICAL AMENDMENT.-The table of parts for subchapter C of chapter 76 (relating to the Tax Court) is amended by adding at the end thereof the following new item:

"PART IV. Declaratory judgments relating to qualification of certain retire

ment plans.".

Ante, p. 949.

(d) EFFECTIVE DATE.-The amendments made by this section shall 26 USC 7476 apply to pleadings filed more than 1 year after the date of the enact- note. ment of this Act.

PART 5 INTERNAL REVENUE SERVICE

SEC. 1051. ESTABLISHMENT OF OFFICE.

(a) IN GENERAL.-Section 7802 (relating to Commissioner of Inter- 24 USC 7802. nal Revenue) is amended to read as follows:

"SEC. 7802. COMMISSIONER OF INTERNAL REVENUE; ASSISTANT COMMISSIONER (EMPLOYEE PLANS AND EXEMPT ORGANIZATIONS).

"(a) COMMISSIONER OF INTERNAL REVENUE.-There shall be in the Department of the Treasury a Commissioner of Internal Revenue, who shall be appointed by the President, by and with the advice and consent of the Senate. The Commissioner of Internal Revenue shall have such duties and powers as may be prescribed by the Secretary. "(b) ASSISTANT COMMISSIONER FOR EMPLOYEE PLANS AND EXEMPT ORGANIZATIONS.-There is established within the Internal Revenue Service an office to be known as the 'Office of Employee Plans and Exempt Organizations' to be under the supervision and direction of an Assistant Commissioner of Internal Revenue. As head of the Office, the Assistant Commissioner shall be responsible for carrying out such functions as the Secretary or his delegate may prescribe with respect to organizations exempt from tax under section 501 (a) and with respect to plans to which part I of subchapter D of chapter 1 applies (and with respect to organizations designed to be exempt under such section and plans designed to be plans to which such part applies)." (b) SALARIES.

(1) ASSISTANT COMMISSIONER.-Section 5109 of title 5, United States Code, is amended by adding at the end thereof the following new subsection:

Office of
Employee Plans
and Exempt
Organizations
Establishment.

"(c) The position held by the employee appointed under section 7802 (b) of the Internal Revenue Code of 1954 is classified at GS-18, Supra. and is in addition to the number of positions authorized by section 5108 (a) of this title."

(2) CLASSIFICATION OF POSITIONS AT GS-16 AND 17.-Section 5108 of title 5, United States Code, is amended by adding at the end thereof the following new subsection:

"(e) In addition to the number of positions authorized by subsection (a), the Commissioner of Internal Revenue is authorized, without regard to any other provision of this section. to place a total of 20 positions in the Internal Revenue Service in GS-16 and 17.".

(c) CLERICAL AMENDMENTS.-The item relating to section 7802 in the table of sections for subchapter A of chapter 80 is amended to read as follows:

"Sec. 7802. Commissioner of Internal Revenue; Assistant Commissioner (Employee Plans and Exempt Organizations)."

(d) EFFECTIVE DATE.-The amendments made by this section shall 26 USC 7802 take effect on the 90th day after the date of the enactment of this Act. note.

Pub. Law 93-406

- 124

88 STAT. 952

31 USC 1037.

26 USC 4940.

26 USC 404.

26 USC 1379.

26 USC 401.

September 2, 1974

SEC. 1052. AUTHORIZATION OF APPROPRIATIONS.

There is authorized to be appropriated to the Department of the Treasury for the purpose of carrying out all functions of the Office of, Employee Plans and Exempt Organizations for each fiscal year beginning after June 30, 1974, an amount equal to the sum of-

(1) so much of the collections from the taxes imposed under section 4940 of such Code (relating to excise tax based on investment income) as would have been collected if the rate of tax under such section was 2 percent during the second preceding fiscal year, and

(2) the greater of—

(A) an amount equal to the amount described in paragraph (1), or

(B) $30,000,000.

Subtitle B-Other Amendments to the Internal
Revenue Code Relating to Retirement Plans

SEC. 2001. CONTRIBUTIONS ON BEHALF OF SELF-EMPLOYED INDI-
VIDUALS AND SHAREHOLDER-EMPLOYEES.

(a) INCREASE IN MAXIMUM AMOUNT DEDUCTIBLE FOR SELFEMPLOYED INDIVIDUALS.

(1) Paragraph (1) of section 404 (e) (relating to special limitations for self-employed individuals) is amended

(A) by striking out "$2,500, or 10 percent" and inserting in lieu thereof "$7,500, or 15 percent", and

(B) by striking out "subject to the provisions of paragraph (2)" and inserting in lieu thereof "subject to paragraphs (2) and (4)".

(2) Paragraph (2) (A) of section 404 (e) is amended by striking out "shall not exceed $2,500, or 10 percent" and inserting in lieu thereof "shall (subject to paragraph (4)) not exceed $7,500, or 15 percent".

(8) Section 404 (e) is amended by adding at the end thereof the following new paragraph:

"(4) LIMITATIONS CANNOT BE LOWER THAN $750 OR 100 PERCENT OF EARNED INCOME.—The limitations under paragraphs (1) and (2)(A) for any employee shall not be less than the lesser of"(A) $750, or

"B) 100 percent of the earned income derived by such employee from the trades or businesses taken into account for purposes of paragraph (1) or (2) (A) as the case may be.". (b) INCREASE IN MAXIMUM AMOUNT DEDUCTIBLE FOR SHAREHOLDER-EMPLOYEES.-Paragraph (1) of section 1379 (b) (relating to taxability of shareholder-employees) is amended-

(1) by striking out "10 percent" in subparagraph (A) and inserting in lieu thereof "15 percent", and

(2) by striking out "$2,500" in subparagraph (B) and inserting in lieu thereof "$7,500".

(c) ONLY FIRST $100,000 of ANNUAL COMPENSATION TO BE TAKEN INTO ACCOUNT.-Subsection (a) of section 401 (relating to requirements for qualification) is amended by inserting after paragraph (16) the following new paragraph:

"(17) In the case of a plan which provides contributions or benefits for employees some or all of whom are employees within the meaning of subsection (c)(1), or are shareholder-employees within the meaning of section 1379 (d), only if the annual compen

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