To amend the Internal Revenue Code of 1986 to provide procedural fairness in the application of the controlled group provisions to employers who contribute to multiemployer pension plans and who engage in bona fide corporate transactions.

November 13, (legislative day, NOVEMBER 12), 2003

Mr. LOTT (for himself and Mr. SMITH) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to provide procedural fairness in the application of the controlled group provisions to employers who contribute to multiemployer pension plans and who engage in bona fide corporate transactions.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Multiemployer Pension Plan Procedural Fairness Act of 2003'.

SEC. 2. AMENDMENT TO THE INTERNAL REVENUE CODE OF 1986.

(a) IN GENERAL- Section 414(f) of the Internal Revenue Code of 1986 is amended--

(1) by striking paragraph (2) and inserting the following:

`(2) COMMON CONTROL-

`(A) IN GENERAL- For purposes of this subsection and subtitle E of title IV of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1381 et seq.), all trades or businesses (whether or not incorporated) which are under common control within the meaning of subsection (c) are considered a single employer.

`(B) PRINCIPAL PURPOSE TEST- If a principal purpose of any transaction is to evade or avoid liability under subtitle E of title IV of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1381 et seq.), then, subject to paragraph (6), the determination of whether one or more trades or businesses are under common control for purposes of such subtitle shall be made without regard to such transaction.', and

(2) by adding at the end the following:

`(6) DETERMINATION OF COMMON CONTROL MORE THAN 5 YEARS FOLLOWING A TRANSACTION-

`(A) IN GENERAL- If--

`(i) a plan sponsor of a plan determines that--

`(I) a complete or partial withdrawal of an employer has occurred, or

`(II) an employer is liable for withdrawal liability payments with respect to the complete or partial withdrawal of an employer from the plan,

`(ii) such determination is based in whole or in part on a finding by the plan sponsor that a principal purpose of any transaction was to evade or avoid liability under subtitle E of title IV of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1381 et seq.), and

`(iii) such transaction occurred at least 5 years before the date of the complete or partial withdrawal,

then the special rules under subparagraph (B) shall be used in applying section 4219(c) and section 4221(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1399(c) and 1401(a)) to the employer.

`(B) SPECIAL RULES-

`(i) DETERMINATION- Notwithstanding section 4221(a)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1401(a)(3))--

`(I) a determination by the plan sponsor under subparagraph (A)(i) shall not be presumed to be correct, and

`(II) the plan sponsor shall have the burden to establish, by a preponderance of the evidence, each and every element of the claim for withdrawal liability.

`(ii) PROCEDURE- Notwithstanding section 4219(c) and section 4221(d) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1399(c) and 1401(d)), if an employer contests the plan sponsor's determination under subparagraph (A)(i) through an arbitration proceeding pursuant to section 4221(a) of such Act (29 U.S.C. 1401(a)), or through a claim brought in a court of competent jurisdiction, the employer shall not be obligated to make any withdrawal liability payments until a final decision in the arbitration, or in court, upholds the plan sponsor's determination.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to any employer that receives a notification under section 4219(b)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1399(b)(1)) after October 31, 2003.

END