How to Use the Black Lung Benefits Trust to Fund Black Lung Liability

Pine, Sidney R.; Wright, P. Bruce
June 1983
Risk Management (00355593);Jun83, Vol. 30 Issue 6, p84
Trade Publication
This article provides information on how to use the black lung benefits trust to fund black lung liability. Under the Internal Revenue Code (IRC) of 1954, as amended, the U.S. Congress decided to encourage the formation of certain organizations to fund particular types of risk by providing an exemption from federal income taxation for such organizations. Counted among these organizations is the so-called black lung benefits trust described in IRC § 501 (c) (21). A trust established to satisfy claims for compensation for death or disability under the Black Lung Acts is exempt from federal income taxation on contributions and investment income earned on reserves if it meets some requirements. This article outlines these said requirements. The IRC regulates the utilization of funds contributed to the trust by the imposition of a series of excise taxes. These taxes include the following: tax on improper payments; tax on improper investments; and tax on acts of self-dealing. Subject to the limitation on amount imposed by IRC § 192 (b), amounts contributed to a trust qualifying under IRC § 501 (c) (21) during the taxable year are deductible under IRC § 192. The contribution, however, must be made in cash or in property of any type which the trust is permitted to hold as an investment.


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