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IRS Issues Excise Tax and Reporting Relief in Line with DOL FAB

The IRS in Announcement 2017-4 has provided relief from certain excise taxes under Section 4975 and any related reporting requirements. It conforms Section 4975 to the temporary enforcement policy the Department of Labor (DOL) set forth in Field Assistance Bulletin (FAB) 2017-01 concerning the fiduciary rule.

The announcement says that because the Code and ERISA contemplate consistency in the enforcement of the prohibited transaction rules by the IRS and the DOL, the Treasury Department and the IRS have determined that it is appropriate to adopt a temporary excise tax non-applicability policy that conforms with the temporary enforcement policy the DOL articulated in FAB 2017-01.

Accordingly, the announcement says, the IRS will not apply Section 4975 and related reporting obligations regarding any transaction or agreement to which the DOL’s temporary enforcement policy, or other subsequent related enforcement guidance, would apply.

The DOL issued FAB 2017-01 on March 10; it announced a temporary enforcement policy related to the DOL’s recent proposal to extend for 60 days the applicability date of the final rule defining who is a “fiduciary” under ERISA and the Code, and the applicability date of the related prohibited transaction exemptions.