SECTION 4. DEPOSITS OF TAX

ON AVIATION GASOLINE AND KEROSENE FOR USE IN AVIATION

Section 4081 of the Code imposes excise taxes on certain removals, entries, and sales of aviation gasoline and aviation kerosene. On July 23, 2011, the tax imposed by § 4081(a)(2)(A)(ii) on aviation gasoline was reduced from 19.4 cents per gallon to 4.4 cents per gallon, but was reinstated by the Extension Act, Part IV, at 19.4 cents per gallon effective July 23, 2011. Also on July 23, 2011, the tax imposed by § 4081(a)(2)(C)(ii) on kerosene removed from any refinery or terminal directly into the fuel tank of an aircraft for use in noncommercial aviation (aviation kerosene) was reduced from 21.9 cents per gallon to 4.4 cents per gallon, but was reinstated by the Extension Act, Part IV at 21.9 cents per gallon tax effective July 23, 2011. Under § 40.6302(c)–1(b)(1) of the Regulations, persons required to make semimonthly deposits of tax on aviation gasoline and aviation kerosene generally must deposit at least 95 percent of the net tax liability

2011–39 I.R.B. 445 September 26, 2011

benefit guarantees by the Pension Benefit Guaranty Corporation (PBGC) in the event of termination of an underfunded pension plan. These results are not limited to a church plan whose only participants are employees of a church, but may also in some cases include substantial numbers of employees of certain affiliated entities who are participants in a church plan as defined in § 414(e).

A nonelecting church plan is instead primarily subject to certain qualification requirements that pre-date the enactment of ERISA. The plan is treated as a tax-qualified plan only if the plan satisfies the participation, vesting, and funding requirements of the Code as in effect prior to ERISA.

Section 514(a) of ERISA generally provides that ERISA supersedes state laws that relate to an employee benefit plan described in section 4(a) of ERISA and not exempt under section 4(b) of ERISA. A nonelecting church plan is exempt under section 4(b) of ERISA. Thus, state laws that relate to an employee benefit plan generally would apply to the nonelecting church plan.

Section 410(d) permits an election to be made under which a church plan would be subject to the same requirements as apply to other qualified plans (electing church plan). Section 1.410(d)–1 of the Income Tax Regulations provides that the election is irrevocable and may be made only by the plan administrator and only in the manner provided in the regulations. If the election is made, the plan must comply with the applicable provisions of the Code. In addition, an electing church plan would be covered by and subject to Title I and, if a defined benefit pension plan, Title IV of ERISA.

Rev. Proc. 2011–4 contains procedures for an applicant to submit a letter ruling request that a qualified plan is a church plan under § 414(e). Although a church plan is not required to have a favorable letter ruling from the IRS, a letter ruling would ordinarily confirm a plan’s status for tax purposes, as noted in Rev. Proc. 2011–4, section 4. Additionally, other agencies may require the applicant to have an IRS letter ruling. Appendix B of Rev. Proc. 2011–4 contains a checklist to comply with the general procedures for all such ruling requests. Appendix E contains an additional checklist applicable to church plan ruling

incurred during the semimonthly period. The IRS will not impose § 6656 penalties with respect to semimonthly deposits made in August 2011 if the taxpayer made a timely deposit of at least 95 percent of the net tax liability for the semimonthly period determined without regard to the reinstated rates. The penalty relief provided in this section does not apply to taxpayers that deposit under the safe harbor rules of § 40.6302(c)–1(b)(2) (relating to depositing ¹ /6 of net tax liability reported for a look-back quarter).